Salaried get back standard deduction of 40k; govt taxes long-term capital gains in equity.
New Delhi: Budget 2018 – the BJP-led NDA government’s last before general elections – kept its eyes firmly on agriculture and rural sectors, healthcare for the poor and some relief in income tax for the salaried.
Prime Minister Narendra Modi termed the Union Budget ‘development-friendly’ and said it would strengthen the vision of a ‘new India’.
Finance Minister Arun Jaitley presented his fifth straight budget in the Lok Sabha on Thursday. He said the focus of the government in the coming year would be agriculture and rural India and announced that all kharif crop would be paid a minimum support price (MSP) that is 50 per cent more than the cost of production.
He said the credit to agriculture would be raised to Rs 11 lakh crore in the coming fiscal from Rs 10 lakh crore.
Kisan credit card would be extended to fisheries and animal husbandry farmers while Rs 2,000 crore would be provided for development of the agri market.
Congratulating Finance Minister Arun Jaitley and his team, Modi said farmers, Dalits and tribal communities would gain from the budget. The budget, he emphasised, would create new opportunities for rural India.
To provide healthcare to the poor, Jaitley announced a 'National Health Protection scheme' to provide health cover of up to Rs 5 lakh to each of the 10 crore poor family per year.
Read: Union Budget 2018: Key highlights
He raised the health and education cess, levied on all taxable income, to 4 per cent from current 3 per cent, and introduced a social welfare surcharge of 10 per cent to fund social welfare schemes.
But to fund these, he let go on the fiscal consolidation roadmap. As a result, fiscal deficit for current fiscal will widen to 3.5 per cent of the GDP as against 3.2 per cent previously targeted, and to 3.3 per cent in FY 2019 as opposed to 3 per cent previously targeted. Fiscal deficit in 2016-17 was 3.5 per cent of the GDP.
“We have worked sincerely without thinking about the political cost,” he said.
Jaitley also announced 100 per cent tax deduction for farm producer firms with turnover of Rs 100 crore.
He lowered the corporate tax for small, micro and medium enterprises with turnover of up to Rs 250 crore to 25 per cent from current 30 per cent, while reintroducing the tax on long term capital gains of over Rs 1 lakh made from the sale of shares.
While keeping the income tax rates and slabs unchanged, Jaitley introduced a Rs 40,000 standard deduction for salaried employees and pensioners against transport and medical expenses.
For senior citizens, exemption of interest income on bank deposits was raised to Rs 50,000 from the current Rs 10,000, he said, adding tax would not be deducted at source on fixed deposits.
Also, exemption on medical expenses on critical illnesses has been raised to Rs 1 lakh, he said, in his 110-minute speech.
Jaitley said a 10 per cent tax on long-term capital gains exceeding Rs 1 lakh made from the sale of shares has been introduced but those made till Janaury 31 would be grandfathered.
A 10 per cent tax on distributed income by equity-oriented mutual funds has also been proposed in the Budget.
With excise duty and service tax being subsumed in the Goods and Services Tax (GST), Jaitley made changes only in customs duty -- raising them in case of mobile phones and lowering for raw cashew.
The target for providing free LPG connection to poor has been raised to 8 crore from 5 crore and 4 crore poor households would be provided free electricity connections.
The President's salary has been raised to Rs 5 lakh per month and that of the Vice President to Rs 4 lakh. Governors will get Rs 3.5 lakh a month.
For members of Parliament, he announced a new law that would allow for automatic revision in their emoluments every five years based on inflation.
He said the focus would be on the agri sector, infrastructure and education as he promised to provide education holistically without segmentation from pre-nursery to Class 12. He said education would move from the black board to digital board.
“The emphasis would be on generating higher income for farmers. Our government wants to help farmers produce more and realise higher prices,” Jaitley said.
Stating that crop production is at a record high, Jaitley said the government was committed to giving 50 per cent more than cost of crop production to farmers.
He said when the NDA government took over, India was considered one of the fragile five economies of the world and the Modi-led Government have reversed it.
"India is today fastest growing economy... India is today a USD 2.5 trillion economy and will become fifth largest in the world from the present seventh," he said, projecting exports growth at 15 per cent.
In the second half (October-March) the growth was expected to be 7.2-7.5 per cent and India was firmly on the path to achieve 8 per cent growth, he said.
Stating that air pollution in Delhi NCR is a cause for concern, he said the Centre would implement special scheme to support the governments of Haryana, Punjab, UP and Delhi NCT to address it and subsidise machinery for the management of crop residue.
The Budget announced allocation of Rs 600 crore towards nutritional support of tuberculosis patients and setting up of 24 new medical colleges and hospitals by upgrading district level ones.
He said the government is slowly but steadily progressing towards universal health coverage and total budget for health, education and social security was increased to Rs 1.38 lakh crore for 2018-19 from Rs 1.22 lakh crore in the current fiscal.
Stating that Rs 4.6 lakh crore has been sanctioned under the MUDRA Scheme, he said government would soon announce measures to address the issue of non-performing assets in the MSME sector.
Mass formalisation of MSME sector is happening after demonetisation and GST and the target for loan disbursement under Mudra scheme has been set at Rs 3 lakh crore for next fiscal, Jaitley said.
Employees PF Act would be amended to reduce contribution of women to 8 per cent from 12 per cent for first three years, with no change in employer's contribution, Jaitley said.
The government will contribute 12 per cent of wages of new employees in EPF for all sectors for the next 3 years, he said.
He said Rs 50 lakh crore is needed for infrastructure and the government would allocate Rs 7,140 crore for textiles sector in next year.
National Highways exceeding 9,000-km would be completed in 2018-19 and allocation of over Rs 1.48 lakh crore has been planned for railways.
Regional air connectivity scheme shall connect 56 unserved airports and 31 unserved helipads and the government would expand capacity of airports by five times to cater to one billion trips a year.
Prime Minister Narendra Modi said the Budget devotes attention to all sectors, ranging from agriculture to infrastructure.
The budget is “farmer friendly, common citizen friendly, business-environment friendly” and will add to “ease of living” and “ease of doing business”, Modi added.
With inputs from PTI.