Union Budget 2019

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We are all pepped up for the Financial Budget to be announced on 1st Feb. The budget this year is an interim budget considering it is an election year. Interim Finance Minister Piyush Goyal is likely to present an interim Budget, the last for the current government before the 2019 Lok Sabha elections These are my takes for the budget:

  1. The low inflation environment, growing GDP with a rate above 7%, Higher FDI’s and on the top of it all a contained Fiscal deficit. This certainly gives extra space for the budget to be populist.

  2. Even though this is an interim Budget, the NDA government may offer big tax cuts to woo the middle class before the general elections

  3. Many people want the basic tax exemption for general taxpayers to be raised to Rs 3 lakh. This would also require hiking the basic exemption for senior citizens to at least Rs 3.5 lakh. In a way, the basic tax exemption is already Rs 3 lakh for roughly 2.7 crore taxpayers with incomes up to Rs 3.5 lakh by way of the Rs 2,500 rebate under Sec 87A. Of the 5.7 crore people who file their tax return, almost 1.5 crore have an income of over Rs 3.5 lakh

  4. Construction, Infrastructure, real estate & housing at large are likely the sector that is going to see special attention in the 2019’s budget since that been the trend for last few years in present government.

  5. Railway spending is likely to rise further. Roads, infrastructure and real estate are likely to see some push

  6. Fertilizer, as an industry, may see some good news since a lot of focus will be seen on improving the present circumstances in the Agricultural sector.

  7. In Pharmaceuticals space, the government could increase tax exemption for preventive health check-ups, which will benefit the diagnostic companies/pathological laboratories. Healthcare will be a key focus area for the government.

  8. However, for retail, there may not be anything to cheer but stock-specific opportunities will keep D-Street busy.

Initiating a thread to discuss the expectations on the budget and discussing the budget and its effects once announced.

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Budget 2019 presented in July has flared-up taxation issues for FPI.

  • The problem is for FPI who have taken trust route to India. Trust are taxed at the rates individuals are taxed.

  • Due to increase in surcharge LTCG has increased from 12% to 14% and STCG increased from 18% to 21.3%.

  • Now, according to Nandita Parker half of the investment done by FPI in India is via trust route. The reason for setting-up trust is for regulatory reason in the country of origin.

I think we ought to understand this better. How much can this issue effect the foreign inflow into Indian markets?