FinMin Arun Jaitley’s Union Budget 2018 speech was in line with public speculations. The speech focused primarily on boosting the rural economy, cutting back on income tax rates and improving the agricultural and automotive sectors. Some of the changes introduced were well appreciated whereas some met with disapproval. Here is a breakdown of Budget 2018’s hits and misses:
a. Prior to Budget 2018 companies with a turnover above Rs 50 crores were taxed at 30%. However, this was changed to the current 25% corporate tax for any company with a turnover of up to Rs 250 crores.
b. The hike in the customs duty for commodities such as automobiles, footwear, mobile phones, smart watches, etc. has helped local business to capture more of the local market share.
c. Rs. 1 lakh crore of an additional outlay for infrastructure, 20% hike on the infrastructure spent on heavy-duty vehicles and construction equipment and 35000 km of roads under Bharat Mala were expedited, which had a multiplier effect on the economic growth.
d. Introduction of the e-assessments to reduce the interface between the taxpayers and the income tax department was also a remarkable move.
d. Introduction of the standard deduction of Rs. 40,000 has helped the salaried people to claim an extra deduction of Rs. 5,800 and enjoy tax benefits on it.
a. The biggest setback came in the form of no change in the personal income tax front, especially among the individual middle-class taxpayers.
b. Introduction of long term capital gains tax on listed equities was a whiner even with the grandfathering and the threshold limit of Rs 1 Lacs.
c. Introduction of health and education cess and increasing the cess from 3% to 4% have impacted all the taxpayers on a broader scale.
d. The government in the budget 2018 revised the fiscal deficit target to 3.5% of the GDP for FY18, from an earlier estimate of 3.2%; this meant that the government had to borrow extra money to bridge the gap between its revenue and expenditure.
The Budget 2019 is just a couple of days away. It has already become quite the eventful affair, with Piyush Goyal taking on the portfolio of Interim Financial Minister. Let’s wait and see how many of our expectation this budget will meet.