Budget 2019 : LTCG Tax, GST, Home Loans, farmer income scheme needs to be focus

Budget 2018 was the last full-fledged budget presented by the government led by Narendra Modi. Long Term Capital Gains (LTCG) tax on profit earned from the sale of equity shares listed on a recognized stock exchange in India.

The LTCG tax was re-introduced after a time gap of 14 years. The provisions were closely followed since they impacted the majority of taxpayers of the country. The tax was levied at the rate of 10 per cent (plus applicable surcharge and cess) while providing relief from gains accrued up to January 31, 2018, i.e., a mechanism was derived wherein the stock price as on 31 January 2018 was considered as the deemed cost, provided it is beneficial to the taxpayer.

Following are some of the illustrative points:

1. Treatment of compulsorily convertible instruments – The current provisions do not provide clarity on the cost to be adopted for the purpose of computation of capital gains in case of instruments that are compulsorily converted into equity shares after 1 April 2018. 
2. Shares acquired by way of merger of two companies – As per the prevalent provisions, the benefit of grandfathering is applicable only to shares held on or before 31st January 2018.

The Goods and Services Tax (GST) was the most ambitious direct tax plan structure implemented by the Narendra Modi-led government. The GST structure came into effect in July 2017 and has a significant impact on the budget allocation by the government. The finance ministry will present the interim Budget 2019 in the Lok Sabha on February 1.

1. The centre used to collect only service taxes. But, under the uniform direct tax structure, both state and the centre collect identical taxes on services and goods.
2. With the 18 per cent GST levied across the nation, the state and the centre get 9 per cent tax each called the Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) respectively.
3. All the goods and services have been placed under a six-slab structure, according to which: 
4. No tax is levied on 50 per cent of the consumer price basket, including foodgrains.
5. 5 per cent tax is collected on mass consumption items like spices and mustard oil.

Housing for all by 2022 has been one of the important drivers of the government's long-term developmental plans. To continue the momentum of infrastructure creation, the Budget is expected to focus on addressing the needs of the common man, especially in terms of extending tax incentives for housing.

Expansion of eligible income tax deductions can incentivise homebuyers. In the recent past, tax laws were amended so as to restrict the loss from house property that can be set off with other income to Rs 2 lakh.  

With housing loan interest rates well over 8.20 per cent, the existing cap on the deduction allowed for the interest paid on loan taken for a self-occupied property is passé and insufficient to absorb the interest cost incurred by the taxpayer. 

The government may announce a farmer income scheme in interim Budget

In a bid to address farmers' woes before the Lok Sabha election, the government may announce a farmer income scheme in the interim Budget on February 1, 2019, said sources familiar with the matter.

The government is yet to take a final decision on the scheme, source adding that agriculture ministry, finance ministry and NITI Aayog is discussing the possibilities and implications of the scheme.

Budget2019 | Interim Budget | TaxPayers | Home Loans | Government | GST | LTCG Tax

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