Budget 2018 key takeaways: India was on tenterhooks, especially the salaried class that files income tax returns and the farmers at large, right from early morning, on expectations that the Prime Minister Narendra Modi led government will announce sops to give them relief in day to day life from high prices. Did Finance Minister Arun Jaitley live up to the expectations of Indian taxpayers or did he not? The FM was brutally honest and did not shirk away from his tough love stance. After all he and PM had time and again said that economics and not politics will dominate the budget rather than sops.
FM nevertheless, made some minor changes in standard deduction, but left the rest unchanged for income tax payers. While speaking on the issue today in Parliament, Arun Jaitley in his blunt comment said, “The Government had made many positive changes in the personal income-tax rate applicable to individuals in the last three years. Therefore, I do not propose to make any further change in the structure of the income tax rates for individuals.”
Know how Arun Jaitley’s Budget 2018 will impact your tax liability with this Income Tax Calculator
After having dropped the bomb, FM made a detailed explanation and said, “There is a general perception in the society that individual business persons have better income as compared to salaried class. However, income tax data analysis suggests that major portion of personal income-tax collection comes from the salaried class. For assessment year 2016-17, 1.89 crore salaried individuals have filed their returns and have paid total tax of Rs.1.44 lakh crores which works out to average tax payment of Rs76,306/- per individual salaried taxpayer. As against this, 1.88 crores individual business taxpayers including professionals, who filed their returns for the same assessment year paid total tax of Rs48,000 crores which works out to an average tax payment of Rs 25,753/- per individual business taxpayer.” This may of may not satisfy you, but read here Budget 2018 key takeaways and find benefits for the entire economy.
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1. Among the foremost Budget 2018 key takeaways is the fact FM Jaitley has actually given a small benefit that will put more money in income tax returns filing people’s pockets. In his words, “In order to provide relief to salaried taxpayers, I propose to allow a standard deduction of Rs 40,000 in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses. However, the transport allowance at enhanced rate shall continue to be available to differently-abled persons. Also other medical reimbursement benefits in case of hospitalisation etc., for all employees shall continue. Apart from reducing paper work and compliance, this will help middle class employees even more in terms of reduction in their tax liability. This decision to allow standard deduction shall significantly benefit the pensioners also, who normally do not enjoy any allowance on account of transport and medical expenses. The revenue cost of this decision is approximately Rs 8,000 crores. The total number of salaried employees and pensioners who will benefit from this decision is around 2.5 crores.”
Also read: Budget 2018 income tax: Here is what FM Arun Jaitley announced for salaried employees
2. Go on, read more Union Budget 2018 key takeaways. Surcharge of 10% on income above Rs 50 lakh but less than Rs 1 cr, 15% on income above Rs 1 cr to continue.
3. Customs duty on perfumes, dental hygiene, after-shave, deodorants, room deodorisers, preparations for use on hair doubled to 20%.
4. Govt to contribute 12% of wages of the new employees in EPF for all sectors for 3 years.
5. Facility of fixed-term employment will be extended to all sectors.
6. Interest income exemption on deposits with banks and post offices for senior citizens increased from Rs 10,000 to Rs 50,000.
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7. Senior citizens will be able to claim benefit of deduction up to Rs 50,000 annually on health insurance premium and/or general medical expenditure incurred.
8. Education cess increased to 4% from 3%.
9. Customs duty on mobile phones increased from 15% to 20%; also on certain parts of TVs to 15%.
10. Customs duty on crude edible vegetable oils hiked from 12.5% to 30%; on refined edible vegetable oil from 20% to 35%.
11. Economic growth pegged at 7.2-7.5% for H2 FY18; India’s average growth in first 3-year of NDA govt 7.5%; Indian economy size $2.5 trillion; 7th largest in world; India is expected to be 5th largest economy very soon.
12. Govt makes PAN mandatory for any entity entering into a financial transaction of Rs 2.5 lakh or more.
13. Revised Fiscal Deficit estimate for 2017-18 is Rs 5.95 lakh crore at 3.5% of GDP; Fiscal Deficit for FY’19 estimated at 3.3% of GDP.
14. Govt’s market borrowing estimated at Rs 4.07 lakh cr in FY’19 versus Rs 4.79 lakh cr estimated in 2017-18.
15. MSP of all kharif crops to be hiked to at least 1.5 times of their production cost.
16. Kisan Credit Cards extended to fisheries and animal husbandry farmers.
17. Agriculture credit disbursal target increased to Rs 11 lakh crore from Rs 10 lakh crore in 2017-18.
18. 2 crore more toilets to be built under Swachh Bharat Mission.
19. Substantial increase in allocation of National Rural Livelihood Mission to Rs 5,750 cr in FY’19.
20. Govt to launch a flagship National Health Protection Scheme to cover over 10 cr poor families providing coverage up to Rs 5 lakh per family every year for hospitalisation.
21. Govt earmarks Rs 56,619 cr for SCs and Rs 39,135 cr for STs in FY’19.
22. Sets target of Rs 3 lakh crore for lending under MUDRA.
23. Redevelopment of 600 major railway stations being taken up; Suburban network of 160 kms in Mumbai at an estimated cost of Rs 17,000 cr being planned; Gross budgetary support for Railways hiked to over Rs 3 lakh crore in 2018-19 from Rs 2.73 lakh crore in 2017-18.
24. Plans to expand airport capacity more than 5 times to handle a billion trips a year.
25. Allocation on Digital India scheme doubled to Rs 3,073 cr.
26 Proposed expenditure on infra pegged at Rs 5.97 lakh cr as against Rs 4.94 lakh crore in FY’18.
27. Govt to evolve a scheme to assign enterprise a unique ID.
28. Disinvestment target for FY’19 at Rs 80,000 cr.
29. Govt to formulate a ‘Gold Policy’ to develop gold as an asset class.
30. Emoluments of President revised to Rs 5 lakh/month, Rs 4 lakh for Vice President and Rs 3.5 lakh for Governors; Govt proposes changes to refix salary, constituency allowance, office expenses and allowance payable to Members of Parliament; The law will also provide for automatic revision of emoluments of MPs every five years indexed to inflation.
31. Growth in direct taxes up to Jan 15, 2018 is 18.7%; Corporate tax reduced to 25% for firms with turnover of Rs 250 cr in 2016-17.
32. Govt introduces long-term capital gains on equity market; long-term capital gains over Rs 1 lakh to be taxed at 10%.
33. Food subsidy to rise to Rs 1.69 lakh crore in 2018-19 from Rs 1.4 lakh crore in current year.
34. Defence outlay raised to Rs 2.82 lakh crore in 2018-19 from Rs 2.67 lakh crore in current year.