The Finance Minister Arun Jaitley will present the Union Budget 2018-19 on February 1st 2018. You and several citizens are eagerly awaiting this Budget. This is the last regular budget of the NDA Government. The Union Budget 2018-19 is expected to give a huge tax relief to middle class citizens in India. The middle class especially the salaried class is suffering because of high retail inflation. Retail inflation hit a 15-month high of 4.88% in November.
Will this be a budget for the middle class? Let's find out. Want to know more on tax planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.
A budget for the middle class can boost consumption in the economy. The World Bank has said that India will be the fastest growing economy in 2018. For this to happen, the middle class needs a huge tax relief.
The Government plans to hike the tax exemption limit from the existing Rs 2.5 Lakhs a year, to at least Rs 3 Lakhs a year, for citizens less than 60 years old. There is even talk of the tax exemption limit being hiked to Rs 5 Lakhs a year. In the Union Budget 2017-18, the Finance Minister Arun Jaitley left the income tax slabs unchanged. To help small taxpayers, the base tax rate was reduced from 10% to 5%.
In the Union Budget 2018-19, Finance Minister Arun Jaitley could lower the tax rate for an income between Rs 5 Lakhs to Rs 10 Lakhs from 20% to 10%. Citizens with income between Rs 10 Lakhs to Rs 20 Lakhs could see a tax rate of 20%, from the current 30%. Income beyond Rs 20 Lakhs could see a tax rate of 30%.
If the tax exemption limit is hiked, it will be a major relief to the middle class, especially the salaried citizens who have been hit by high retail inflation.
Will these be the new income tax slabs and income tax rates?
Section 80C encourages you to invest in financial instruments like PPF, NSC, ELSS and so on, by giving you tax benefits. You get a maximum deduction up to Rs 1.5 Lakhs a year, under Section 80C of the income tax act.
There are chances that the deduction limit under Section 80C could be hiked to Rs 2 Lakhs.
The Government has been chasing tax evaders and demonetization and GST, have made tax evasion very difficult. There is talk of introducing a tax on long-term capital gains (LTCG) in equities. Currently, LTCG in equity is tax-free.
If you stay invested in equities for a year or more, your gains are called long-term capital gains. If you sell equity investments after a year, LTCG is tax free. LTCG in equities could be taxed at 15% or maybe 10% after Union Budget 2018-19.
The Government wants to help the middle class and a LTCG tax on equities, may affect about 5,000 families of the rich and well-to-do. The money the Government collects by taxing LTCG in equities, can be used to help crores of poor people and the middle class in India. Be Wise, Get Rich.
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