Union Budget 2018 to bring income tax cheer? Here's why this EY survey thinks so

About 59% of the respondents were of the view that multiple outdated deductions would be replaced with a standard deduction in order to reduce the tax burden of employees

The government is likely to tweak income tax slabs and rates in Budget 2018-19 to bring down the burden on individuals, while there is unlikely to be any change in the current taxation of dividends, according to a survey by EY.

In a pre-Budget survey by tax consultant EY, a wide majority of 69 per cent of the respondents felt that the threshold limits for taxation would increase further in order to boost disposable income in the hands of the people.

About 59 per cent of the respondents were of the view that multiple outdated deductions would be replaced with a standard deduction in order to reduce the tax burden of employees.

The survey includes the views of 150 CFOs, tax heads, and senior finance professionals and was conducted in January.

About 48 per cent of the respondents said they expect the finance minister to lower corporate tax rate to 25 per cent but the surcharge would continue.

Most of the respondents (65 per cent) do not anticipate a change in the current taxation of dividends at this stage. About 24 per cent of the respondents feel that with a view to lowering the overall burden on the corporate sector, the government may lower the rate to 10 per cent.

"The pre-Budget 2018 EY Survey with business decision makers reveals a consensus amongst India Inc for stability and consistency in tax policies and a moderate tax structure. There seems to be little expectation of any major direct tax overhaul after the transformative introduction of GST earlier in the year," EY India National Tax Leader Sudhir Kapadia said.

FY19 growth at 7.1%, Budget unlikely to be populist: India Ratings

With global crude prices firming up, it expects retail, wholesale inflation to come in at 4.6% and 4.4%, respectively in 2018-19

India Ratings and Research on Thursday projected the country's economic growth to improve to 7.1 per cent next financial year from 6.5 per cent this year, buoyed by robust consumer demand and low commodity prices.

In its outlook for 2018-19, the agency said there will be a gradual pick up in growth momentum owing to structural reforms like GST and Insolvency and Bankruptcy Code (IBC) in place.

"While the implementation of GST is likely to benefit the economy over the medium to long-term, the same cannot be said about the impact of demonetisation," India Ratings & Research (Ind-Ra), a subsidiary of Fitch Ratings, said.

Ind-Ra expects gross domestic product (GDP) to grow 7.1 per cent year-on-year in 2018-19, it said.

The projection is a tad lower than 7.4 per cent growth estimated by Asian Development Bank (ADB) and International Monetary Fund (IMF) for next financial year.

Ind-Ra said but for demonetisation and goods and services tax (GST) implementation, growth would not have decelerated to 7.1 per cent in 2016-17 and 6.5 per cent in 2017-18.

With the global crude prices firming up, Ind-Ra expects retail and wholesale inflation to come in at 4.6 per cent and 4.4 per cent, respectively in 2018-19, indicating an end to the current rate cut cycle.

There is still some fuzziness with respect to the intensity and the level of its future trajectory, it said, adding that the RBI "will remain in a pause mode for an extended period of time".

The agency said it expects fiscal deficit in 2017-18 to come in at 3.5 per cent, overshooting the budgeted estimate of 3.2 per cent.

"Despite 2018-19 being a pre-election year, Ind-Ra does not expect the Union Budget 2018 to be a populist budget. However, it expects some expenditure reallocation with an increased focus on the rural and agriculture sectors," it said.

The agency expects fiscal deficit in 2018-19 to be at 3.2 per cent, higher than 3 per cent stated in the medium-term fiscal policy statement.

A mix of global and domestic factors will keep the Indian rupee range bound at average Rs 66.06/$ in 2018-19, it said.