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Budget 20/20 💰💼

If you ran a business & your clients ranged from large corporations, high net-worth individuals,
Budget 20/20 💰💼
By Making smalltalk • Issue #32 • View online
If you ran a business & your clients ranged from large corporations, high net-worth individuals, and foreign investors to the struggling farmers, migrant labourers, and regional communities - would you be able to serve them all? 
This is the classic problem the Government faces when it decides on its Annual Budget every year. Of course, the Indian Government isn’t alone in this - almost all modern day nations follow a similar routine, though their timing can vary.
In fact, this used to be done in even the ancient Maurya Empire that was founded (in 3rd century BC) by Chandragupt Maurya with the help of his advisor Vishnugupt - popularly known as Chanakya.
Chanakya, in his now famous political & socio-economic treatise “Arthashastra”, defined a well-structured financial system that estimated, tracked, and accounted the revenue & expenses of the entire kingdom.
AFAIK, this is the first recorded instance of an “annual budget” for an entire kingdom/nation. Interestingly, this followed the Mauryan calendar, which was 354 days long!
The modern day “Budget” has its origins in 18th century Britain, when the term was used to (satirically) describe a speech made by the then British PM & Chancellor of the Exchequer.
The word, which actually has Latin roots meaning “small pouch” or “bag”, usually of leather, was used to depict the British minister opening his bag to take out documents relating to the finances of the nation.
Over the years since then, this word has come to be associated with this new financial meaning - as a “statement of likely expenditures and revenues”.
Interestingly, the current FM Nirmala Sitharaman ditched the tradition of FMs carrying a “briefcase” last year, when she entered Raisina Hill for her maiden budget speech carrying a red cloth bag instead! So much for leather pouches and bags!

Coming back to the problem at hand - with so many different stakeholders to serve & please, and numerous different and opposing objectives, creating the National Budget is quite an extensive task.
So, what’s in store for Budget 2020? There are a few usual suspects in terms of policies on agriculture reforms & sops, infrastructure spending, and large-scale national projects around housing, highways, etc.
But we’ll not focus on those since tbh, what most of us (including me) are really, really interested in is how the upcoming Budget is likely to impact us! :)
So from a personal finance point-of-view, the following 3 things are most anticipated:
  1. There’s an expectation of personal income taxes being reduced - this could be either via a change in slabs (more likely) or a reduction in income tax rates
  2. It’s also widely anticipated that the deductions allowed under Section 80-C will be increased from the current 1.5 lakhs, to 2-2.5 lakhs
  3. Lastly, there are wide rumours/reports that say Long Term Capital Gains (LTCG) tax on shares, which was introduced few years back (and is 10%), might be abolished - either for a holding period of 1-year or perhaps 2 years.
While the first is expected to increase disposable income & thus boost consumption, the latter two measures will boost investments in the country from domestic & foreign investors.
And all three are expected to bring a smile on the faces of city-dwelling salaried professionals and business owners!
Budget 2020 will be announced in the Parliament on 1st February, which is a Saturday. Interestingly, the stock markets will remain open on that day with business-as-usual timings. While rare, this has actually happened previously in 2015, when the Budget also fell on a Saturday.
In the meantime, let’s stay hopeful of the possibility of paying less taxes in the coming year :) 🤞🏼
Happy investing!
-Vikas Bardia, CFA
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