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Impact of Interim Budget 2019 on the Retail Sector – RealtyMyths

Retail sector RealtyMyths

by Anushree Ghosh

Review & analysis of the interim budget for the retail sector

Introduction to the interim finance budget, impact on the rural and lower-middle-class segment, increase use of consumer-driven goods, benefits to small and middle-sized enterprises, future impacts and the central thought behind introducing exemptions to a great degree.

The interim budget 2019-20 was a political stroke to chase the rural and middle-class voters. The upcoming general elections seem to define the limits of the taxpayers, aimed to woo the voters.  Finance Minister Piyush Goyal announced the course of action required to foster the growth of private consumption. Focusing on the current scenario, when the customer is much more evolved than before, the customer-driven retail segment expects a lot from the new proposal.

Exempt from income tax until Rs 5 lakh, hike in the TDS limit for rent and tax exemptions under Section 54, the introduction of pension schemes in the informal sector are few of the proposals that are widely lauded; as more disposable income for the middle class will ultimately lead to profitable sales. This would increase consumption of consumer-driven good across various categories, a great impact was seen on the stocks of companies like HUL, Mahindra and Mahindra, Tata Motors and Future Group with prices going up significantly.

The other segment which would witness a tremendous growth due to the change in taxation policies is the gold retail sector. In India, where people are dramatically into buying gold for every auspicious occasion, greater purchasing power would incentivize them to invest in their favourite saving option, i.e., gold. Demand for gold is likely to grow by 6.8% by the year 2020, reinforced by the upswing in the rural and urban market.

The new directives would hardly have any impact on the e-commerce platforms, the regulations can’t keep a check on predatory pricing and heavy discounts offered by the online stores due to their immense control over inventory.  Therefore, the ongoing threat of illegal invoices and the sale of goods at a price below the permissible limit would continue to damage the ecosystem of online marketing. There are no reforms to monitor the discounts/cash backs offered by credit card companies and online wallets.

Small retail enterprises are deemed to benefit from the proposed financial setup as the government has introduced steps to make GST trader friendly – allowing quarterly returns and structured scheme. Lowering the limit of corporate tax would aid the running of medium enterprises with a turnover of up  Rs 250 crore, reducing the chances of tax evasion. The growth would also generate more jobs since these segments would try and encash the situation as soon as possible.

Although the proposed exemptions look lucrative, a question that pops out every time we think of the proposal is the time the government chose to introduce such measures when the current government is not sure about the next term,and we need to ponder around the fact that whether announcing a drastic change in the budget is really a good idea for the economy of the country.

Anushree is a versatile writer, theater actress with an immense passion for any form of art. Her blogs will take you through the different horizons of infracultural storie.

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