Expectations for Budget 2022: Finance Minister’s Top 10 Investor Wish List
Finance Minister Nirmala Sitharaman will announce her fourth budget on February 1, which is expected to be largely growth-oriented.
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Most experts believe that the 2022 budget will maintain its focus on CAPEX-related spending to support growth, as we saw throughout 2021 when the center launched various production-related incentive programs (PLIs). ).
“This Union Budget could see FM announce plans for higher capital spending on healthcare schemes and to trigger India’s CAPEX cycle, which aims to boost India’s inclusion in global supply chain,” said Mohit Nigam, Head – PMS, Hem Securities.
“The market is looking for support measures for sectors such as housing, autos and auto accessories, measures linked to the LIP in several sectors. Also, some tax easing and GST exemptions are expected to boost the real estate sectors,” he said.
It will be an expansionary, growth-focused budget that will push many of the right buttons to pull the economy out of the Covid shadow.
We have compiled a list of investors’ expectations of the Minister of Finance in this 2022 budget:
Expert: Jay Prakash Gupta, Founder, Dhan and Co-Founder, Raise Financial Services.
1. Homebuyer Incentive:
The sector supports employment as well as ancillary industries which are mainly SMEs and MSMEs. An increase in housing demand would indirectly benefit all those associated with the sector. With lower interest rates and banks ready to lend, now is the best time for people looking to buy an end-use home.
The tax benefit on home loan for both interest payment and principal repayment is expected to be increased by Rs 50,000 each from the current limit of Rs 2 lakh and Rs 1.5 lakh, respectively.
2. Focus on the transfer of domestic savings to financial assets:
To stimulate growth, our economy needs investment. Investment can come either from FDI or from the channeling of domestic savings into the general economy. The latter can occur by reducing friction by investing in financial assets.
Easier and centralized KYC to invest in all financial assets, an increase in the limit to invest in tax-saving mutual funds from Rs. 1.5 lacs to Rs. 2 lakes would be a positive step in this direction.
3. Focus on financial literacy and personal finance:
While India is home to around 17% of the world’s population, 65% of whom are under the age of 35, the financial literacy rate is only 24%.
Personal finance should be a subject in school that can create a foundation for citizens who can channel savings into investments, creating wealth for themselves and for the economy. Guidelines along these lines in the next budget would be a welcome step.
4. Incentives for FinTechs working for the unbanked population:
FinTechs that are into microcredit and lending, spending on technology and various tools to reach unbanked or underbanked population categories not served by NBFCs and traditional banks, are working towards the goal of financial inclusion .
A framework to provide tax incentives, easy access to funds would again be a welcome step.
5. Reduce SGB lock-in period:
The SGB was launched with the aim of lowering the demand for physical gold purchases and transforming domestic savings into financial savings.
Reducing the lock-up from 5 years to 3 years and benefiting from the LTCG on exit after 3 years will put money back in the hands of households and individuals.
This will help to increase the circulation of money in the economy, which will lead to more consumption and investment.
Expert: Prem Prakash, co-founder and CEO of CapitalVia Global Research Limited.
6. Increased 80C limit:
For salaried workers, the government could consider increasing the increase in the PPF limit below 80C from 1.5 lacs, as it was not touched in the last budget.
7. Tax advantage on home loans:
Higher capital spending is expected in this budget in my view and will be more focused on infrastructure and the real estate sector.
Tax benefits on home loans, both for interest payment and principal repayment, could be increased by Rs 50,000 each from the current limit of Rs 2 lakh and Rs 1.5 lakh, respectively.
8. Disinvestment objective in sight:
The street is reportedly focusing on the government’s divestment targets as the government has failed to meet its 1.75 crore lac target and this year that target may be revised.
Expert: Parth Nyati, Founder, Tradingo
9. STT Reduction:
I think the Securities Transaction Tax (STT) should be abolished or at least reduced as it was originally introduced in place of the long term capital gains tax but now we have both LTCG and STT, which is not fair to Indian investors.
The transaction cost in India is too high and LTCG and STT are considered to be a drag on market sentiment resulting in very few traders making profits.
Stock market penetration is increasing in India, and it is expected that the government will take policy measures to ensure that the Indian market becomes more investment-friendly compared to other emerging markets and the reduction of LTCG and STT could be a good step in that direction. This can significantly increase trading volumes, which results in higher tax collection.
10. Rationalization of LTCG and STCG
SEBI prohibits brokers from providing intraday leverage to traders, higher impact costs have been incurred, and a reduction in STT can increase volume, thereby reducing impact costs.
When the cost of doing business in India drops further, it will only encourage more foreign participants to invest in our economy and trade on our exchanges.
The government should also streamline the LTCG and STCG because a reasonable income tax rate will encourage people to pay taxes and do things right.
(Disclaimer: Opinions/suggestions/advice expressed here in this article are investment experts only. Zee Business suggests its readers consult their investment advisors before making any financial decisions.)