Income tax cut will boost economy; rules need to be relaxed to win investors' trust, says this expert

What are the expectations from the Budget 2020, when the markets are doing well amid some signs of a slowdown? How will this divergence impact the investors? Financial advisor Deena Mehta unravels the mystery shrouding this question!

Mehta said that people are expecting income tax relief from the government in the Budget 2020. Even if the government brings some changes in the Longterm Capital Gains Tax (LTCG), that would have a positive impact on an investor. Mehta, however, said that this measure would definitely give some relief, but it is not very significant as far as the economy is concerned.

#Budget2020ZEE | इनकम टैक्स दरों में कटौती होती है तो ये इकॉनोमी के लिए छोटी दवा की तरह होगी, निवेशकों का भरोसा बरकरार रखने के लिए निवेश के नियमों में और ढील की जरूरत: दीना मेहता, MD, @ACM_Investmentz

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The government has been trying hard to revive the economy and is listening to different stakeholders. It has been giving a lot of impetus to the people. Even the negativity present in the last few budgets have been removed. This has created a feel-good factor for the economy.

The longterm benefits could be achieved only by taking measures that could drive us at a growth of 7-8%, Mehta said. She added that the government will have to relax rules for investments so that it benefits the investors. The government will have to make structural changes and ensure that the compliance measures are not changed frequently.

She also said that paperwork needs to be lessened for small investors. She also said that there was an atmosphere of distress between the market regulator Securities and Exchange Board of India (SEBI) and investors which is not auguring well for the markets and investments.

She said, "There is a lack of trust in the current atmosphere which needs to be brought back. We should follow the example of the government's Jan Dhan account which had made it very easy to open accounts. That practice should be replicated for opening the Demat account." 

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She also said that there is a lot of distress for all the requirements like the KYC requirements, CKYC requirements. This has to be brought down to enhance investor sentiments.