According to Care Ratings, the Budget on February 1 would be addressing issues with respect to "additional revenue garnered on account of the income disclosure scheme as part of the demonetisation drive and expenditure allocations based on the assessment of the economy as there appears to be a slowdown in growth post demonetisation", among others.
"The tax framework would be interesting for individuals and corporates where there are expectations of some major changes following demonetisation," it said in a report.
Care Ratings estimates the Government to levy tax between 12 per cent and 18 per cen on services, depending on its classification based on essential and non-essential services as a move towards the final GST rate.
On the direct tax front, the rating agency expects the Government to lower the corporate tax rate. Finance Minister Arun Jaitley in 2015 had laid a road map to reduce the tax rate from 30 per cent to 25 per cent over the next four years.
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Observing that the current MAT rate at 18.5 per cent is quite high, the report said the high rate adversely impacts the cash flow of companies that have low taxable income or have incurred losses, among others.
"Long term capital gains on equity are also on the cards to be bought on par with debt with a three year lock in period."
On the expenditure side, the revenue expenses in the
next fiscal is expected to grow by 10-15 per cent from the level of Rs. 17.31 lakh crore in the current financial year on account of increased payments towards higher borrowings, interest rate subventions and implementation of the 7th Pay Commission and OROP Scheme (One Rank One Pension).
The budgeted expenditure towards Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) could be increased by 10 per cent for 2017-18, Care Ratings said.