Tax rates, slabs unchanged; Standard Deduction for salaried employees
NEW DELHI, Feb 1: The Government today announced the “world’s largest” health insurance scheme for India’s 50 crore poor in its last full budget before general elections, focusing heavily on uplifting agriculture and rural sectors while paying little attention to the middle class.
Finance Minister Arun Jaitley presented the budget in Lok Sabha to repeated thumping of desks by treasury members led by Prime Minister Narendra Modi, who later described it as a vehicle to build a “new India.”
The budget is “farmer friendly, common citizen friendly, business environment friendly” and will add to “ease of living and ease of doing business,” Modi said in a televised address.
With chaotic implementation of the Goods and Services Tax and demonetisation causing distress in the economy, Jaitley announced massive spending on rural and urban infrastructure as also lower tax rates for small and medium enterprises.
While continuing the 10-15 per cent surcharge on super- rich, he raised the health and education cess, levied on all taxable income, to 4 per cent from 3 per cent at present.
The opposition slammed the budget, with the Congress calling it “defeatist” and a “big letdown” while the Left parties dubbing it an election-minded “big jumla (rhetoric).”
“It is a campaign for them. We consider it as a ‘big jumla’. We think it is an election campaign as talks are going on for early elections,” CPI(M) Lok Sabha leader Mohd Salim told reporters here.
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The centrepiece of the budget was the Government’s plan to provide universal healthcare through a ‘National Health Protection scheme’. It provides a cover of up to Rs 5 lakh per family per year for secondary and tertiary care hospitalisation to 10 crore poor and vulnerable families, or about 50 crore beneficiaries, nearly half of India’s population of 125 crore.
This, Jaitley said, will be world’s largest health protection scheme.
He committed an expenditure of Rs 1.38 lakh crore on health, education and social protection.
But to fund these, he let go of the fiscal consolidation roadmap. As a result, fiscal deficit for the current fiscal will be 3.5 per cent of the GDP as against the previous target of 3.2 per cent, and 3.3 per cent in 2018-19, as opposed to 3 per cent set earlier.
Fiscal deficit in 2016-17 was 3.5 per cent of the GDP.
Keeping the income tax rates and slabs unchanged, Jaitley introduced a Rs 40,000 Standard Deduction for salaried employees and pensioners in lieu of the present exemption in respect of transport and medical expenses.
At present, no tax is applicable on Rs 19,200 of transport allowance and medical expenditure of up to Rs 15,000. This has now been subsumed into the new Standard Deduction of Rs 40,000 which may mean very little benefit in tax saving considering that health and education cess has gone up.
Senior citizens will get higher exemptions on income from interest on bank and post office deposits, health insurance premium and critical illness expense.
Jaitley, however, raised customs duties on a host of imported products — from cellphones to perfumes and toiletry, from watches to parts of automobiles, sunglasses to truck and bus tyres, footwear to diamonds and edible oils to fruit juices.
Fourteen years after it was scrapped, he brought back tax on gains made from sale of shares to offset revenue losses.
Capital gains exceeding Rs 1 lakh from shares held for more than a year will be taxed at 10 per cent. Currently, gains from equity investments held for more than 12 months are exempt from tax.
In July 2004, the Government had abolished long-term capital gains tax on shares and replaced it with the securities transaction tax (STT) – a same-day tax credit system that continues.
In the 110 minute speech, in which he kept switching from English to Hindi, Jaitley announced plans for agriculture, rural housing, organic farming, animal husbandry and fisheries with a total allocation of Rs 14.34 lakh crore.
“My Government is committed for the welfare of farmers,” he said announcing that his party’s election promise of fixing a minimum support price (MSP) at 150 per cent of the cost will be implemented for all kharif crops this year.
Also, credit to agriculture would be raised to Rs 11 lakh crore in the coming fiscal from Rs 10 lakh crore and kisan credit card extended to fisheries and animal husbandry farmers. Rs 2,000 crore will be provided for development of agri market and export of agriculture commodities will be liberalised.
The defence budget was increased by 7.81 per cent to Rs 2.95 lakh crore against last year’s Rs 2.74 lakh crore, belying expectations of a significant hike when the armed forces are facing growing challenge on the borders with both Pakistan and China.
Jaitley, who had in 2015 promised to reduce corporate tax from current 30 per cent to 25 per cent over four years, proposed lower tax rate of 25 per cent for companies with turnover of up to Rs 250 crore in 2016-17.
The Union Budget 2018-19 was the last full budget before the general elections next year, when a vote on account would be presented. The next full budget will be presented by the new government.
With GST and demonetisation pulling down GDP growth rate in Asia’s third largest economy to its lowest level in three years, Jaitley said economic growth was picking up and “firmly on path to achieve 8 per cent plus growth soon”.
Gross domestic product (GDP) is expected to grow at 6.5 per cent to 6.75 per cent in 2017-18.
“Indian economy is now USD 2.5 trillion – seventh largest in the world. India is expected to become the fifth largest economy very soon,” he said.
A 100 per cent tax deduction will be given for the first five years to companies registered as farmer producer companies with a turnover of Rs 100 crore and above.
“While making the proposals in this year’s budget, we have been guided by our mission to especially strengthen agriculture, rural development, health, education, employment, MSME (micro, small and medium enterprises) and infrastructure sectors of Indian economy,” Jaitley said.
He put revised expenditure for 2017-18 at Rs 21.57 lakh crore and projected Rs 24.42 lakh crore expenditure in 2018- 19.
Railway capital expenditure has been put at Rs 1.49 lakh crore in 2018-19.
Customs duty on import of mobile phones is proposed to be increased to 20 per cent from 15 per cent, on some of their parts and accessories to 15 per cent and certain TV parts to 15 per cent.
Jaitley said measures to address bad loans of small and medium enterprises would be announced soon. He proposed setting up Rs 3 lakh crore target for lending to small enterprises.
Three Government-owned non-life insurers — National Insurance Co, United India Assurance Co and Oriental India Insurance Co — will be merged into a single entity and listed subsequently.
The process of strategic sale in 24 State-run companies including privatisation of Air India has begun and more exchange-traded fund offers including debt ETFs will come.
Special schemes for states around Delhi will be implemented to address air pollution, he said adding removal of crop residue will be subsidised in order to tackle the problem of pollution due to burning of crop residue.
Meanwhile, the salaries of the President and the Vice President have been increased to Rs 5 lakh and Rs 4 lakh per month respectively, in a rectification of an anomaly.
Announcing the hike in their salaries in his Budget speech, Finance Minister Arun Jaitley said the emoluments of the President, the Vice President and the Governors were last revised with effect from January 1, 2006.
“These emoluments are proposed to be revised to Rs 5 lakh for the President, Rs 4 lakh for the Vice President and to Rs 3.5 lakh per month for the Governors,” he said, amidst thumping of desk by the members in the Lok Sabha.
As of now, the President gets Rs 1.50 lakh per month, the Vice President Rs 1.25 lakh and a Governor of a state Rs 1.10 lakh.
Till now, the President, the Vice President and the Governors continued to get less salaries as compared to the top bureaucrats and service chiefs since the laws were not amended to rectify an anomaly with the implementation of the 7th Pay Commission’s recommendations two years ago.
After the implementation of the 7th Pay Commission’s awards on January 1, 2016, the Cabinet Secretary, who is the top-most bureaucrat in the country, gets Rs 2.5 lakh per month and a Secretary in the Union Government draws Rs 2.25 lakh per month.
The President is also the supreme commander of all the three armed forces — the Army, Air Force, and Navy.
However, the President’s current salary was less than the chiefs of the three armed forces, who draw a salary equivalent to the Cabinet Secretary. (PTI)
Highlights
u No change in personal income tax slabs and rates;
u Surcharge of 10% on income above Rs 50 lakh but less than
Rs 1 cr, 15% on income above Rs 1 cr to continue;
u Standard Deduction returns after a decade; Rs 40,000 to be allowed in lieu of transport allowance and medical expenses;
u Economic growth pegged at 7.2-7.5% for H2 FY18;
u India’s average growth in first 3-year of NDA govt 7.5%;
u Indian economy size USD 2.5 trillion; 7th largest in world;
u India is expected to be 5th largest economy very soon;
u Revised Fiscal Deficit estimate for 2017-18 is Rs 5.95 lakh crore at 3.5% of GDP;
u Fiscal Deficit for FY’19 estimated at 3.3% of GDP;
u Govt’s market borrowing estimated at Rs 4.07 lakh cr in FY’19 versus Rs 4.79 lakh cr estimated in 2017-18;
u MSP of all kharif crops to be hiked to at least 1.5 times of their production cost;
u Institutional mechanism proposed to develop policies and practices for price and demand forecast;
u Rs 2,000 cr fund for developing and upgrading agri marketing infra in 22,000 Grameen Agri Markets and 585 APMCs;
u Allocation for food processing ministry doubled from Rs 715 cr in RE FY’18 to Rs 1,400 cr in BE FY’19;
u Kisan Credit Cards extended to fisheries and animal husbandry farmers;
u Agriculture credit disbursal target increased to Rs 11 lakh crore from Rs 10 lakh crore in 2017-18;
u Steps announced to deal with air pollution in the Delhi-NCR region;
u 2 crore more toilets to be built under Swachh Bharat Mission;
u Substantial increase in allocation of National Rural Livelihood Mission to Rs 5,750 cr in FY’19;
u Govt announced 2 major initiatives under ‘Ayushman Bharat’ programme;
u 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;
u Govt earmarks Rs 56,619 cr for SCs and Rs 39,135 cr for STs in FY’19;
u Sets target of Rs 3 lakh crore for lending under MUDRA;
u Govt to contribute 12% of wages of the new employees in EPF for all sectors for 3 years;
u Facility of fixed-term employment will be extended to all sectors;
u Outlay of Rs 7,148 cr for textiles sector in 2018-19;
u FinMin to leverage India Infrastructure Finance Corporation to help finance major infrastructure projects;
u Redevelopment of 600 major railway stations being taken up;
u Suburban network of 160 kms in Mumbai at an estimated cost of Rs 17,000 cr being planned;
u Gross budgetary support for Railways hiked to over Rs 3 lakh crore in 2018-19 from Rs 2.73 lakh crore in 2017-18;
u Plans to expand airport capacity more than 5 times to handle a billion trips a year;
u SEBI to consider mandating, beginning with large firms, to meet about 1/4th of their financing needs from bond market;
u Allocation on Digital India scheme doubled to Rs 3,073 cr;
u Rs 10,000 cr for creation and augmentation of telecom infra;
u Government to come out with policy to introduce toll system on ‘pay as you use’ basis;
u Proposed expenditure on infra pegged at Rs 5.97 lakh cr as against Rs 4.94 lakh crore in FY’18;
u Govt to evolve a scheme to assign enterprise a unique ID;
u Capital of the FCI will be restructured to enhance equity and to raise long-term debt;
u DIPAM will come up with more ETF offers including debt ETF;
u Disinvestment target for FY’19 at Rs 80,000 cr;
u Bank recapitalisation to pave way for PSBs to lend additional credit of Rs 5 lakh crore;
u Govt to formulate a ‘Gold Policy’ to develop gold as an asset class;
u Emoluments of President revised to Rs 5 lakh/month, Rs 4 lakh for Vice President and Rs 3.5 lakh for Governors;
u Govt proposes changes to refix salary, constituency allowance, office expenses and allowance payable to Members of Parliament;
u The law will also provide for automatic revision of emoluments of MPs every five years indexed to inflation;
u Rs 150 cr earmarked for FY’19 for the activities leading to Commemoration of 150th birth anniversary of Mahatma Gandhi;
u Growth in direct taxes up to Jan 15, 2018 is 18.7%;
u Corporate tax reduced to 25% for firms with turnover of Rs 250 cr in 2016-17;
u Interest income exemption on deposits with banks and post offices for senior citizens increased from Rs 10,000 to Rs 50,000;
u 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;
u Govt introduces long-term capital gains on equity market; long-term capital gains over Rs 1 lakh to be taxed at 10%;
u Education cess increased to 4% from 3%;
u E-assessment of Income Tax Act to eliminate person-to- person contact;
u Customs duty on mobile phones increased from 15% to 20%; also on certain parts of TVs to 15%;
u Govt makes PAN mandatory for any entity entering into a financial transaction of Rs 2.5 lakh or more;
u Food subsidy to rise to Rs 1.69 lakh crore in 2018-19 from Rs 1.4 lakh crore in current year;
u Defence outlay raised to Rs 2.82 lakh crore in 2018-19 from Rs 2.67 lakh crore in current year;
u Customs duty on crude edible vegetable oils hiked from 12.5% to 30%; on refined edible vegetable oil from 20% to 35%;
u Customs duty on perfumes, dental hygiene, after-shave, deodorants, room deodorisers, preparations for use on hair doubled to 20%. (PTI)
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