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People’s Wishlist: Dividend Linked to Share Price, IT Exemption Hike on Top of Union Budget 2023 Expectations

New Delhi: From allowing company dividends to be linked to the market price of shares, scrapping of income tax (IT), goods and services tax (GST) on insurance policies to increasing the IT exemption limit to Rs 5 lakh are the expectations from the upcoming budget. “There is no wish list. Just one wish. Zero tax,” quipped a Tamil Nadu government employee.

While that may be possible in utopia another interesting wish expressed by a chartered accountant is the linking of dividends declared by companies to the market value of the shares. “Presently all companies are paying dividends at the face value of shares. (Also Read: Despite the Slew of Polls Ahead, Prospects of Populist Budget Appear Bleak)

There is a huge gap between market price and face value. For example, the market price of TCS is around Rs 3,300 per share. whereas the face value is Re 1. Companies boast that they give dividends at 150 percent or 200 percent, which is nothing but Rs 2 or Rs 3 per share on a value of Rs 3,300. The yield is pathetic,” Srinivasan Jaishankar, a chartered accountant, told IANS. (Also Read: Union Budget 2023 Expected to Focus on Job Creation)

“The government should ask companies to pay dividends at a benchmark rate on the average market price of the last 12 months. Say if the average share price of TCS is Rs. 3,000 per share, then they should give a dividend at 3 percent of the market price, which is Rs. 90 per share. In short, dividends should really relate to the inflation rate,” Jaishankar added.

According to Jaishankar, for MSMEs to survive and flourish individuals should be given an IT deduction of Rs. 5,000 if they buy anything from MSMEs making organic household goods, khadi products, handicrafts, pottery, and others through Rupay, Gpay, BHIM, and others.

The government can create a portal for this so that MSMEs can register and all such payments are directly posted in the Annual Income Statement published by the Income Tax department so that they are entitled to the deduction.

He added that all property transfers should be done electronically without any need to carry the mother document and others. A simple transfer acknowledgment stored in Digilocker should be sufficient.

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