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Home / Budget / Budget Expectations /  The big hopes from the Union budget

Finance Minister Nirmala Sitharaman will present the Union budget today. She may choose to prioritize growth over fiscal consolidation, according to a survey of economists. A bigger rural outlay is expected, too. Mint summarizes the key expectations:

What do individual tax payers expect?

A hike in standard deduction is the most common expectation. Standard deduction is a relief of 50,000 per annum given to salaried individuals. It replaced earlier deductions for conveyance allowance and medical reimbursement and requires no bills or supporting documents. Salaried employees have seen their expenses go up in the covid years as work shifted to home, with larger bills for electricity, broadband and equipment like laptops. Other than standard deduction, a deduction on medical expenses incurred due to covid-19 also features high in the list of expected reliefs.

What do the capital markets want?

The markets would like budget proposals to be fiscally prudent and growth-supportive. Markets will watch for announcements around disinvestment, tax compliance, ease of doing business, support for micro, small and medium enterprises (MSMEs), and the rural economy. There are concerns the budget may take a populist turn. In the last 10 years, on budget day, the Nifty has moved an average of 2.4%, with a rise of 4.9% in 2021, according to Edelweiss Alternative Research. Foreign institutional investors have been net buyers and domestic institutional investors marginal net sellers on budget day.

What is in the wish list of farmers?

To boost rural earnings and demand, farmers and those living in rural areas expect increased allocation under the rural jobs scheme, and bigger direct cash transfers. In line with past budgets, farmers also expect higher credit flows and larger funding for infrastructure development at the farm-gate and the post-harvest value chain.

What can we expect on customs duties?

The Make-in-India objective implies there will be import substitution measures. In mobile phones, the government wants to move from assembly operations to component manufacturing. Currently, high value components are mostly imported. A rejig of customs duties on sub-parts of consumer electronics and mobile phones is on the industry wish list. The government believes that with modest policy support, components such as battery packs, chargers, and USB cables, among others can be made in India.

What about tax compliance?

Companies expect steps around the reduction of tax litigation and amendments to a dispute resolution scheme announced last year. The Centre, on the other hand, appears keen on measures that boost tax compliance by greater oversight of transactions. The broad idea is to make tax administration simpler and get the departments more access to information related to transactions. The emphasis on improving tax compliance follows a good show by both the direct and indirect tax administrations.

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