This new tax has been a demand for the domestic players for a long time to bring imported goods at par with domestic goods.
The Modi Government 2.0 will be presenting its second Union Budget on 01 February 2020. The Government has aimed for a $5 trillion economy by 2024. With decreasing GDP and increasing inflation, the Government will have to put in that extra effort to achieve this ambitious goal. The Government will have to increase growth, revive consumption and boost private investment. The budget is expected to reduce income tax rates for partnership firms and LLPs from 30% to match them to companies. Parallelly, the Government may also increase disposable income in the hands of the consumers. It is expected that the Government may increase tax threshold slab rates, bring parity of exemptions between government and non-government employees, increase the exemption limit of various salary allowances and increase the deduction for housing loan Rs. 3,00,000. These changes are expected to increase disposable income and enhance investment in the economy.With a view to instil investor confidence and attract more investment, the budget in a major move may decriminalise Income Tax and Companies Act. This should give a positive signal that businesses are not looked with suspicion. Another pain point for businesses are a large number of pending tax litigations. A large amount of resources and money is blocked in these litigations. It is expected that the Government may bring an Income Tax Amnesty Scheme which helps free up government resources and contribute to the government exchequer. The Scheme may be on similar lines with the recent Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and provide relief to taxpayers from interest, penalty and prosecution.There may not be any major changes in GST as they are usually brought through the GST Council meetings. The Government may accept the industry’s demand for a rate cut in GST to increase disposable income. The Government may also issue a clarification to end confusion regarding the export of IT and ITES services.On international trade, the Government may introduce a new tax on imports ‘Border Adjustment Tax’. This will be a non-creditable levy. This new tax has been a demand for the domestic players for a long time to bring imported goods at par with domestic goods.The Budget is expected to play a major role in reviving the economy.
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