According to the analysis, Budget 2018 could have several positive changes on the direct tax side, as any major change is unlikely in indirect taxes.
However, the key consideration while reducing direct taxes, either for individuals or corporates, would be to ensure that the changes don’t reduce government revenue too much, as there is already the possibility of overshooting the fiscal deficit target.
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The other thing that could change is the medical reimbursement limit of Rs 15,000, which is an archaic limit. So that could go up.
Income tax slabs could also be tweaked, as according to the Chief Economic Advisor changing the income tax slabs to reduce the tax burden on the salaried and middle class was one of the government’s key focus areas.
The government may also introduce a long term capital gains tax on equity shares, or may remove the dividend distribution tax.
There could be some changes on the corporate tax front as well, according to analysts, who added that the government will be careful with these to minimise the impact on the exchequer.
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