New Delhi: Notwithstanding the high expectations of cuts in corporate and income tax rates in Wednesday's first Union Budget post-demonetisation, Finance Minister Arun Jaitley will have his task cut out owing to the stress the small scale and rural sectors have felt, as well as the possible impact of implementing GST, industry chamber Assocham said on Sunday.
"Meeting the excessive expectations riding on the forthcoming Union Budget, being seen as a 'Solve-All' big mover in the aftermath of demonetisation, could be a challenging task for Finance Minister Arun Jaitley who has to reckon in the fallout of the Goods and Services Tax (GST), stress in the small industry and trade as also the rural landscape," Assocham said in a pre-budget release here.
"The biggest challenge before the government is to revive the urban consumer demand and provide a huge stimulus to the rural economy which had to bear the maximum impact of the note-ban. Inflation may be down, but it has to be seen in the context of glut in many crops, especially vegetables, resulting from excess output and cash withdrawal in November," it said.
Noting that with near consensus reached on rolling out GST from July, the industry chambers said "the outcome in terms of tax collection may be uncertain even as the Centre remains committed to fill the shortfall of the states."
"There are bound to be teething troubles, though in the long run, lot more benefits would accrue to the economy."
According to Assocham, "the corporates are seeking reduction in the corporate tax rate to 25 per cent."
"The individual tax payers are expecting a big rise in the exemption limit and not a token amount of Rs 10,000-20,000," it said.
"The way expectations are soaring high, especially in the stock market, the Finance Minister may find it tough to come up to them, under conflicting demands," it added.
Noting that "industrial production and services remain subdued", the Associated Chambers of Commerce and Industry of India said that "the banks reeling under their non-performing assets and the scanner of the investigative agencies, would remain cautious in lending, however much they are flush with liquidity" post-demonetisation.