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Highlights of the Union Budget 2018: The Winners and the Losers

Like every union Budget, this year’s budget too has come with its highs and lows. The budget this year is chiefly focused on providing a boost to the agricultural sector, along with giving a major push to healthcare and education sectors in India. According to the Press Information provided by the Government of India, the budget for 2018 has been guided by mission to strengthen agriculture, rural development, health, education, employment, MSME and infrastructure sectors. “This budget will accelerate economic growth, it is focused on all sectors” –  PM Narendra Modi The budget has been viewed as a mixed-bag by experts as well as investors. As with every budget, this year too has its share of ‘the good’, ‘the bad’ and ‘the ugly’.

THE GOOD

  • Farmers/ Agriculture:
    • Minimum support price for Kharif crops hiked by 1.5 times
    • 100% tax deduction to companies registered as farmer-producer companies with turnover of Rs 100 crore
  • Senior Citizens:
    • No TDS on FDs and post office deposits up to Rs 50,000
    • Deduction for senior citizens increased to Rs 50,000 for medical insurance
  • Salaried People/ Employees:
    • Standard deduction of Rs 40,000
    • The government to contribute 12 % of wages for new employees for Employee Provident Fund.
  • Healthcare and Education:
    • Ayushman Bharat Programme. Rs 5 lakh/year per family for 10 crore families for health expenses
    • Eklavya schools to be started for Scheduled Tribe populations
    • Government will set up two new Schools of Planning and Architecture
    • Rs 600 crore allocated to Tuberculosis patients undergoing treatment
  • Consumer Goods: Rise in custom duty on mobile phones from 15% to 20%, making them costlier. This will help domestic manufacturers
  • Ujjwala Scheme: Free gas connection for 8 crore poor women under Ujjwala scheme
  • Others:
    • Health and Education cess to increase to 4%
    • Package worth Rs 7100 crore for the textile sector
    • No legal status for crypto-currencies
    • Lower tax rate of 25 per cent to companies with a reported turnover up to Rs 250 crore
    • Infrastructure outlay increased from Rs 4.94 lakh crore to almost Rs 6 lakh crore. 11. Expansion in airport capacity by five times to handle 1 billion passengers
    • Elimination of 4,267 unmanned rail crossings at broad gauge network
    • Rs 56,000 crore for SCs and Rs 39,000 crore for STs

“Farmer friendly, common citizen friendly, business environment-friendly and development friendly” –  PM Narendra Modi

THE BAD

  • Personal Income Tax: No change in tax slabs for personal income tax
  • Fiscal Deficit: The government has opted for a wider fiscal deficit at 3.5 per cent of GDP for 2018-19 and projected 2018-19 deficit at 3.3 per cent of GDP. Higher fiscal deficit not good for government credibility and FDI among other things
  • Private Investments & Jobs: No tax cut for big corporates which could have helped revive private investment as well as create more jobs.

 

THE UGLY

Possibly the most debated of propositions of the Union Budget is:

  • Long Term Capital Gains Tax: Govt introduces LTCG tax of 10% on capital gains over Rs1 lakh

 Source: The Times of India and Economic Times

REAL ESTATE TAKEWAYS

In terms of Real Estate, the budget does not have a direct impact, though it has offered a boost to affordable housing, with as many as 51 lakh houses to be built in the rural areas between 2018 and 2019.

The Government will set up a dedicated Affordable Housing Fund (AHF) through the National Housing Bank.

  • The National Bank Act is being amended to transfer its equity from the Reserve Bank of India to the Government.
  • Home buyers will also be provided with the ease of credit for aspirational or affordable homes.
  • Necessary measures taken by the Government and market regulators for development of instruments of monetisation such as Infrastructure Investment Trust (InvIT) and Real Investment Trust (ReITs) in India. The Government would initiate monetising select Central Public-Sector Enterprises (CPSE) assets, using InvITs from the next year.
  • In order to minimise hardships in real estate transactions, the budget also proposes that no adjustment be made in a case where the circle rate value does not exceed 5% of the consideration. In the current scenario, when taxing income that is received from capital gains, business profits and other sources with respect to immovable property, the consideration or circle rate value, whichever is higher, is adopted and the difference is counted as income both in the hands of the purchaser and seller.
  • Out of the 100 Smart Cities projected to be built under the Smart Cities Mission, 99 cities have been allocated an outlay of Rs 2.04 lakh crore, for the implementation of various projects such as Smart Command and Control Centre, Smart Roads, Solar Rooftops, Intelligent Transport Systems, Smart Parks.

Source: ET Realty by The Economic Times

Over all, the budget presented by the Finance Minister, Mr. Arun Jaitley for 2018 focuses on the upliftment of rural India, with the 2019 assembly elections looming ahead. With the country having witnessed nation-wide protests by farmers in 2017, the government is making sure to deliver more money for rural areas.

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