Expecting a populist Budget? FM's hands could be tied by fiscal constraints

The country is abuzz with discussions around the upcoming National Budget 2018 to be presented by the finance minister (FM) on February 1, 2018. Since we Indians are an opinionated lot, all of us have views on what the FM should do or not do. The Finance Minister is in an unenviable position of having to meet multiple expectations ranging from that of corporates or businesses seeking “relief” after GST implementation to individual tax payers hoping for lower income tax rates.  The barrage of articles on Budget expectations, including this one, does seem to suggest that the annual National Budget has become akin to end-of-season sales where everyone expects to pick a real bargain.

The government’s initiatives to broad base tax compliance and increase tax revenues is yet to yield significant results. According to statistics provided by the Income-tax Authorities (updated in December 2017), only approximately 8 per cent of the total tax filers have reported income over Rs 1 million in financial year 2016-17, while only approximately 0.3 per cent of the total tax filers have reported income over Rs 10 million.

These statistics tell that many among us have anyway assumed and gifted ourselves a perpetual tax holiday.  It also says that only a very few among us carry the burden of supporting the country’s need for tax revenues.
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