Budget 2018 is now announced by Finance Minister Arun Jaitley for the financial year 2018-19, including the good, the bad and the ugly effects. Like every Budget, this one too has also its positives and negatives. So the below-mentioned points will highlight us about its good and bad effective features.
The Good in Budget 2018
# For agriculture
- The minimum price offered to farmers for their crops where the minimum support price for Kharif crops hiked by 1.5 times means all Kharif crops will be paid a minimum support price (MSP) that is 50 percent more than the cost of production.
- The budget provides for a 100 percent tax deduction for farm producer firms with Rs 100 crore turnover.
- There is a special impetus to promote “Operation Green”. In total, there has been a record allocation of Rs. 14.34 lakh crores for the agriculture sector.
# For healthcare
- The Budget 2018 announces a ‘National Health Protection scheme’ to provide health cover of up to Rs 5 lakh to each of the 10 crore poor families per year.
- Under the Aayushman Bharat programme, a total of 1.5 lakh centers will be set up to provide health facilities closer to the homes.
- Tuberculosis patients will be provided with a grant at the rate Rs 500 per month during the course of their treatment.
- The senior citizens of the nation like Incentives for Senior citizens like exemptions in income of Rs 10,000 from Banks FD and post offices and Rs 50,000 per annum exemption for medical insurance under Sec 80D means No TDS for senior citizens on FDs and post office deposits up to Rs 50,000. Also deduction for senior citizens increased to Rs 50,000 for medical insurance.
- There are plans to set up 24 new medical colleges and hospitals by upgrading district level ones. The budget lists that the PM JivanBimaYojana has benefited 5.22 crore families with more in the pipeline.
# For Transport infrastructure
- Infrastructure outlay increased from Rs 4.94 lakh crore to almost Rs 6 lakh crore.
- National highways exceeding 9,000-km will be completed in 2018-19 and allocation of over Rs 1.48 lakh crore has been planned for railways.
- Elimination of 4,267 unmanned rail crossings at broad gauge network.
- Regional air connectivity scheme shall connect 56 unserved airports and 31 unserved helipads for a better connected and closer India.
- Expansion in airport capacity by five times to handle 1 billion passengers.
- Package worth Rs 7100 crore for the textile sector.
# For the rural economy
- Under the Prime Minister’s SaubhagyaYojana, it is estimated that 4 crore poor people will get power connection.
- 8 crore poor women will get new LPG connections means free gas connection for 8 crore poor women under Ujwala scheme.
- Under the Swach Bharat Mission, the Government plans to construct 2 crore toilets in the next fiscal year.
- The government has set an ambitious target to provide a house for all by 2022.
- A total of 1 crore houses are to be built under Pradhan MantriAwasYojana in the rural areas.
- The Government will expand the PM Jan DhanYojana. All 16 crore accounts will be included under micro insurance and pension schemes for better returns and social outreach.
# To formalize the economy
- The Employees Provident Fund (EPF) Act will be amended to reduce the contribution of women to 8 percent from 12 percent for first three years, with no change in employer’s contribution.
- The government will contribute 12 percent of wages of new employees in EPF for all sectors for the next 3 years.
- The standard deduction of Rs 40000 for salaried people.
- The target for loan disbursement under Mudra scheme has been set at Rs 3 lakh crore for next fiscal.
- Rs 56,000 crore for SCs and Rs 39,000 crore for STs.
- Rise in customs duty on mobile phones from 15% to 20%. This will be a big relief for the domestic mobile manufacturers.
The Bad in Budget 2018
- No change in personal income taxes. The middle class had expected a change in tax slabs while others had expected to raise of exemption limit in Budget 2018.
- The government has extended Corporate Tax of 25% to companies with turnover up to Rs 250 cr in the financial year 2016-17.
- The government has opted for the wider fiscal deficit at 3.5 percent of GDP for 2018-19 and projected 2018-19 deficit at 3.3 percent of GDP. Higher fiscal deficit not good for government credibility and FDI among other things.
- 100% tax deduction is allowed to co-operative societies, the majority of whom have cooked books and shady members.
- No tax cut for big corporates which could have helped revive private investment as well as create more jobs.
- The Education cess increased to 4% from 3% to collect additional Rs 11,000 crore but in turn, has put an additional burden on the tax paying middle class.
The ugly in Budget 2018
# LTCG and DDT on Equity
Govt introduces LTCG tax of 10% on capital gains over Rs1 lakh means the long-term capital gains will now be taxed at a rate of 10% if exceeding Rs 1 lakh. Also, earlier there is no dividend distribution tax for equity and equity mutual funds. Now it is levied at 10%.
# increase in customs duty on imported items
Urban consumers will have to pay more for almost everything they cover from cranberry juice and iPhones to sunglasses and lipsticks due to higher customs duty (10% on basic customs duty). The import duty increase would make it a double whammy for consumer products companies that are already reeling under poor sales due to low consumer sentiment.
- Prices of imported iPhones and Google’s Pixel smartphones are set to go up by 3-4% due to increase in customs duty to 20% from 15%, though iPhone SE, which is locally manufactured, will escape the price hike.
- Import duty on a host of beauty and cosmetic products, watches, including make-up preparations, sunscreens, perfumes, hair colors, and manicure and pedicure products, is being doubled to 20%.
- The move will impact global players such as Sephora, South Korea-based Innisfree, Bobbi Brown, Estee Lauder, and Italy’s Kiko Milano which import majority of their products.
- Flat-panel television prices are expected to go up by 1.5-2%, escaping any major price increase despite the government doubling duty on LED panels to 15%, since most of the companies have started local assembly of panels by placing the glass top on the panel.
- The price hike for televisions will be due to increase in duty on parts like the TV cabinet and printed circuit board where it has gone up to 15% from 10%.
- The price of toys, games, dolls, puzzles, watches & clocks to cost more. Outdoor sports equipment, footwear, fishing rods, cigarette lighters, silk fabric, sunglasses may also become costlier.