Budget ’20: Middle class, IT assessees expect some relief

In her first full budget after the general elections, she has an unenviable task of finding resources for some of the government’s pet schemes while faced with the problem of taxes, both direct and indirect, especially GST, falling behind the budget estimates in the current fiscal. Disinvestment targets are also unlikely to be attained.

The pre-budget Economic Survey to be tabled in Parliament on Friday, may give indications about the government finances and the way forward while at the same it would contain cautions on fiscal deficit estimates exceeding targets.

After the corporate tax rate cut in September last year, there are high expectations that the budget for next year would contain some sops for at least the salaried class, which has not got any relief in the last few years.

Speculation is that the threshold exemption level could be raised up to Rs 5 lakh from the present Rs 3 lakh. A few other reliefs like higher standard deduction may be attempted to put more money into the hands of individuals that could encourage consumption to boost manufacturing. As per current personal income tax rates, there is no tax up to Rs 2,50,000 while it is 5% for incomes between Rs 2,50,001 to Rs 5 lakh and 20% from Rs 5,00,001 to Rs 10 lakh. Speculation is that a new 10% rate could be introduced to bridge the gap between the initial 5% level and the next level of 20%.

On the corporate tax rates, the government has already given major concessions to the industry by slashing rates in September last year shortlyafter the budget by bringing the effective rate to 22%. New companies wereoffered 15% rate.