After the colossal demonetization grenade on November 8, people like me, you and the rest of the country were expecting some aid and had all their hopes pinned up on the upcoming budget 2017. Let’s analyze the quantum of expectations fulfilled, although the majority of the sectors were untouched as GST is on the climb but the few sectors which were brushed, we see their absolute reflection in the mirror.


Expectation: Elevating the minimum slab rate for personal income tax by at least Rs. 50,000 i.e. increasing the exemption limit from current Rs 3 lakh to Rs 3.5 lakh, if not the pinned upon Rs 4 lakh or by lowering tax on slabs above Rs 5 lakh. This would have increased the purchasing power or aided in extra savings.

People also expected a rise in the investment limit under Section 80C from Rs 1.5 lakh to Rs 2 lakh. The move could have encouraged people to put their money into the financial system, instead of stocking up cash, in which liquidity would have prevailed.

Reality: Tax rate has been reduced to 5% in the lowest income tax slab of Rs 3 lakh to Rs 5 lakh as opposed to 10%. The rest of the slabs remained untouched. A surcharge of 10 per cent will be levied on individuals having annual income Rs 50 lakh to Rs 1 crore. The 15% surcharge on incomes above Rs 1 crore will continue to be the same.

Impact: Post the Income Disclosure Scheme and Demonetisation, witnessing a reduction the individual income tax rates, has spread cheers as this ended up as a win-win situation, be it a salaried employee, a student, senior citizen or a homemaker! Each will be saving Rs 12,500 per year, which roughly comes up to Rs 1042 per month.


Expectation: Low-priced education loans and more jobs from the government. Also, with the revival of “Digital India” and blazing digitization, there were hopes that smartphones, tablets, and other gadgets would become cheaper.

Reality: To enhance jobs, the government is creating employment in leather, footwear and a new metro rail policy, which will accommodate jobs for youth. Also, 100 Indian international skill centers to be established with courses in foreign languages. Rs 4,000 crore allocated to launch skill acquisition and knowledge awareness. Effective accreditation ratings for colleges and a platform (SWAYAM) with at least 350 online courses will be initiated.

Impact: Instead of giving immediate benefits, the announcement of several schemes which will have a long-term effect serves as a benefitting accord to both the youth and the nation.


Expectation: People who are going to buy a residential place for the first time; were expecting an increase in the deduction limit on interest payable on home loan from current Rs 2 lakh under Section 24(b) to Rs 3 lakh. There was also a conundrum for increasing the House Rental Allowance (HRA) deduction. As we know, a salaried person gets HRA from a component of his/her total salary, and therefore claim a substantial deduction. However, for a self-employed person not having any HRA can only claim a maximum deduction of Rs 5,000 per month under Section 80GG. But these limits are conventional as compared to today’s rents. This is where hope drives in.

Reality: The presented budget provided tax relief for one year from the date of issue of the completion certificate to real estate developers on unoccupied housing stock under notional rental income. This would provide time to developers to sell their inventory without the burden of the additional tax. The house rent deduction limits were left untouched and the affordable housing sector was given the status of infrastructure.

To ensure availability of larger affordable houses to buyers, the scheme would now be applicable to 30 sq m and 60 sq m carpet areas as earlier it was only for built-up areas. While the 30 sq m stipulation would be applicable to the four metros, the 60 sq m unit size would be applicable for the rest of the country.

The reduction in the holding period under ‘long-term capital gains’ from three to two years, and changing the base year for the determination of cost inflation index from 1981 to 2001 has its own perks. Also, the interest subsidy would serve to be highly beneficial for people taking home loans:

Annual Income Loan Amount Interest subsidy
Up to Rs 12 lakh upto Rs 9 lakh 4%
Up to Rs 18 lakh upto Rs 12 lakh 3%
Up to Rs 6 lakh Up to Rs 6 lakh

Above Rs 6 lakh



*Interest subsidy provided will be the difference between actual interest rate and the said 6.5% for e.g. (9%-6.5% = 2.5%).

**Interest subsidy will be NIL, therefore loan amount will have to be paid at actual interest rate say 9%.

Say, an individual having an annual income of Rs 6 lakh borrowed Rs 25 lakh for buying a house at 9 per cent per annum; they will have to pay only 2.5 percent interest on Rs 6 lakh and 9 percent on the remaining Rs 19 lakh.

Impact: Providing infrastructure status will facilitate large public sector investors and insurance firms to invest in the housing sector. It will also enable the financial institutions to look positively at the real estate sector as it reduces the risk factor for housing loans. The housing sector would see a rebound in the coming months as both the developers and consumers will benefit. This will benefit an overwhelming majority of people who buy houses priced at, or above, Rs 1 crore.


Expectation: The year 2016 was a challenging one for the Indian middle class, especially the senior citizens. With the government rolling out several policy changes, including the much critical currency discontinuation, senior citizens were the receptors of most of the short ends. Incentives made for affordable health care were high on their wish list.

Reality: Considering this Aadhar-based smart cards providing their health details will be introduced. Two new All India Institutes of Medical Sciences announced for Jharkhand and Gujarat and the ministry proposed to amend the Drugs and Cosmetics Rules to ensure availability of drugs at sensible costs and advance the utilization of non-specific meds.

Impact: This has made things less demanding, helpful and moderate, requiring fewer compliances for the matured personals and additionally edified an approach to additionally ventures to be taken in the social insurance zone.


Expectation: In Budget 2016, Jaitley had guaranteed to decrease the corporate expense rate from of 30% to 25% so as to contend with other Asian contenders. A year ago he slices the rate to 29% for those organizations and it was foreseen to be 28% this year. Additionally, the Minimum Alternate Tax (MAT) was required to be diminished to 10% to energize speculations.

Reality: The FM cut the corporate expense to 25% yet just for organizations with a yearly turnover of up to Rs 50 crore. The proposition to diminish the expense rate to 25% from 30% will profit 96% of all organizations recording government forms, according to the information for the evaluation year 2015-2016. For MAT, rather than bringing down it, organizations have been permitted to convey forward it for a long time from the present 10 years now.

Under Section 44AD of presumptive taxation, 8% of the turnover is taken as income in case the turnover is less than Rs 2 crore. Now it has been reduced to 6% of the turnover from the F.Y. 2017-18. The SME (Small & Medium Enterprises) sector was severely hit by demonetization and was looking for a boost. The government has made provision to recapitalise public sector banks and for that Rs 10,000 crore has been provided; this should cater well as SMEs look at PSU banks for their working capital requirements.

Impact:  History has it, whenever the corporate tax has been lowered, the collection has gone up. A 25 percent corporate tax should therefore not lead to revenue loss to the government and at a stroke move us away from a high tax yet high concession regime. This might bring India in line with the most lucrative investment destinations internationally such as Singapore, Portugal, Spain, Denmark, and Ireland.