Budget 2019 Expectations: Increase Income Tax Section 80C limit to 2.5 lakh, include private sector employees in NPS, demand experts

Budget 2019 Expectations: Narendra Modi government is all set to present its firm interim budget on February 1. The expectations are high from all the quarters despite people being aware of the fact that this is just an interim budget. There have been demands to rationalise tax slabs and rates for the salaried employees while companies have been demanding a rebate in the corporate tax rate.

Nikhil Mantha, co-founder and COO of Piggy: Increase 80C limits to 2.5 lakhs

“Any budget before general elections comes with huge expectations. My macro level focus points are around job creation, industrial infrastructure and Agricultural credit. Also I'm curious to see how the FM plans to balance tax cuts, subsidies if any, with fiscal deficit targets given that we're missing our Q4 target by 0.2%. For investments space, I expect an increase in 80C limits to 2.5 lakhs from the current 1.5 lakh. Also, Investors are expecting the government to bring parity between the schemes and make these tax savings avenues more attractive for individuals. In the present scenario, any switch within the same scheme from debt to equity in ULIPs and NPS or any fund reallocation between them is not liable to taxation. But shifts between the schemes like in the case of a shift from a dividend option to a growth option or vice -versa, is liable to capital gains tax. Also I expect FM to promote implementations of blockchain technology to boost our public infrastructure and pave way for positive regulations for the same to be incorporated in our financial services infrastructure.”

Vineet Chaturvedi, co-founder, Edureka: Give skilling allowance' to all tax paying individuals

"'Skilling' and 'continuous learning' have become sufficiently important requirements in today's competitive professional landscape so much so that even the Indian Govt. has taken note of it and launched skill development initiatives. What could accelerate India's skill development story even further and provide fodder to corporate growth is a 'skilling allowance' for all tax paying individuals. Such a rebate that rewards continuous learning will go a long way in creating an industry relevant workforce that can make India a skill hot spot. Continuous learning is a necessity and not just an option anymore and by treating it on par with necessary allowances such as HRA, LTA, DA & others, GOI would be doing India a great service. After all, India's biggest strength is its human resource. Such an allowance will also be beneficial to IT, ITes industries which are subject to frequent skill churn and the ed-tech industry which has been working towards addressing this skilling need on ground. Speaking specifically of the ed-tech industry, a reduction in GST would greatly help boost a culture of up-skilling among Indians and this is indeed the need of the hour for India to maintain an edge in technical skills. Education and up-skilling is no luxury and it should not be taxed as such. It's said that India lags behind even Sudan when it comes to its investments in education and healthcare mapped as a measurement of its commitment to economic growth, according to Institute for Health Metrics and Evaluation. It's time to change that." 

Alok Dubey, CFO, Acer India: Lower personal income tax slabs

"For the year 2019, we are optimistic that this year, the union budget will focus more on Digital India initiative in order to shape the IT infrastructure and increase adoption of technology to encourage digitization. Last year, the budget did not really see any major inclusions for the IT sector. We also, feel that slashing of corporate taxes will help the larger companies and help Indian entities to compete globally and attract more investment to the country. In addition to this, it would be great to see the budget focusing on lowering the personal income tax slabs, and tax saving schemes which would lead to higher disposable income and directly benefit the normal taxpayer.”

Vipul Singh, CEO and Co-founder, Aarav Unmanned Systems: Give special attention to small scale manufacturing industry

“The government should have special attention on small scale manufacturing industry including startups which are making unique hardware products in India. Ministry of Civil Aviation has done a fantastic job by bring a very pragmatic drone regulation and has gone further to even put down a 10 year roadmap for the Industry. Since the drone Industry in India is very small and mostly run by very small startups, govt. should announce Special Drone VC fund, R&D grants, tax exemptions, export benefits and infrastructure development grants for startups and SMEs to help the domestic industry grow faster than the global counterparts and serve not only the domestic market but the global market.”

Ritobrata Sarkar, Head of Retirement, India, Willis Towers Watson: Include private sector employees under NPS

“The Finance Bill 2019 is slated to have new set of rules for NPS for FY 2019-20. While some amendments came in the form of enhanced contribution to NPS for central government employees and increase in tax limit to 60% of withdrawal of NPS, the budget could widen the base by including private sector employees. To increase penetration, especially in the unorganized sector, I would expect the Government to promote pension products (like APY), which may involve broadening the base and enhancing the pension limits for such product. The Government should consider relaxing the investment rules for NPS and APY, to generate higher long term returns.”

P Venkatesh, Director – Maveric Systems: Provide tax credits for failed ventures

“India is becoming a growing hub for home grown start-ups. This is across some vital industries like Health care, Logistics, Power and Finance. In order to encourage that, the following can be done:

a. Remove the Angel tax; if it cannot be abolished for whatever the reasons, bring down the tax to 10% from the current 30%; also clarify the valuation method to be applied in this which is free of ambiguity.

b. Provide tax credits for failed ventures at twice the investment; encouraging shift in investment to early stage ventures is a critical need at the moment and this would certainly enable a quick decision making on the venture and also provide relief for entrepreneurs who may have to hold the strain of the drained investment in a failed venture to recoup and probably re-try some other venture.

c. Channel a part of the Research and development spend of the government to this sector and thereby encouraging new start-ups.

Indirect tax concession for core and vital sectors: The vital industries like Health care, Logistics, Power and Finance would greatly benefit from Digitization in not only for extending the reach but also bringing down the cost. This would have spiraling effect on the manufacturing industry in general to become competitive. Therefore, the following may be done:

a. Digital-only units of these industries should have a tax holiday both from indirect tax- GST- and direct tax for a period of 5 years at the minimum;

b. Industries using services from these units should be exempt from being charged the indirect tax on those services; and

c. Industries that source more than 50% from these units of their overall services should be granted a tax incentive of 20% remission in their corporate and indirect tax-GST.

Reduction in Corporate tax: The focus should now be in stimulating the indirect tax. Therefore the maximum corporate tax rate has already been brought down from 35% to 21% and this can progressively be reduced further to say, 15%. Similarly, most of the service sectors especially IT who are export earners pay minimum alternate tax at 18.50%. This should be brought down to 10% and abolished over time."

Employment generation: In order to facilitate scale-up and also to encourage not to automate everything unless that is necessary, 15% of new recruit payroll cost should become deductible in tax if the new recruit exceeds 15% of the overall payroll count. Instead of a flat rate, a slab rate can be introduced especially for the Small and Medium Enterprises (SME) which goes either with the slabs of the number of people deployed 500-750, 750-1250 etc.”

K G Prabhu, Chief Financial Officer, DIGISOL Systems: Encourage digitization

"Expectations from IT sector is a bit high as the ruling government has been focusing on making India a digitally empowered country since 2015 and has undertaken many initiatives in order to implement the vision. For the year 2019, we are bullish that the union budget will focus more on Smart cities and Digital India initiative in order to shape the IT infrastructure and increase adoption of technology to encourage digitization."

Rohit Jain, Head of India, Willis Towers Watson: Keep focus on agriculture, manufacturing

“In the upcoming budget, I would urge the Government to focus on agriculture, manufacturing, infrastructure, renewable energy and the startup ecosystem. On agriculture, steps need to be taken to drive structural improvements and efficiency. I also believe that there is merit in reconsidering farm loan waiver and input subsidy in favour of a mechanism like Direct Benefit Transfer (DBT).

Infrastructure will continue to be a focus in 2019 and beyond, and it will be prudent to progressively develop the public private partnership (PPP) model for the future of the sector. The budget should also focus on creating a more robust startup ecosystem with less onerous regulatory environment. For example, abolishing angel tax on startups. Another agenda for the FM to consider is the continuity of policies in the renewable energy sector such as steps towards prioritising financial sustainability of renewable projects. The electric vehicle industry also has shown a lot of promise in 2018 and any concessions in GST could boost consumption, thus insulating the economy from ‘crude shocks’. 

The Kerala floods have served as another rude awakening for further attention and investment in the natural catastrophe and disaster management framework by focusing on the key areas of risk assessment, mitigation and coverage.”

Madhu Sudhan Bhageria, Chairman and MD, Filatex India: Increase customs duty on Polyester

"On Textile sector: In the budget, we expect that customs duty on Polyester filament yarn (PFY) and Polyester Staple Fibre (PSF) to be increased from 5 to 10%.  When it comes to GST, we have 18% on our raw material and 12% on finished product. Corporate tax is very high, this comes to almost 35% after all surcharges and we expect it to be brought down to 25% as stated by Finance Minister in 2014."

"On Individual Tax: Individual IT slabs should be rationalised to 10 percent for income group of 4 lakh to 8 lakh, 20 percent for income above 8 lakh to 15 lakh and 30 percent for income levels above 15 lakh. Also, if the government thinks that income up to 8 lakh qualifies for economically backward. Then, it is likely that income up to Rs 8 lakh will be exempted from tax."

Sumit Berry, Managing Director, BDI Group: Income tax deductions to encourage homebuyers

"2019 will be the year of growth and development for Indian real estate. We expect the budget 2019 will be in favor of the sector. Additional income tax deduction will encourage more homebuyers to invest in the affordable housing segment. Bringing stamp duty within the purview of GST and other tax benefits to the affordable centric realty market will turn government’s affordable housing dream into reality."

Roshan Baid, Managing Director, Alcis Sports: Incentivise the garments exports

"Incentivise the garments exports sector by giving indirect benefits to compensate loss of duty drawback reductions after GST. GST refunds needs to be smoothened. Lot of paperwork is required at the moment. Inverted duty structure needs to be relooked in the textile industry. Polyester yarn has a GST of 12.5%  whereas fabric and garments are into 5% slab."

Co-working startup GoWork's Chief Evangelist and CEO Sudeep Singh: Angel Tax a challenge

"One major challenge that still remains is the angel tax. Many start-ups face the heat of clearing this outstanding amount from the funds, which keeps them from trying their hands at innovation at a consistent pace. Also, in order to enrich the Indian market, the rate of corporate tax, which is currently at 33 percent, should be reduced significantly. Lower rates of corporate taxes are one of the major factors that attract businesses to overseas markets. (For example, in Singapore, it is charged at 17percent, making it a profitable ecosystem for businesses to sustain).  
 
Another consideration should be easing the FDI norms for raising funds from private equity players who can strengthen the inflow for our commercial real estate verticals like office spaces, malls, hospitals and hotels. This is quintessential for the consistent growth of India’s realty and construction sector."

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Budget Expectation fom Joy Sharma and Sudeep Gupta, Founding Partners of Impactify: Stricter enforcement of the CSR required

"The upcoming budget may introduce measures for stricter enforcement of the CSR laws to ensure that corporates carry out their responsibilities as prescribed in the Companies Act, 2013. While this is important, the government also needs to understand that corporates face genuine problems in complying with the CSR mandate. One of these problems is the inability to find credible NGOs to partner with. Impactify is helping solve this problem through its matching platform. The platform provides a public database for corporates and NGOs to identify partners and projects that best fit their requirements.

Second, any pooling of CSR funds should be discouraged. Governments have previously tried to support corporates by pooling funds into a kitty to be administered centrally. This is counter to the essence of the CSR Mandate, which encourages corporate and social sectors to interact directly and learn from each other. In our opinion, corporates should continue to be responsible for spending their own CSR funds.

Third, there should be a strong focus on data-driven need assessment. Companies usually undertake projects in thematic areas they are passionate about. Common themes such as education, sanitation, and Skill Development, may, therefore, get more attention than others such as reducing inequality, and environmental sustainability. The government can play a major role by providing grassroot data more frequently, enabling NGOs and corporates to design outcome-driven projects that address real need gaps.

Finally, a strong focus is also required for monitoring implementation, over and above the current practice of tracking fund utilization."

Siraj Dhanani, Co-Founder and CEO, InnAccel Technologies: Budget should continue focus on healthcare

"In this budget the Govt should continue the focus on healthcare and invest substantially in upgrading the primary and secondary health tiers in the country. This upgrade can leverage the indigenous medical technologies developed specifically for Indian healthcare needs, and thereby support the Make in India initiative. I hope the budget also provides a comprehensive resolution to the angel tax issue being faced by startups, especially ones based on generating intellectual property like medical technology startups. Raising capital for startups working on affordable healthcare is already difficult- it is made more so by this angel tax, which is effectively a tax on Indian innovation."