BUDGET 2013 EXPECTATIONS- DIRECT TAXES

GDP growth of India has not lived up to the expectation as per the Finance budget 2012. The Fiscal Deficit of India is ever increasing and a threat of India moving to Junk status, the government will be looking to cut down unnecessary expenditures and come out with a stimulus package to spur the growth in the country similar to one during the 2008 recession.   2013 will be a political turnaround year as it’s a year before the elections and government will look to utilize these opportunities. 

With the Income Tax Act moving more in lines with Direct Tax Code and increase in disposable income, there is an expectation that the Basic Exemption limit would be raised to Rs 2.5 Lakhs and an increase Sec 80C limit to Rs 2,00,000. There is a need to increase the medical expenditure limits u/s 80D and Provision to section 17(2) as medical facilities are not cheaper anymore. There is likelihood that Sec 80CCF may be reintroduced in the lines of infrastructure bonds over and above Sec 80C.

Moving on there is still no clarity on implementation of DTC, GST and Companies Bill. These acts have to be well integrated before they can be implemented. The current situation of standoff between the state and central government may see the implementation process being delayed.

With the FDI in various sectors being opened up, certain benefits will be provided in form of additional depreciation, land allocation, tax holidays or specific exemptions to encourage their setup. The manufacturing sector may get added boost in the budget as industry specific tax sops may be provided by the government. (Eg: Automotive industry)

The Indian Banking sector has been reaching out to more people in rural areas and a considerable amount would be set  aside for capital infusion in to PSBs. The allocation for Defence has been ever increasing and 20% additional allocation may take place over previous years budget.

Rs 20, 000 crores may be set aside for Direct cash transfer scheme and additional amount may be allocated to aadhar scheme. There will be considerable allocation for Infrastructure sector  for development of Railways, Road transport, education and so on. Schemes such as NREGA need to be scrapped as they are meaningless.

The budget will require to address key issues on fiscal deficit, inflation, depreciation of rupee and lead an accelerated growth in India s development.  2013 is a crucial year for India and the budget will play a key role to it.