How Budget 2018 will be different from last year
The Union Finance Minister Arun Jaitley is all set to present budget on February 1, but this year budget is significant for several reasons.
First, this is the first post-GST era Budget, which makes it different; second, this is the last full Budget of the present government ahead of the impeding 2019 General Elections. While the 2017 Budget was hailed as a reformist Budget, the 2018 Budget will most likely be populist.
Post GST budget
Union Budget 2018 is going to be the first Post-GST era budget that Finance Minister Arun Jaitley is scheduled to share on 1st February 2018. The most evident change is expected to take place in the way the finance minister , in his budget speech, details about the tax structure.
Currently, The Union Budget has two parts - Part A contains allocations to different sectors and schemes, while Part B contains tax proposals, both direct and indirect. Since the implementation of the GST, more than 12 different taxes including VAT, Excise Duty got subsumed, hence, leaving no room for the Budget manoeuvre under different indirect tax heads. Any decision on indirect tax on goods and services is now taken by the GST Council.
The government is also expected to introduce Direct Taxes Code in Union Budget 2018, thereby streamlining processes for Income Tax collection and controlling leakages.
This means that there would be no proposals on excise duties, value added tax and at least 10 other different indirect taxes, given that these taxes have now been subsumed by the GST.
Thus, finance minister Arun Jaitley will likely not be able to tweak any of these, since they simply cease to exist anymore.
Last full-fledged budget of Modi government
This is going to be the incumbent government's last budget before the country goes for General Elections in 2019; it is highly speculated to be populist in nature as compared to Budget 2017. In the last budget, the Finance Minister gave some relief to the mid-income group by reducing the tax slab rate for ₹2.5 Lakh - ₹5 Lakh from 10% to 5%, however, this year, it is being widely speculated that the government might first of all increase the exemption limit and secondly, it might create new tax slabs to boost purchasing power and hence economic growth in the country.
Limited sectoral impact
Given that there would be no excise, VAT etc., the Budget speech could be a shortened one. Sectoral impact could be very limited and what would be watched is the fiscal deficit numbers. Unlike the previous Budgets, where the individual stocks were volatile because of excise and other levies, this may not be the case now.