Finance minister Arun Jaitley will present Union Budget 2018 on 1 February amid reports of slowest economic growth in three years. Photo: HTMumbai: Finance minister Arun Jaitley will unveil Union Budget 2018 for fiscal year 2018-19 on Thursday, with investors expecting increased investment in key areas such as agriculture, and a slew of incentives for businesses. Handicapped by the chaotic rollout of goods and service tax (GST) last year and the demonetisation move in late 2016, the Indian economy is expected to post GDP growth of 6.75% in 2017-18—slowest in three years. The government is widely expected to increase spending to ensure growth recaptures momentum, but most investors expect it to be prudent as loosening fiscal deficit targets by too much would likely spark a sell-off in the bond market. Listed below are the budget expectations across markets and corporate sectors:Taxation■ Reduce corporate tax rate to 25% from 30%■ Cut Minimum Alternative Tax to 15% from 18.5%■ Enhance tax deductions, exemptions for individuals■ May tax long-term capital gains in stock market investmentsAgriculture■ Establish fund to guarantee credit to encourage investment in agriculture sector■ Allocate more funds for crop insurance schemes■ Increase spending for dams and canals, micro irrigation systems■ Provide subsidies for building cold storage to avoid wastage of perishable crops■ Reduce fertilizer subsidiesBanks■ Allow full tax deduction for provisioning of non-performing assets (NPAs) at banks■ Raise the threshold for tax deduction on interest paid on bank deposits from current Rs10,000■ Reduce the tenure of tax-exempted retail term deposits to minimum of 3 years from current 5■ Allow tax relief for proceedings under insolvency codeInfrastructure■ Increase investment by 10-15% in roads from Budget 2017■ Provide support for key road projects, including Bharatmala project, which will connect western and eastern India■ Increase railways investments by 10% from 2017/18 budgetTechnology and IT sector■ Provide greater incentives for digital transactions■ Support digital payments infrastructure■ Rationalise tariff structure, excise duties for mobile phones, tablet computers■ Lower GST rates for telecom services to 12% from 18%Auto sector■ Announce policy on scrapping commercial vehicles that do not comply with emission norms if operational for over 15 years■ Lower GST rates on electric vehicles, currently at 12%Real estate sector■ Set single-window clearance for all real estate projects, especially housing to avoid execution and project delays■ Give infrastructure status to real estate to help bring down finance, project costs, make homes more affordable■ Reduce GST rate for under-construction real estate projects from current 12%■ Spend more on affordable housing■ Reduce GST rate for home purchases to 12%, stamp duty could also be cutEnergy sector■ Reduce “cess” duty to 8-10% from 20% for oil and gas exploration and production■ Set more beneficial GST rates for natural gas■ Reduce or exempt city gas distribution companies from excise duty■ Exempt LNG imports from paying basic customs duty■ Provide subsidy aid to downstream companies selling LPG, kerosene below market pricesMetals and mining sector■ Decrease in basic customs duty on coking coal across grades■ Decrease in export duty on iron ore above certain grade levels■ Hike basic customs duty on aluminium scrap to protect domestic industry■ Accelerate minerals explorationGold■ Cut import tax on gold to 2-4% from 10% to prevent smuggling.

Source: Mint January 30, 2018 12:33 UTC