Budget 2020: Why Is it Necessary to Reduce Income Tax?
What should the Modi government do in the upcoming Budget to improve the economy? Renowned investor Basant Maheshwari tells us what to expect from the Union Budget 2020.
“Usually, before every budget, commentators always say 'this is make or break'. But It's not as much of a cliche this time. For any political party to secure an election, it has to ensure that the economy stays on track,” Maheshwari said.
What Should Centre Do?
“Now is not the time to think about the fiscal deficit, whether it should be 3.3 or 3.4 or what the IMF or even the World Bank is saying. America, which is economically stronger, never thinks of fiscal deficit and that is because of the fact that dollar is an international currency,” he added.
“For example, if someone falls sick at home, you wouldn't think whether to borrow money or use your own money. So, the government should not mix income and expenditure together and if we don't give a kickstart to the economy now, then it would be very difficult.” Maheshwari said.
Why Should There Be Less Personal Income Tax?
Slashing the personal income tax is very important, he said. “Talking about a layman who works hard for 24 hours, travels for four hours to reach work... the person thinks that he/she pays more tax than the company he works for, which has to pay 15-25% of tax and there are expectations for this to be addressed in the budget.”
Secondly, he added, the government has not gained anything from LTCG for the last two years, but there has been wealth destruction. “When my portfolio gets down valued from 20 lakh to 15 lakhs then what happens is that if I visit a mall, I eat burgers and fries and don't spend much as I feel that I have become poor,” he said.
What Will Happen in Budget 2020?
If the share market investments get better, Maheshwari added, people will automatically start buying televisions, cars, etc.
"The dividend distribution tax must be monitored by the government as, nowadays, companies do not provide dividends to their employees. Instead, they say the money was used to pay this or that tax which leads to money getting blocked in the company. Thus, dividend distribution tax must be monitored,” he said.