Budget 2018: Income tax, 5 more things that will be most tracked in FM’s Jaitley’s speech

FISCAL DEFICIT: All eyes will be on the fiscal consolidation roadmap and the government’s borrowing plans. Will Jaitley stick to the 3 percent (of GDP) fiscal deficit target for 2018-19 set last year? Or will he signal a move to fiscal deficit range from fixed target. There is heightened expectation that he may announce a new framework suggesting a fiscal deficit range from 2018-19 setting the stage for replacing the Fiscal Responsibility and Budget Management (FRBM) Act with a new law, giving the government more flexibility on borrowing and spending.

LTCG: Will he bring back the long-term capital gains tax (LTCG) in stock markets?  Or will he change the definition of “long-term,” raising the time limit for tax relief to a minimum of 2-3 years from one year at present. Or will it be a status quo? Markets and investors will be hoping for the third option, for either a changed definition of long-term or a tax on gains from stock trading could trigger correction in markets as it will force many individuals and institutional funds to shuffle their stocks portfolio.

CORPORATE TAX: Will Jaitley cut the headline corporate income tax rate from 30 percent? In 2015, the finance minister had said that main corporate income tax rate will be progressively brought down to 25 percent by 2019. He may well chose his fifth, and the NDA government’s last full budget, in its current term to overhaul of India’s corporate tax structure by slashing the statutory rate and removing layers of exemptions

India Union Budget Live: News, updates and highlights from FM Arun Jaitley's Budget speech, announcements

INDIVIDUAL INCOME TAX: Will the finance minister have some good news for the salaried and the middle class? There is speculation that he may announce a restructuring of tax slabs and increase the income tax exemption limit from the existing Rs 250,000 to about Rs 300,000 —a move that would leave more money in the hands of people. It is also speculated that the budget may reinstitute the concept of standard deduction to provide some relief to tax-payers.

80 (C) BENEFITS: Will the Finance Minister raise the income tax deduction limits for money parked in specified savings instruments? There is speculation that Jaitley may raise the deduction limit on investments in specific mutual funds, national savings certificates and public provident fund (PPF) among others made under the popular “Section 80(C)” scheme of the Income Tax Act from Rs 1,50,000 to Rs 200,000. The deduction limit under Section 80C has been at the current Rs 1.5 lakh since 2014-15.

FARM PUSH: Will the budget contain measures to address concerns of rural distress and lift farm income? There is speculation that Jaitley may announce a new agricultural exports policy in the Budget for 2018-19 to help arrest the slide on farm product prices induced by domestic gluts. He may also announce a ‘Price Deficiency Payment Mechanism’ for those crops where procurement cannot be ensured. This could be on the lines that the Madhya Pradesh government is currently implementing through its Bhavantar Bhugtan Yojana.