Budget 2020: What investors want from Sitharaman's second Budget

Budget 2020: Union Finance Minister Nirmala Sitharaman will present her second Union Budget today. At a time when the economy is heading southward, each sector will keep a close eye on what's in store for them. Here's what investors and companies are hoping in this year's Budget.

Rollback of long-term capital gains tax

The foremost demand of investors is a rollback of long-term capital gains tax. LTCG tax or long-term capital gains tax was introduced in Union Budget 2018-2019 to bring marginal revenue gain of Rs 20,000 crore in the first year. However, the move backfired as the investor sentiment dwindled. In September last year, PM Narendra Modi promised foreign investors the government was working towards "bringing tax on equity investments in line with global standards". Investors are hoping the government might change the definition of 'long term' from a year to two years. Currently, long-term means a holding period of more than one year from the date of purchase of securities. Anyone selling listed equity shares after holding them for one year has to pay 10% LTCG tax on the profit earned over Rs 1 lakh in a year.

FULL COVERAGE: Union Budget 2020

Relief to real estate sector

Sales of housing units continue to fall across the country; so do new launches. Investors want the Modi government to provide tax breaks to homebuyers to boost demand. Incentives for purchases could also increase demand, benefitting leading housing investors like Godrej Properties, Sobha Ltd, DLF Ltd, among others. As per a recent report by real estate research and analytics firm PropEquity, sales of housing units fell 10 per cent across India's top nine cities to 52,885 units in the third quarter of 2019 versus the year-ago quarter. Investors are hoping the government would take appropriate measures to revive the ailing sector.

Also read: Budget 2020 Live Updates: FM Nirmala Sitharaman to present budget at 11 AM; middle class, corporate await surprise

Cut income tax to boost consumption

Investors and businesses want a reduction in personal income tax. The personal income tax cut will increase consumption, which in 2019 has been one of the slowest in a decade. This could give rise to the demand for cars and homes, providing a much-needed fillip to companies like Voltas, Havells, Whirlpool, TVS, Bajaj Auto, Hero MotoCorp, among others. More disposable income in the hands of individuals and more investible surplus in the hands of corporates could only come if the Centre reduces income tax, say experts.

Push for rural demand

Consumption in rural India slumped to a seven-year low during the July-September period. This is for the first time that the consumption of packaged consumer goods by households in rural areas rose at a slower pace than urban areas. Companies, especially from the FMCG sector like Hindustan Unilever, ITC, Britannia Industries, Nestle India, are seeking a renewed push for the revival of rural consumption, which would increase their capacity for more consumer goods and automobiles.

Also read: Budget 2020: Date, timings, where to watch, expectations from Modi govt's most challenging Budget