5 most feared expectations from Union Budget 2018

With the Union Budget 2018 just a day away, traders and investors alike are waiting patiently to hear from Finance Minister, Arun Jaitley what his spending plans are for the year ahead. While there are many expectations from the budget, there also many fears that have gripped the market since the pre-budget discussions have taken-off.

Here are the five worst fears that worry the investor community:

LTCG tax rate

The Union government may tweak the definition of long-term capital gains tax (LTCG) to curb the building of a valuation bubble in the Indian stock markets. This move might trigger negative sentiments. Any changes to LTCG exemption rule, including tweaking of the holding period, will see a backlash in the market leading to volatility.

Populist budget

An outright populist budget that doles out taxpayer money for social spends and thereby increases the fiscal deficit is the biggest fear emanating from a budget which heads to an election year. Any deviation from the fiscal prudence path will create jitters in the market.

Unsold Inventory Tax

In a bid to revive the real estate market as well as make housing more affordable, the government may introduce a 10 per cent tax on real estate developers which would be applicable on the value of the unsold inventory that they hold. This move would help rationalize home prices that have stayed high despite low demand. If introduced this tax will be a further setback to an already ailing property market. 

Inheritance tax

The government may reintroduce inheritance tax, formerly called estate duty, to enhance its tax revenue kitty. By this way, in a pre-election year, the government can enhance its image as a regime that taxes the rich to support the less fortunate. 

New cess

Although least expected, Modi government's favourite 'cess' which were the highlights of the earlier budgets, may find their way to the bills of the Indian middle-class. 

All said, this budget still seems to the most safe and prudent budget that we might see in years to come.