What is in this budget for me ?
Every time budget will be keenly watched for any interesting proposals from the government to spur growth. Stock Market will be keenly watched, as traders and FII’s will react immediately to the announcement by the Finance Minister. This year’s budget was the most expected affair as there is a stable government at the center, but the growth wass going down in the last few years. Positive outlook is not creating any increasing growth or job opportunities.
Why was this Budget 2020 most expected ?
In the last 12 months, consumer sentiment has gone down drastically. This had dented the GDP growth. GDP is at multiple year lows and the future looks bleak with macro conditions not favouring growth.
- US – Iran war of words even with missile talks escalated the price of crude oil for a brief period. Though price stabilised now.
- CoronaVirus in China had hit many countries across the world and this might bring the world economy to a halt for a brief period.
- As private investments are not picking up and Government needs to increase its investment strategically to increase the growth
- Plans and proposals to achieve the ambitious target of 5 trillion dollar economy by 2025
- Disinvestment process of Government companies to meet fiscal targets
Budget 2020, for investors ;
From the investors point of view, Budget 2020 can be a mixed bag.
Dividend Distribution Tax is abolished and this will be taxed in the hand of Individuals or Investors.If you are an investor with 30% tax slab, then the complete dividend received by you will be taxed at your income slab as per the calculation.
On the personal tax front, if you are availing all the tax deductions, then it is good to continue in the older tax regime itself. As you have all the proof.
If you are not having any proof, are struggling to give those deduction proofs, then it makes sense to file tax without any exemptions. Though this may give some confusion till the time tax filing is completed this year.
Practically the older tax regime with deductions scores high if you are availing deductions with all the proofs. Else, it is recommended to file with a new tax model without any deductions. Slowly the government might head towards tax filing with no exemptions as per source quoting the Finance minister.
NRI’s needs to comply more from now on. Earlier if you are staying away for more than 181 days, you will be considered as NRI. Now you need to stay away from India for more than 240 days.
What happened to the stock market on budget day?
The previous day, all the global markets had sharp corrections due to coronavirus breakout and its threat. February 1, being budget day and saturday, stock market was kept open.
Sharp fall of around 987 points happened on Budget day which is February 1. This was one of the biggest fall in stock market on budget day.The reason was there was no boost to the economy and it was flat. Budget allocations, fiscal prudence and macro stability took centre stage.
Once all the dust settled, on Tuesday all the stocks rebounded as there was no negative news as well in the budget. Sensex gained around 917 points. All which was lost in one day got gained in one day.
What Investors need to look out for in 2020?
Stock Market is bound to reach new heights in the coming years to come. As the economy is bound to double up by 2025. The challenge ahead with the stable government is huge. As an investor it is your duty to stay invested for a longer time period.
Now with 2.2 Trillion Dollar economy, stock market is at 41000 points. We already saw that the stock market reflects the economy. If the real economy becomes 5 Trillion dollar by 2025, the stock market will also double upto 80,000 points. Also imagine when India becomes a 10 Trillion dollar economy by 2030 which was a distant dream set by this government.
Steps to invest in 2020,
- Invest only the portion which can stay invested for long term
- Learn about stock market investing
- Stay invested for long term to reap the benefit of equity investment.