Budget Highlights for FY 2018-2019
Background of the budget
Governance, Economy and Development
- Budget guided by mission to strengthen agriculture, rural development, health, education, employment, MSME and infrastructure sectors.
- Government says, a series of structural reforms will propel India among the fastest growing economies of the world.
- Country firmly on course to achieve over 8 % growth as manufacturing, services and exports back on good growth path.
Agriculture and Rural Economy
- MSP for all unannounced kharif crops will be one and half times of their production cost like majority of rabi crops: Institutional Farm Credit raised to 11 lakh crore in 2018-19 from 8.5 lakh crore in 2014-15.
- 22,000 rural haats to be developed and upgraded into Gramin Agricultural Markets to protect the interests of 86% small and marginal farmers.
- "Operation Greens" launched to address price fluctuations in potato, tomato and onion for benefit of farmers and consumers.
- Two New Funds of Rs10,000 crore announced for Fisheries and Animal Husbandary sectors; Re-structured National Bamboo Mission gets Rs.1290 crore.
- Loans to Women Self Help Groups will increase to Rs.75,000 crore in 2019 from 42,500 crore last year.
- Higher targets for Ujjwala, Saubhagya and Swachh Mission to cater to lower and middle class in providing free LPG connections, electricity and toilets.
Health, Education and Social Protection
- Outlay on health, education and social protection will be 1.38 lakh crore. Tribal students to get Ekalavya Residential School in each tribal block by 2022. Welfare fund for SCs gets a boost.
- World's largest Health Protection Scheme covering over 10 crore poor and vulnerable families launched with a family limit upto 5 lakh rupees for secondary and tertiary treatment.
- Fiscal Deficit pegged at 3.5 %, projected at 3.3 % for 2018-19.
Infrastructure and Financial Sector Development
- Rs. 5.97 lakh crore allocation for infrastructure.
- Ten prominent sites to be developed as Iconic tourist destinations.
- NITI Aayog to initiate a national programme on Artificial Intelligence(AI).
- Centres of excellence to be set up on robotics, AI, Internet of things etc.
- Building Institutions and Improving Public Service Delivery.
- Disinvestment crossed target of Rs 72,500 crore to reach Rs 1,00,000 crore.
- Comprehensive Gold Policy on the anvil to develop yellow metal as an asset class.
Some key features of Union Budget 2018-19:
Income Tax Slabs : No change has been proposed on tax slab rates.
Standard Deduction : A standard deduction of Rs 40,000 in lieu of travel, medical expense reimbursement and other allowances has been proposed for salaried employees and pensioners.
Increase in Cess : Currently, there is 3% cess on personal income tax (2% for primary education and 1% for secondary and higher education). This will be replaced with 4% Health & Education Cess.
Senior Citizens & Income Tax exemptions :
- The Interest income earned on Fixed Deposits & Recurring Deposits (Banks / Post office schemes) will be exempt till Rs 50,000 (current limit is up to Rs 10,000). No - TDS will be deducted on this income u/s 194A.
- The premium paid on health insurance plans by senior citizens of up to Rs 50,000 can be claimed as tax deduction under Section 80D (current limit is Rs 30,000).
- The limit under section 80DDB has been proposed at Rs 1 lakh towards medical expenses, for treatment of Critical Illnesses.
- The maximum investment under Pradhan Mantri Vaya Vandana Yojana has been increased to Rs 15 Lakhs from the current 7.5 Lakhs and scheme to be extended upto March 2020.
Long Term Capital Gains on Shares & Equity Mutual Funds :
- The Budget 2018-19 has proposed to introduce tax on Long Term Capital Gains on sale of stocks and equity mutual fund units.
- LTCG tax at 10% on gains of above Rs 1 lakh from Equities & Equity mutual funds. No benefit of indexation.
- No change has been proposed to STT tax rate.
- No change has been proposed to holding period to arrive at LTCG/STCG.
- STCG will continue to be taxed at 15%.
- Any LTCG accrued on Stocks/Equity funds up to 31-Jan-2018 are tax-free, if held for 1 year period.
For Example : If the equity share is purchased 6 months before 31st January 2018 at Rs 1,000 and the highest price quoted on 31st Jan is Rs 1,200. There will be no tax on the gains upto Rs. 200, if the stock is sold after 1 year. However, any gains in excess of Rs 200 earned after 31st Jan 2018 will be taxed at 10% if this share is sold after 31st July 2018.
- Equity Oriented Mutual Funds will now have to pay a dividend distribution tax (DDT) of 10%.
- PSU general insurance companies may be merged into one Entity and the new entity would be listed on the Stock exchanges.
- Gold Monetization Schemes to be revamped.
- The new budget has proposed to launch National Health Protection Scheme, to provide Rs 5 Lakh health insurance cover for 10 crore poor families. This can benefit 50 crore individuals in India.