One of the major expectations and anticipated amendmentS from this Budget is the tax reform which would increase disposable income in the hands of an individual. There are expectations that there would be a revision in individual tax slabs. Also, the interest deduction for income from house property may also be amended. Any reduction in the personal tax rate will be a boost for the retail sector as surplus cash in hands of the individuals increase their purchasing power. With the deadlock on GST being cleared and Hon’ble Finance Minister announcing that GST would be implemented from July 1, 2017, do not expect any major changes in the indirect taxes. Focus would be on the tax rates under which each and every category would fall, which I don’t think would be released in this Budget. Currently, retail business is done both through cash as well as card payments. Wallets have also started to occupy a share of business. But, still, 50 percent of the business is done through cash. Post demonetisation, the government is pushing for a cashless economy. Retailers are spending anywhere between 1 percent and 2.5 percent as commission on the value of transactions done through digital means. Retailers hope that this Budget would pave way for reduction in this cost as incremental digital payments will have an impact on the profitability of the retailers. With respect to Corporate Taxation, it is widely anticipated that there would be reduction in the overall tax structure. Any change in the corporate tax structure will augur well for corporate. Also, the current Minimum Alternate Tax (MAT) rates are quite high at 18.5 percent. There have been consistent requests from Corporate for a review of the same. We expect that this might be addressed in this year’s budget and the rates would be lowered. With the back of demonetization, expect the Budget to be tax-friendly and hope it helps the Retail Industry in more ways than one.
[Source:-Money Controll]
