Budget 2019: Key suggestions given by banking experts to Nirmala Sitharaman

As India's first full-time women Finance Minister Nirmala Sitharaman is all set to present Union Budget 2019 on July 5, expectations and suggestions have started coming in from different sectors in order to push the country towards $5 trillion economy.

Sitharaman has started the pre-Budget consultation by meeting the members of PMEAC. (Image: Twitter/ FinMin)

Budget 2019: As India's first full-time women Finance Minister Nirmala Sitharaman is all set to present Union Budget 2019 on July 5, expectations and suggestions have started coming in from different sectors in order to push the country towards $5 trillion economy. The Ministry of Finance has started its pre-Budget consultations with Sitharaman meeting with industry experts between June 11 to 23. The newly elected Modi government has stated that it will treat the banking space as a priority sector and will also take all the necessary steps to uplift the economy which slipped to 5-year low growth of 6.8 per cent in 2018-19. The banking sector has an important role in the reinvigorating sagging economy and news agency PTI stated that Finance Minister's Budget speech will contain roadmap for reform in the sector. As Sitharaman has already kickstarted the pre-Budget consultation by meeting the members of the Prime Minister's Economic Advisory Council (PMEAC) and seek their views on the state of the economy and way forward, here's all what experts from banking industry recommended the Finance Ministry ahead of Budget 2019: Rise in exemption limit The Finance Minister held intensive consultations with trade and industry bodies, besides other stakeholders. Industry chambers like CII and Ficci have already made detailed presentations on their suggestions for the Budget. An tax expert from PwC recommended that the government may raise the basic exemption limit by Rs 50,000 (from Rs 2.5 lakh to Rs 3 lakh) extending the benefit to all or alternatively, 5 per cent slab may be raised from Rs 5 lakh to Rs 7.5 lakh thus reducing the tax burden from 20 per cent to 5 per cent for this category. He also suggested that to give a push to the housing sector and also incentivise the taxpayers to buy their own house, the deduction for housing loan interest may be raised to Rs 3 lakh from the current Rs 2 lakh and the cap of set-off of loss against other income may be removed. Bringing down corporate tax Industry body CII has made a case for bringing down the corporate tax rate to 18 per cent along with elimination of all exemptions saying it will not result in any loss to the exchequer. President of the industry body said that CII is supporting a reduction in taxes along with reduction in exemptions and a very simplified tax code. India Inc Tuesday made a case for reduction in corporate tax rate, abolition of minimum alternate tax, halving dividend distribution tax to 10 per cent and increase in outlay for infrastructure sector in the upcoming Budget with a view to arrest economic slowdown. Even Ficci sought reduction corporate tax rate to 25 per cent. Indian businesses are bearing high tax cost as corporate tax rate along with dividend distribution tax pushes India's overall tax rate for companies beyond 50 per cent, which is quite high. Investment reforms: Among other things, Assocham President BK Goenka recommended that 100 per cent depreciation should be permitted in the first year of investment for all new investments. Suggesting upward revision of the income tax slabs for individuals, Ficci demanded that the highest tax rate of 30 per cent should be applicable only for income above Rs 20 lakh. Review interest rate and NPAs The financial and capital market representatives also suggested review of interest rates on government's small savings schemes, review of banking NPAs provisions through setting-up a committee, setting-up of Debt Exchange Traded Fund (ETF), domestic capability building in audit and credit rating, rationalisation of various taxes like Security Transaction Tax (STT) in capital market. In the pre-budget meeting, financial and capital markets players made suggestions concerning infusion of capital in niche/regional banks, enhanced role of Financial Sector Development Council (FSDC) in the NBFC sector and creation of dedicated liquidity window for NBFCs. With a view to give boost to Indian economy, industry representatives submitted several suggestions with regard to land reforms, special economic zones, industrial policy, investment in research and development, simplification of tax regimes, tapping potential in tourism sector, Foreign Direct Investment (FDI), Goods and Services Tax (GST), Capital Gains Tax, Corporate Tax, among others.