Budget 2018: Highlights
Budget 2018 is the last comprehensive budget for the current Government before General Election slated for 2019. The Budget was expected to be a populist one considering Lok Sabha as well as eight State Legislative Elections coming up. Government has tried to strike balance between Populism and Reforms. Budget 2018 may be seen as attempt to provide some benefits to each section of the society but primary focus was on Rural Population, Farmers and the Agriculture Sector.
The Salaried Class and Investors might have reasons to feel disappointed with no changes in the tax slab and re-introduction of Long Term Capital Gain (LTCG) tax on Equities. However, introduction of Standard Deduction is aimed at providing marginal relief to the Salaried Employees.
Key Highlights of Budget 2018
GDP expected to remain robust in the second half of the current Financial Year with estimates of 7.2%-7.5% growth.
Fiscal Deficit pegged at 3.5% for FY 2017-18 and projected at 3.3% for FY 2018-19.
Rural Infra expenditure of Rs 14.34 lakh crore announced for creation of livelihood in rural areas.
Divestment Target set at Rs 80,000 crore for FY 2018-19.
Minimum Support Price (MSP) to be raised by 1.5 times of input cost for agricultural commodities. Mechanism to be put in place to ensure farmers receive the MSP.
Allocation of Rs 27,500 crores to PM Affordable Housing Plan
100% Tax Deduction allowed to Co-operative Societies
LPG connections to be extended to 8 crore under privileged women in rural areas.
Improvement in quality of Education with aid of Technology. Target of moving to Digital Boards from Blackboards by 2022.
World’s Largest Government Funded Healthcare programme announced. Benefits up to Rs 5 lakhs per family per year for secondary and tertiary care hospitalization.
Corporate Tax of 25% to include companies with turnover up to Rs 250 crore. This is going to benefit 99% companies filing tax returns.
Government to setup comprehensive Gold policy and Gold Monetization Schemes to be revamped.
Amendment of Income Tax Act, to facilitate e-Assessment to reduce interaction between Income Tax department and Tax Payers. Improving efficiency and transparency.
Blockchain Technology to be explored in order to boost Digital Economy.
Personal Finance Aspects in Budget 2018
No changes in Personal Income Tax Slabs or Rates.
Standard Deduction of Rs 40,000/- allowed to Salaried Employees in lieu of transport and medical reimbursement.
Hike in Cess on Tax Payable from 3% to 4%.
Government will contribute 12% of the wages on new employees in Employees’ Provident Fund (EPF) in all sectors for next 3 years.
Women Employees contribution to EPF reduced to 8% for the initial 3 years.
Deductions U/S 80D for medical insurance for Senior Citizens increased to Rs 50,000/- from Rs 30,000/-. Exemption on premium paid towards Health Insurance Premium.
Tax Exemption on Interest earned from Bank and Post Office Deposits increased to Rs 50,000/- from Rs 10,000/- for Senior Citizens.
Medical Expenses Deduction U/S 80DDB increased to 1 lakh for certain illness.
Senior Citizen limit for investing in 8% interest bearing LIC scheme doubled to 15 lakhs from 7.5 lakhs.
Long Term Capital Gains (LTCG) exceeding 1 lakh in Equities will be taxed at 10% without indexing. However, all gains till 31st January, 2018 will be grandfathered.
Equity Oriented Mutual Funds also to be impacted by LTCG tax. Dividend Distribution Tax (DDT) proposed for Dividend Distribution Schemes.
Government once again clarifies that Bitcoin or any other cryptocurrency is not recognized as Legal tender and will take measures to prevent illegal use of the currency.
The Budget has attempted to address the necessities of the rural and under privileged sections of the society. Healthcare programme for poor along with incentives for Senior Citizens is really encouraging. However, one cannot ignore the fact that the Salaried class did not have much to cheer about the Budget 2018.