BFSI Budget Expectations 2019

BFSI-Budget 2019

From credit crisis, increased tax deductions on home loans, susidies for MSMEs to exemption of DRR in the HFC space, NewsBarons connects with leading industry experts to understand their expectations from the upcoming Budget 2019.

Khushru Jijina, Managing Director, Piramal Capital & Housing FinanceKhushru Jijina, Piramal Capital & Housing Finance

Indian Real Estate accounts for 6% of the GDP employing close to 18% of the workforce and supporting over 350 industries such as cement, paint, steel, etc. The credit crisis within NBFCs delivered a major blow to this sector significantly paring its access to funds. Global financial crisis of 2008 was a costly lesson on what it means for a real estate sector to be out of control. The Government needs to take aggressive measures, albeit temporary, to mitigate stress in FY20. To stimulate housing demand in FY20, the budget should aim at policies to reintroduce income tax deduction on principal and interest on a second home loan. In addition, Income tax deduction limit on interest paid should be hiked to Rs 5 lakhs especially in Tier 1 cities. Similarly, IT deduction allowed on principal paid should be increased. The policies should also be aimed at increasing ease of doing business for developers by rationalizing tax structure with a uniform GST preferably lower than 12% and merging stamp duty into GST and stimulus package for major developers should be rolled out and delivered through major NBFCs.

HDFC securities-Dhiraj Relli - CEO & MDDhiraj Relli, HDFC Securities

Propriety demands that not too many changes should be made in a vote on account or Interim Budget. This is all the more true when the vote on account (on Feb 01) will precede the unveiling of the Direct Tax code report on February 28. Tinkering with the tax rates or tax provisions before the release of the report will lead to avoidable controversies.

While some reliefs that no political party can dare to roll back (like raising exemption limit for individuals under Income Tax Act) some relief measures for rural population etc can be expected. We do not foresee any measures having substantial impact on businesses. While the speech may include a lot by way of vision statement for the next 3-5 years, its implementation will be postponed to the new Govt.

Shortfall in GST collections (despite customs duty revenues being better than budgeted, net indirect tax receipts till November were only 49.4% of estimates compared with 57% last year), telecom sector revenues, divestment revenues and some shortfall in direct tax receipts (going by the caution displayed by CBDT chairman recently) could upset the targeted budgeted revenues. This might happen at a time when the expenditure may overshoot budgeted numbers (including fertilizer subsidies which alone could be closer to Rs.1 lakh cr vs Rs.0.70 lakh cr budgeted). While some shortfall may be recouped from higher RBI dividends, a minor overshooting of fiscal deficit (easily justifiable as usual, due to unpredictable events) is likely unless severe expenditure cuts are undertaken (which does not seem likely ahead of general elections). Read more