Budget 2018: A case study on GST collections

Budget 2018 50% professionals expect Budget to a steep cut in corp tax

The government's scope to increase revenues is limited because the power to levy indirect taxes, which make up about half of total tax collections, has been transferred to the Goods and Services Tax Council that is administering India's biggest tax reform in 70 years. With almost half of the labour force being dependent on agriculture and allied sectors, it is essential for the government to focus on irrigation, seeds and crop insurance to nurse the farm sector back to health. Prime Minister Narendra Modi also pointed out the optimism around India in the worldwide market. It is to be noted that the GST Council in the November meeting had chose to keep only sin goods and white goods under the 28 per cent tax bracket and moved 178 items from the highest tax bracket to 18 per cent.

The government is mandated to target a fiscal deficit of 3 per cent of GDP for FY2018-19.

"GST has brought about an entire change in the taxability structure of indirect taxes in the entire country".

Looking back, the Rs 65,000 crore farm loan waiver that the UPA government announced before the 2009 general elections wreaked havoc on the country's fiscal arithmetic. "Therefore, we seek an increased budget allocation of at least 1.5 percent more, to the tune of Rs 50,000 crore from last Rs 48,853 than the last year's allocation, which we, as a part of the social development sector, believe is a very humble expectation", Bansal added. For example, instead of monthly returns, service sector companies should be allowed to file tax returns on a half-yearly basis.

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The Morgan Stanley economists said it was likely the government would focus on boosting employment in labor-intensive and micro-, small- and medium-enterprises. A paper by Carnegie Endowment for International Peace observed that the three most important factors determining the choice of both rural and urban voter in 2014 elections were corruption, economic growth and inflation. On the occasion, the Finance Minister, Shri Jaitley also released two IT tools of the Customs Department i.e. ICETRAK, and ICETAB, developed by the CBEC to provide an easy way for trade to track their consignments and for providing other important information and updates. Further strengthening e-NAM, the electronic national agriculture market, to hasten integration of 585 regulated wholesale mandis so that farmers get the best price for their produce, without depending on middlemen, will remain a priority.

"We also do not expect much relief on the tax front, except some reduction in the corporate tax rate for medium-sized companies".

After a narrow victory in the Gujarat elections, which was partially attributed to a loss in the rural vote share, the government will want to raise it's rural spending amongst other things, but it has a fiscal deficit target to consider as well.

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