Simplified Laws Guide to Taxation and Legal Concern A budget is a statement showing the projected income and estimated expenditure for a specified period. The one our Finance Minister is presenting on 1st February is the Budget of the Union Government for the year starting on 1st April 2021 to 31st March 2022.
What can we expect from this budget? I have picked up 6 points.
What won’t be there in the Budget? – 3 Points
Indirect Taxes / GST – A few years back, after the budget, we used to get a long list of items like TV, Refrigerator, AC (prices going up), Chappals, Pulses, Glucose (prices coming down), high tax on cigarettes and gutka, etc. Remember this? At least 2 -3 pages were reserved for this list in all the newspapers. Gone are those good olden days! Such information is no more a part of the Budget. GST rates/slabs are decided by GST Council and announced during the year, independent of the Budget document
Railway Budget – A day before the Finance Budget, we used to get the Railway budget. The major announcements were about fare hikes, new train services connecting Town A to Town B. People in those states, towns, and the villages where the trains pass would dream about the growth in their area, increase in real estate prices, train sound, etc. (A study done a couple of years back found that over three-fourth of such new trains remained on paper, as we say, only ‘RAIL’ by Rail Minister). Railway Budget is no more independent activity. It is merged with the main course! In the last two years, no train announcements were done as part of the budget. They are announced separately as a policy decision during the year.
Petrol/Diesel/Oil products – A few years back, changes in fuel prices were announced in the annual budget. But today, the fuel prices follow a dynamic pricing system that reflects fluctuations in the global oil market, under which prices are revised every morning at 6 am. Thus, fuel prices are not part of the Budget document.
What will be there in the Budget? – 3 points
Three things will be there in the Budget, namely
- Macro-Economic Data – This means
- How much expenditure (both running and capital) is going to be done by the Union Government between April 2021 to March 2022
- How to source funds to meet such expenses. The main source of funds are GST, Income Tax, Corporate Tax, Customs Duty and Excise Duty, Loan and other miscellaneous receipts.
The most important aspect to look forward to in the Budget is the fund allocation towards the various sectors like Agriculture, Infrastructure, healthcare, etc.
B. Income Tax
If you read the media reports, the Industry bodies, associations, Individuals, etc., have given their “Wish List’ to Finance Minister. The common wish is “reduce the taxes!”
Is reducing the taxes really possible?
What do you think about your family budget? Do you think that it will come down in the coming year? If you think that it will go up, similar logic holds good for the country as well. Expenses will only go up! To meet the increased expenses, we need to increase the income. So, the tax collection has to go up! Loans can’t go up as we have already taken up to the brim!
Maybe, some tweaking is possible. For example, if there are 2 bags of 50 kg of sand to be transported manually, if one of the laborers is weak, who can’t carry 50 kg, you can transfer 10 kg to another person who has strong arms! Likewise, you may find a marginal relief in taxes for the lower-income groups, loading the burden to the rich and mighty.
Or it may so happen that, if 5 baskets having 30 apples are kept, one can re-distribute among them, say one will have 20, another one will have 40 so on and so forth. This means tax re-distribution may happen. LTCG rate may go up, exemption for housing loan may increase; or wealth tax may be introduced and tax on dividends may be repealed.
But in the end, the citizens are going to pay higher taxes when compared to the previous year. This is guaranteed. Do you think, this kind of re-distribution is still interesting to anyone?
C. Policy Matters
In the past major policy decisions were announced as part of the Budget document. Today, policies are taken regularly. I don’t think there will be a slew of policy announcements in the budget (except fund allocation to the Schemes announced already).
You may ask “What are you trying to say?”
All I am saying is that, in today’s context, Budget has become an annual ritual without much excitement. New policies, new rates, new schemes are published regularly, nothing is left for Mr. Budget!
Having said that, this Government, as done in the past, can throw surprises, many things are invisible and unimaginable by common people like me.
Hello Madam FM, only pleasant surprises, please!
