Union Budget 2016 : What to Expect
With the Union Budget 2016 hardly days away, the nation’s eyes are on the Finance Minister Arun Jaitley’s suitcase which holds in itself the blueprint of the plan which will not only affect big Multi National firms and small startup companies but each and everyone of us.
From IT firms, automobile manufacturers to mobile phone makers, everyone has their wish lists set that will help them grow in this vibrant and growing market that India is right now, but what about the average tech-loving citizen that you and me represent? Let’s take a look at what the budget holds for tech addicts like you and me.
Allocation of resources for improving existing telecom and Broadband Infrastructure
We might have access to fancy 4G phones, and expensive computers in our country, but what good is it if there isn’t a proper infrastructure at the service providers end to run these devices the way they should? But the government wants to change all that with the upcoming Union Budget 2016.
Call drops, and slow broadband connections could soon become a thing of the past with the government looking to substantially invest in improving the infrastructure in the coming year. The Telecom ministry has a proposal to allocate Rs.7,350 crore to Universal Obligation Fund which focuses on increasing infrastructure across the country.
Push for Startups and Entrepreneurs
With the push by the government towards the ‘Start Up India, Stand Up India’ initiative, we may see more tax breaks, concessions and budget allocation towards developing the infrastructure and skills to encourage entrepreneurship in the country.
According to analysts, the Government is likely to raise the Service Tax exemption bar for Small & Medium Businesses. The service tax limit is expected to be raised to Rs 25 lakh from the current Rs 10 lakh. The moves will mark a significant advance in ease of doing business and pave the way for the growth of young entrepreneurs and startups across the nation.
Apart from this, Startups could also enjoy benefits in the form of exemption from paying income tax for the first three years and a massive 80% rebate on filing a patent application.
Hike in VAT and Sales Tax
With the shadow of the Goods and Service Tax(GST) which will subsume all other indirect taxes under it looming large over the economy, the government with the new budget will look towards a new round of tax hikes to bring all indirect taxes such as VAT and Sales Tax as close to the 17.5% rate of GST.
Though this move is good for fiscal consolidation, and will most likely not last for over a year, this increase in the tax rate could make products such as mobiles, laptops, cameras etc significantly more expensive and as a result, hamper consumer demand.
Subsidy to See Cars/Mobiles Get more Affordable
With the government pushing for its pet project, the ” Make in India” Campaign, a number of new companies are expected to start rolling out mobile phones, automobiles and other consumer durables which will cost significantly less because of tax exemptions they will enjoy under the Make in India program. The companies are expected to trickle down the benefit that they enjoy from the governments end to help provide products to the end consumer at more affordable price points.
Subsidy on smartphones budget smartphones can also be expected which will further help the government in connecting the far reaches of the country to the big cities. As it stands, Tier 2 and 3 cities in the country thrive on these devices and increasing smartphone reach through such tax reductions will only help the whole growing smartphone ecosystem in the country.
Union Budget 2016
What to Expect
|Telecom and Broadband Infrastructure||Proposal to allocate Rs.7,350 crore to Universal Obligation Fund to improve infrastructure.|
|Startups and Entrepreneurs||Service tax limit expected to be raised to Rs 25 lakh.
Exemption from paying income tax for the first three years.
Massive 80% rebate on filing a patent application
|VAT & Sales Tax||Major Hike in taxes from their respective rates closer to the 17.5% of GST. To affect prices of mobile phones, cars, and consumer goods directly.|
|Tax exemption on Manufacturing||Subsidy on products to increase under the “Make in India” program. Will see Cars/Mobiles Get more Affordable in the coming year.|