Today, we have witnessed a cracking Union Budget 2018-19. This Budget announced a number of schemes for agriculture and rural growth. The Finance Minister Arun Jaitley has allocated a massive Rs 14.34 Lakh Crores for the livelihood of farmers.
The Minimum Support Price (MSP) for all Kharif Crops will be increased to 1.5 times the production cost. The Government has announced Operation Green with an allocation of Rs 500 Crores to promote agriculture in India. With the Finance Minister calling Bamboo, Green Gold, the focus on agriculture is complete.
The Government has taken rural health very seriously. A National Health Protection Scheme has been launched, to cover 10 Crore poor and vulnerable families. The Government will provide Rs 5 Lakh per family per year in the World's largest Government funded healthcare programme.
The salaried class has been looking at this Union Budget with a lot of anticipation. Let's see what the Finance Minister has in store for them.
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The Middle and salaried class was expecting a hike in the income tax exemption limit from Rs 2.5 Lakhs to Rs 3 Lakhs. Unfortunately, personal Income Tax Slabs remain unchanged. The personal income tax slabs for senior citizens and super-senior citizens remains unchanged.
2. FM Jaitley pleases the office-goer with a standard deduction
The standard deduction was withdrawn in 2005. Every budget, office goers hoped this would come back. It has come back this Budget. The Finance Minister has announced a standard deduction of Rs 40,000 a year.
If you are a business person, you can deduct business expenses and save tax. What can the salaried do? Standard deduction allows a flat deduction from salary income before calculating taxable income. This will help you make up some of the expenses that you (an employee) incurs, during the course of employment.
Hear this great news. The Government will pay the 12% of wages to the Employees Provident Fund (EPF) contribution on behalf of new employees in all sections for the next three years. Women's contribution to retirement savings has been reduced to 8% from 12%, for the first 3 years. Women get higher take-home pay, but they might not feel the need to save.
Budget 2018 is all about Senior citizens. Premiums paid for health insurance plans for senior citizens under Section 80D, enjoy tax deduction up to Rs 30,000 a year. This Section 80D benefit has been increased to Rs 50,000 a year.
The Finance Minister has also announced that there will be no TDS on FDs and Post Office Deposits up to Rs 50,000. Senior citizens would enjoy an increased interest income exemption up to Rs 50,000 from Rs 10,000 for all FDs, RDs and even small savings.
FM Arun Jaitley has announced a standard deduction of Rs 40,000 which will benefit pensioners, which was mainly enjoyed by office-goers. There is also an Increase in deduction limit for medical expenditure for certain critical illness from Rs 60,000 (in case of senior citizens) and from Rs 80,000 (in case of very senior citizens) to Rs 1 lakh for all senior citizens, under section 80DDB.
There's no tax-free return from LTCG on equity mutual funds, on investments made a year earlier. FM Jaitley has proposed a tax on long-term capital gains (LTCG) of over Rs 1 Lakh at 10% without the indexation benefit. However, all gains up to January 31st, 2018 will be grandfathered.
If you had purchased an equity share 6 months before 31st January 2018, at Rs 100 and the highest price quoted on 31st January 2018, with respect to this equity share was Rs 130, there's no tax on your profit of Rs 30, if this share is sold after one year from the date of purchase. But, any gain in excess of Rs 30 earned after 31st January 2018, will be taxed at 10%, if this share is sold after 31st July, 2018.
FM Jaitley has proposed a tax on distributed income called dividend distribution tax (DDT), on equity-oriented mutual funds at 10%. Many investors invest in dividend options of balanced mutual fund schemes to get monthly dividends. DDT will reduce the in-hand return of investors who opt for the dividend option of balanced funds. The growth option of balanced funds will be more suitable for investors looking for regular income.
Finance Minister Arun Jaitley, stated that the Government will do everything to discontinue the use of Bitcoin and other virtual currencies in India. India does not recognize cryptocurrencies as legal tender and will instead encourage blockchain technology in payment systems.
Expect more money to flow into stocks and equity mutual funds as cryptocurrencies are destroyed.
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6. MSME sees a lot of benefits
This Budget was all about MSME. MSME had suffered heavily because of Demonetization and GST. The Government introduced measures to ease NPAs on MSMEs. MSMEs will get loans easily, online. Fintech will boost MSME in India.
Now, for the biggest news. Jaitley had last year reduced the corporate tax for smaller companies with annual turnover up to Rs 50 Crores to 25%. He has now extended this benefit to MSME with a turnover up to Rs 250 Crores. Be Wise, Get Rich.
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