Government says that it is firmly on track to attain high growth of 8% plus as manufacturing, services and exports are back on good growth path. While GDP growth at 6.3% in the second quarter of 2017-18 signaled a switch in the economy, growth in the second half is likely to remain between 7.2% to 7.5%. The Union Minister for Finance and Corporate Affairs Shri Arun Jaitley while presenting the General Budget 2018-19 in Parliament said that Indian society, polity and economy had shown remarkable resilience in balancing with the structural revamp. According to IMF’s latest update, India is expected to grow at 7.4% next year in the backdrop of services resuming high growth rates of 8% plus, exports expected to grow at 15% in 2017-18 and manufacturing back on good growth path.
Highlights:
• Budget guided by mission to strengthen agriculture, rural development, health, education, employment, MSME and infrastructure sectors
• Government says, a series of structural reforms will propel India among the fastest growing economies of the world. The nation is firmly on course to achieve over 8% growth as manufacturing, services and exports back on good growth path.
• MSP for all unannounced kharif crops will be one and half times of their production cost like majority of rabi crops: Institutional Farm Credit raised to 11 lakh crore in 2018-19 from 8.5 lakh crore in 2014-15.
• 22,000 rural haats to be developed and upgraded into Gramin Agricultural Markets to protect the interests of 86% small and marginal farmers.
• “Operation Green” launched to address price fluctuations in potato, tomato and onion for benefit of farmers and consumers.
• Two New Funds of Rs 10,000 crore announced for Fisheries and Animal Husbandry sectors, Re-structured National Bamboo Mission gets Rs 1290 crore.
• Loans to Women Self Help Groups will increase to Rs. 75,000 crores in 2019 from 42,500 crore last year.
• Higher targets for Ujjwala, Saubhagya and Swachh Mission to cater to lower and middle class in providing free LPG connections, electricity and toilets.
• Outlay on health, education and social protection will be 1.38 lakh crore. Tribal students to get Ekalavya Residential School in each tribal block by 2022. Welfare fund for SCs gets a boost.
• World’s largest Health Protection Scheme covering over 10 crore poor and vulnerable families launched with a family limit upto 5 lakh rupees for secondary and tertiary treatment.
• Fiscal Deficit pegged at 3.5%, projected at 3.3% for 2018-19.
• Rs 5.97 lakh crore allocation for infrastructure.
• Ten prominent sites to be developed as Iconic tourist destinations.
• NITI Aayog to initiate a national programme on Artificial Intelligence (AI) and centres of excellence will be set up on robotics, AI, Internet of things etc.
• Disinvestment crossed target of Rs 72,500 crore to reach Rs 1,00,000 crore.
• Comprehensive Gold Policy on the anvil to develop yellow metal as an asset class.
• 100% deduction proposed to companies registered as Farmer Producer Companies with an annual turnover upto Rs 100 crore on profit derived from such activities, for five years from 2018-19.
• Deduction of 30% on emoluments paid to new employees Under Section 80-JJAA to be relaxed to 150 days for footwear and leather industry, to create more employment.
• No adjustment in respect of transactions in immovable property where Circle Rate value does not exceed 5% of consideration.
• Proposal to extend reduced rate of 25% currently available for companies with turnover of less than 50 crore (in Financial Year 2015-16), to companies reporting turnover up to Rs. 250 crores in Financial Year 2016-17, to benefit micro, small and medium enterprises.
• Standard Deduction of Rs 40,000 in place of present exemption for transport allowance and reimbursement of miscellaneous medical expenses. 2.5 crore salaried employees and pensioners to benefit.
• Exemption of interest income on deposits with banks and post offices to be increased from Rs 10,000 to Rs 50,000.
• TDS not required to be deducted under section 194A. Benefit also available for interest from all fixed deposit schemes and recurring deposit schemes.
• Hike in deduction limit for health insurance premium and/or medical expenditure from Rs 30,000 to Rs 50,000 under section 80D.
• 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.
• Proposed to extend Pradhan Mantri Vaya Vandana Yojana up to March, 2020.
• Current investment limit proposed to be increased to Rs 15 lakh from the existing limit of Rs 7.5 lakh per senior citizen.
Tax Highlights:
• More concessions for International Financial Services Centre (IFSC), to promote trade in stock exchanges located in IFSC.
• To control cash economy, payments exceeding Rs 10,000 in cash made by trusts and institutions to be disallowed and would be subject to tax.
• Tax on Long Term Capital Gains exceeding Rs 1 lakh at the rate of 10%, without allowing any indexation benefit. However, all gains up to 31st January 2018 will be grandfathered.
• Proposal to introduce tax on distributed income by equity oriented mutual funds at the rate of 10%.
• Proposal to increase cess on personal income tax and corporation tax to 4% from present 3%.
• Proposal to roll out E-assessment across the country to almost eliminate person to person contact leading to greater efficiency and transparency in direct tax collection.
• Proposed changes in customs duty to promote creation of more jobs in the country and also to incentivise domestic value addition and ‘Make in India’ in sectors such as food processing, electronics, auto components, footwear and furniture.