It’s going to be an unaccustomed Budget 2018!

[Pragya Singh]

Just few days are left until the Finance Minister; Mr. Arun Jaitley will pose with the briefcase to reveal the plans of the country for the next one year in the form of his budget speech. The Budget is one of the most important activities of the government, which will be closely watched and analysed by all stakeholders of the economy.

Last year, the Budget 2017 was unique for two reasons:

• The first budget when the Railway Budget was merged with the General Budget giving an end to the 92 year old practice of presenting a Railway budget.

• It was presented on 1^st February departing from the colonial era tradition of presenting the union budget on the last working day of February. 

This year too, the budget is “one-off” as it is the first Budget post implementation of the tax biggest reforms since independence: GST.  The GST Council is the key decision making authority and hence Mr. Jaitley will not be making much tweaking to the indirect taxes or take concrete decisions on GST and so it appears that GST will steal the roars of Mr. Jaitley’s Budget speech.  Let’s see how!

The budget speech and the document has two parts – Part A and B. Part A is the macroeconomic part of the budget where various schemes are announced, and allocations are made to several sectors. It covers broad outlays of each sector, introduces new schemes and is indicative of the government’s policy priorities. Part B contains taxation proposals such as income tax revisions and indirect taxes.

Now GST has swallowed most of the indirect taxes and cesses and to meet the goal of GST, the Centre and the States have given up their exclusive powers to levy tax and to make decisions the nod of the GST Council has become essential. Thus the major changes in the indirect tax shall be restricted to changes in the basic custom duties which are outside the purview of GST. Thus the unintended consequence of it shall be that direct tax will be on the spot light in the Part B and the shrinkage of Budget Speech.

Further adding to the challenge is that the GST collections have been consistently showing a downward trend.  In Budget 2017, service tax alone accounted for more than 14% of the government's revenue and so it will be big task in the fiscal consolidation agenda to ensure the collection of GST is not on the lower side of the pre GST collection of indirect taxes.

However to bang on the Budget Speech 2018 we may expect that Mr. Jaitley may bring out some overwhelming amendments in Direct Taxes and give us out some hits about the upcoming amendments/intentions of the GST Council, in “not so concrete” way!