Union Budget 2017: What to expect?

The age old tradition of announcing the budget on the last day of February has been advanced by a month to February 1. This move will speed up the financial planning process for the upcoming year and the government will also get more time to implement all the financial decisions by April 1. Moreover, another change that has been made is scrapping the practice of announcing a separate Rail Budget altogether. The Cabinet has decided to merge the two budgets and announce it on the same day.

The Indian economy is reeling from the after effects of demonetisation and hence this budget holds a lot of importance. Let us have a look at the economic outlook for 2017-18.

Economy Outlook

The GDP is expected to grow at 7.5% in 2017-18E and will be supported by growth in agriculture and recovery of private investment in the medium term.

The CPI inflation is estimated at 4.5% in 2017-18E, given a normal monsoon and increased food supply.

The fiscal deficit is expected to come down to 3.4% in FY17-18E on account of the increase in excise duty on oil and petroleum products which will help in narrowing down the deficit gap.

The government is expected to bring in a lot of new reforms along with stable commodity prices. The subsidy is expected to be restricted at Rs. 230k crore.

Here are 4 major announcement that a common man can expect from the Union Budget of 2017:

Revision of Tax Slab Rates

Demonetisation had a lasting impact on the common man. In order to provide some relief to the aam aadmi, the government can increase the current tax exemption limit from Rs. 2.5 lakh to Rs. 4 lakh. Moreover, the government can also consider revising the slab rates.

Allow higher deduction for interest paid on housing loan

The real estate sector has faced the brunt of demonetisation in a big way. Sales have declined substantially over the last couple of months. The real estate sector contributes to the overall growth of the country substantially. So, it is very important that this sector revives sooner. One such way to boost this sector is to allow higher deduction on home loan EMIs. At present, the tax deduction available for interest paid on home loan is Rs. 2 lakh. The government can consider revising this limit from Rs. 2 lakh to Rs. 3 lakh, which will help the real estate sector to revive, which in turn will also provide a boost to the banking sector.

Increase deduction under Section 80C

At present, the total deduction allowed under this section is Rs. 1.5 lakh. It is expected that this limit will be increased to Rs. 2 lakh in this Union Budget. This will encourage savings among households.

Reduce Corporate Tax Rate

The Finance Minister is likely to announce a reduction in the corporate tax rate from 30% to 25%. Reduction in corporate tax will attract more investment in the country, thereby leading to an overall economic growth.