While there are unlikely to be any major changes in indirect tax as most of them are now under the purview of the Goods and Services Tax Council, Budget 2018 could have several positive changes on the direct tax side, according to analysts.

However, the key consideration while reducing direct taxes, either for individuals or corporates, would be to ensure that the changes don’t reduce government revenue too much, as there is already the possibility of overshooting the fiscal deficit target.

“One of the things I have been reading is that the Budget could introduce a standard deduction for salary payers,” Parizad Sirwalla, Partner and Head, Global Mobility Services – Tax, at KPMG told The Hindu .

“The other thing that could change is the medical reimbursement limit of Rs. 15,000, which is an archaic limit. So that could go up. The last thing is that the income tax slabs could be tweaked.”

Ms. Sirwalla echoed Chief Economic Adviser Arvind Subramanian, who in an interview to The Hindu , made it clear that changing the income tax slabs to reduce the tax burden on the salaried and middle class was one of the government’s key focus areas. “I think the fact that we have set up this committee and the government has invested a fair amount of thought into this for the future is something that shows it is an important subject, and the government is going to be thinking about it constantly,” Mr. Subramanian said.

Ms. Sirwalla also said there is a chance the government may introduce a long term capital gains tax on equity shares, or may remove the dividend distribution tax.

There could be some changes on the corporate tax front as well, according to analysts, but they added that the government will be careful with these in order to minimise the impact on the exchequer.

The GST has subsumed most of the indirect taxes, and so there are very few avenues for changes.

“On indirect tax, there is hardly anything the Budget can do,” D.K. Srivastava, Chief Policy Advisor at EY India said. “I think the Budget will contain numbers for the old indirect taxes that existed up to June 30, 2017.”

Against the backdrop of consistently rising oil prices, there has been an increasing demand for a cut in the excise duty on fuel. However, indications from both the government and the private sector suggest that this will not happen in this Budget.