Comprehensive Union Budget 2018-2019
3 weeks ago Shruti Goel 0
The Union budget of India is the annual budget of the Republic of India. It is mentioned in the article 112 of the Constitution of India and known as the Annual Financial statement. It is presented on 1st February, by the Finance Minister in Parliament. It is then materialized before the beginning of the new financial year in April. This year also, Union Finance Minister Arun Jaitley has presented the Union Budget for the year 2018-2019 on 1st February 2018. According to him, the Indian economy has now become a 2.5 trillion dollar economy which is seventh largest in the world and is soon expected to become the fifth largest economy.
Giving final touch to the proposed Union Budget, efforts have been made to cut the rates such that it does not pose a threat to the revenue. Most of the indirect taxes are now under the coverage of the Goods and Services Tax Council. Hence, any major changes in Indirect tax are unlikely to happen. Budget 2018 is expected to have many other positive changes towards the side of direct tax. However, any tax reductions either for corporates or for individuals will be done while keeping in mind that any changes do not reduce the revenue of the government too much.
One of the key focus areas of the government has been to reduce the tax burden for the salaried and the normal middle-class people. Here’s the coverage of aspects presented in the budget.
Cryptocurrencies declared illegal
While presenting the Union Budget 2018-2019, Finance Minister Arun Jaitley declared that all the cryptocurrencies, including bitcoins, are illegal. All the possible measures will be taken by the government to eliminate the use of these currencies. Cryptocurrencies are not considered as a legal tender and there are no regulations for governing such virtual currencies in India. No licence has been allotted to any company by the Reserve Bank of India to be able to operate these currencies.
Apart from this declaration, he also added that increasing concerns raised several times regarding the use of virtual currencies (VC’s) and challenges related to regulation are being looked after. The Department of Economic Affairs (DEA) has formed a committee in collaboration with the Department of Financial Services (DFS), Ministry of Home Affairs (MHA), RBI, Niti Aayog, and SBI. The report submitted by this company is being examined.
Welcoming the Tax Payers
- The Union Budget is formed keeping the rates of personal income tax and slabs unchanged.
- Three general public sector insurance companies: National Insurance Co Ltd, United India Assurance Co Ltd, and Oriental India Insurance Company will be merged into one and the entity on stock exchanges will be subsequently listed.
- A relief to the taxpaying individuals has been proposed by the Finance Minister Arun Jaitley applying a nominal deduction of ₹40,000 labelling the transport and medical allowance. This is minutely beneficial as the present medical and transport allowances total up, giving a tax-free salary of up to ₹34,200 p.a.
Benefits for Senior Citizens
- He has further announced additional concessions for senior citizens. Earlier taxation was exempted only against ₹10,000 earned through interests on fixed deposits by the senior citizens. Extending this limit, now the interest of up to ₹50,000 earned on fixed deposits by senior citizens will be tax-free.
- TDS will not be deducted under the section 194A extending it for all fixed deposit and recurring deposit schemes.
- Incurred expenses up to ₹1 Lakh on critical illness by senior citizens will be spared. Earlier this amount was only ₹60,000 for senior citizens and ₹80,000 for very senior citizens.
- The Pradhan Mantri Vaya Vandana Yojana is also proposed to be extended up to March 2020, increasing the limit up to ₹15 Lakh per senior citizen.
Education and Health of Rural People
- Proposals have been made to take care of the needs of rural families regarding the education and health. Existing 3% education tax levied on the tax payable has been increased by 1%. Education cess on personal and corporate income tax will now be 4% taken as ‘Health and Education Cess’.
- The government will now be able to collect an additional amount of about ₹11,000 crore, helping the BPL (below poverty line) and rural families. Their education and health needs will be taken care of.
- The government will also be launching a flagship scheme under which 10 crore poor families will be covered. It is being considered as a ‘game changer’. A coverage of up to Rs five lakh per family will be provided per year for secondary and tertiary care hospitalisation.
- Healthcare has largely been made affordable by launching this scheme. It is indeed appreciating that 40 percent of India’s population will be absorbed under this insurance scheme. It will prove to be an important step in creating a Swasth Bharat.
Benefits to Women
- The target of beneficiaries has been raised to 8 crores under the Ujjwala scheme.
- It has been proposed to reduce the women employees contribution to 8% for the first three years of their employment against the existing rate of 12% or 10%. There is no change in the employer’s contribution. This is done for promoting more employment of women in the formal sector and enabling higher take-home wages.
- The lower corporate tax rate has been proposed to 25 percent for businesses having a turnover of up to ₹250 crore. This will benefit the entire MSME sector accounting 99 percent of companies filling the taxes. The estimated revenue due to this measure is ₹7000 crore in 2018-19.
- However, for businesses having a turnover of more than ₹250 crore 30% tax remains.
- According to Mr Jaitley, for further ease of doing business 372 action points will be carried out in a ‘mission mode’. Each state will be taking up these reforms and will compete with each other.
- It will develop a better business climate for investors. The government is targeting to be among the top 50 countries in the ranking of overall ease of doing business. Presently it has jumped 30 positions and reached rank 100th among 190 countries.
The defence has been allocated a total of ₹2.95 lakh crore including pensions observing a modest hike. Defence allocation has crossed the ₹1 lakh crore mark for the first time. Out of the overall allocation, ₹1,95,947 crore is the revenue component whereas ₹99,563 crore is the capital allocation. ₹1,08,853 crore has been allocated for the defence pensions which is 14.26% higher than the estimates of the last year at ₹95,000 crore. Defence allocation for this year accounts for 12.1% of the total Central government expenditure.
Boost to Telecom Infrastructure
- Referring to the work done under government’s Bharat Net project, Finance Minister Arun Jaitley has announced a ₹10,000-crore outlay for creation and augmentation of the telecom infrastructure in the country.
- The aim of the Bharat Net project is to connect 2.5 lakh gram panchayats by March 2019. It has already gained an achievement connecting 1 lakh gram panchayats with a high-speed optical fibre network. Under Phase 1 of the program, this achievement has made it possible to have a broadband access over 2.5 lakh villages.
- Along with it, a proposal has been made to provide broadband access to five crore rural citizens by setting up 5 lakh wifi hotspots.
- The Department of Telecom will be supporting the establishment of 5G centres with IIT Madras to take full benefits of emerging technologies. Particularly the adoption of latest 5th generation technology is being focussed.
- The finance minister has doubled the allocation to ₹3,073 crore in 2018-19 for the Department of science and technology (DST) on digital India program. This step has been taken for the promotion and adopting of the latest developing technologies like machine learning, artificial intelligence (AI), and the Internet of Things (IoT). With the help of this, DST will invest in the development of various technologies. They will be launching a mission on cyberspace in order to support the establishment of the centre of excellence.
- Digital India, Startup India, Make in India, and other initiatives will be helping in the establishment of a digital society. The global economy is gradually transforming into a digital economy which proves it to be the need of the hour.
- Infrastructure is termed as the ‘growth driver’ of the economy. Arun Jaitley declared the allocation of ₹5.97 lakh crore for 2018-19 for spending on infrastructure.
- Our country needs a large investment in this sector. It is important for increasing the growth of GDP and connecting the nation with a network of roads, airports, railways, and inland water along with providing good quality services to the people.
- It will also help in creating employment and will aid the growth. The government has increased the expenditure on infrastructure to ₹5.97 lakh crore in the year 2018-19 as compared to ₹4.94 lakh crore in the previous year 2017-18.
- Using an online monitoring system of Pragati alone, the targets and achievements in the infrastructure sector are personally examined by the Prime Minister. Projects of a total of ₹9.46 lakh crore have been facilitated and regularly tracked.
- National Highways project for highways exceeding 9000 km would be completed in the year 2018-19. A total of 35,000 km of highways would be constructed under the Phase 1 of this project. An estimated cost of ₹5.35 lakh crore will be invested in this.
- The government had provided a capital expenditure of ₹1,48,528 crore for the Indian Railways for 2018-19. All the trains will soon be having great facilities such as WiFi and CCTV’s.
- In order to secure India’s defence, connectivity infrastructure is being developed in the defence areas. The government will also be focusing on seaplanes.
- Urbanisation is a priority and the government has already undertaken a step by launching the Smart City Mission for the same. Ninety-nine cities have been selected for an investment of ₹2.04 lakh crore. Projects like smart roads, solar roof, and intelligent transport system have already been started to be implemented in these cities.
- Projects worth ₹2,350 crore have already been completed and the remaining work worth ₹20,850 crore is in progress.
- The government will also be developing 10 tourist destinations in order to attract more and more visitors.
- The Union Budget 2018 has given its green signal to the 160 km long urban transportation network. A suburban rail network costing up to ₹17,000 crore will come up to promote the growth of Bengaluru metropolis.
A fiscal deficit occurs when the total expenditure of the government exceeds the amount of revenue. An accumulation of yearly deficits leads to debt. This fiscal deficit has been 4.1% in the year 2014-15. It has been gradually decreasing since then with 3.9% in the following year and 3.5% in 2016-17. Fiscal deficit bears the overall rating of the country in the debt market. This year, the target fixed by the Fiscal Responsibility and Budget Management Act was 3% but missing the target, it has been fixed at 3.3% for the year 2018-19.
- As proposed in the Union Budget 2018-19, imported items which include mobile handsets, cars and motorbikes, fruit juices, eatables, perfumes, and footwear will become costlier. The customs duties on these products have been hiked.
- However, cost of some imported items such raw cashew nuts, solar tempered glass, and raw materials and accessories of cochlear implants will be reduced. They have been made cheaper by the government reducing import duties on these items.
List of imported items becoming costlier includes:
- Cars and Motorcycles
- Mobile phones
- Silver, Gold, Coloured gemstones, Diamonds, Imitation jewellery
- Vegetable, fruit juices including orange and cranberry
- Various food preparations other than soya protein
- Perfumes, deodorants, bath preparations, depilatories, scent sprays and similar toilet sprays, and toilet waters
- Sunscreen, suntan, manicure, and pedicure preparations
- Oral dental hygiene preparations, denture fixative pastes and powders, dental floss
- Pre-shave, shaving, and after-shave preparations
- Truck and bus radial tyres
- Silk Fabrics
- Smartwatches/wearable devices, wrist watches, pocket watches, clocks
- LCD/LED TV Panels
- Furniture, mattresses
- Tricycles, scooters, pedal cars, wheeled toys, dolls’ carriages, dolls, toys, and puzzles of all types.
- Video game consoles
- Equipment for sports and outdoor games, swimming pools and paddling pools.
- Cigarette and other lighters, candles
- Olive oil, groundnut oil, and other edible oils.
List of imported items becoming cheaper includes:
- Raw cashew nuts
- The solar tempered glass used for manufacturing solar panels/modules.
- Raw materials, parts or accessories used in making cochlear implants.
- Selected capital goods and electronics such as ball screws and linear motion guides.
Government is highly encouraged by the success of their efforts to reduce the black money. They pledge to continue with more such policies as demonetisation in future so that the honest taxpayers continue to get rewarded and all the black money gets contained. The government had come out with plans to deal with the problem of domestic black money as well as illegal funds which are stored abroad.
Delhi Air Pollution
The ill-famed Delhi Smog issue was mentioned in the Union Budget 2018. A special scheme has been proposed to tackle with the burning of crop residue in the neighbouring states of the National Capital. Machinery will be subsidised to support Haryana, Punjab, Uttar Pradesh and Delhi NCR regarding the management of crop residue. In-situ machinery will be set up for disposing of the crop residue in a manner that does not affect the environment.
Revisions in Salaries of MPs
As according to the proposed budget 2018, there has been a hike in the salaries of the members of parliament. The salaries of the President and Vice-President of India has been increased to ₹5 lakh and ₹4 lakh per month respectively. There will also be a rise in the salaries of the Governers. MPs will now get a basic salary of ₹1,00,000 (increased from ₹50,000).