Budget 2021: Income tax, common man's expectations, Covid 19 challenges and more - this market expert answers all questions

Ahead of the Union Budget 2021, Hemant Rustagi, CEO, Wiseinvest Pvt, talked to Zee Business and spoke in length about the 'one like never before' budget to be presented by Finance Minister Nirmala Sitharaman. He talked about common man expectations, corporate demands, sectors to benefit, Covid 19 challenges and Finance Minister's recent statement about Budget 2021 that has raised everyone's expectations from this budget. Excerpts:  

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1 What does stock market, corporates expect from Union Budget 2021?
To begin with, both wouldn’t want any additional tax and/or cess in the Union Budget 2021. Equity investors expect the finance minister to either abolish long-term capital gains tax of 10 percent or increase exemption limit from Rs. 1 lakh to Rs. 3 lakh. Besides, if some exemption is given on tax on dividend, it will not only help in bringing more investors into the stock market but also encourage existing investors to invest more. The industry would broadly expect some announcements on public-private participation, rationalization of GST, improving infrastructure and ease of doing business.

2 Which Sector is likely to benefit maximum from this budget and why?
Some of the sectors like healthcare and infrastructure as well as those affected severely by Covid-19 like automotive, manufacturing and tourism are likely to get special attention in the budget. In addition, setting up of a Bad bank to improve the health of banking sector as well as recapitalization of public sector banks to support economic revival is keenly awaited. Of course, there have been mixed views on the effectiveness of a Bad Bank and hence it remains to be seen whether this idea finds a favour with the government or not. Real estate sector could get a boost as there is an expectation of higher exemption for interest on housing loan for home-buyers.

3. What a common man wants from this budget and key areas that government would like to address in the wake of Covid 19.
The common man has been struggling to cope up with disruptions caused in his financial life by Covid-19. Therefore, the broader expectations would be to have some reduction is tax outgoings. Another expectation is a rise in the limit of tax deduction on health insurance premium under Section 80 D. A special deduction for those working from home would also provide a relief. Retail investors also expect certain relief on their investment returns. No tax on dividend received from mutual funds within a certain limit as well as higher exemption limit for long-term capital gains from equity funds (currently at Rs. 1 lakh) will encourage them to focus on market-linked products offered by mutual funds and that will go a long way in helping them create wealth over time.

4 Can common man expect relief in tax exemption under Section 80C or will the budget see change in income tax slabs?
While tax-payers would love to have both, there is a strong possibility of the finance minister increasing the exemption limit under Section 80 C instead of changing the tax slabs. The current limit has remained unchanged for quite some time and doesn’t provide enough scope for tax-payers to invest in different options and save taxes.

5 How do you decode Finance Minister Nirmala Sitharaman's statement when she said this budget will be 'one like never before,' How do you see it and what a common man could read from it?
I believe finance minister’s statement was more about the challenges before her in presenting the budget in the midst of a pandemic rather than actually raising expectations from it. Considering that the focus of the finance minister is likely to be on expansion of government spending to regain the growth momentum in the economy, I don’t expect too much in terms of direct benefits to a common man from the budget. Of course, there will be announcements to revive the economy and that should help various sections of the society to a varying degree.