Nifty99000 100%

Sensex99000 100%

Article rating: 3.1
Article rating: No rating
Article rating: 5.0
Article rating: 4.5
Article rating: 5.0
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 4.7
Article rating: 4.0
Article rating: 3.5
Article rating: No rating
Article rating: No rating
Article rating: 4.0


Union Budget: Winsome for farmers, lose some for salaried individuals

Author: IANS/Thursday, February 1, 2018/Categories: Government

Union Budget: Winsome for farmers, lose some for salaried individuals

New Delhi, Feb 1 - In his last full budget before general elections in 2019, Finance Minister Arun Jaitley raised long-term capital gains (LTCG) tax to 10% from zero at present, reduced corporate tax for 99% of the companies to 25% but left the tax structure for individuals largely unchanged.

The finance minister's focus was on rural india and agriculture, perhaps with an eye on electoral gains for the ruling party at the centre next year, announcing a number of schemes and incentives. For the Kharif agricultural output, the minister increased the minimum support price to one and half times of production cost, raising institutional farm credit to Rs 11 lakh crore in 2018-19 from Rs 8.5 lakh crore. His speech also focused on education and healthcare.

The finance minister indicated a slippage in fiscal deficit for the current year from 3.2% to 3.5% and from 3% to 3.3% (Rs 5.95 lakh crore) of the GDP next year, indicating the government will be borrowing more to balance its books.

"In order to impart unquestionable credibility to the government's commitment for the revised fiscal glide path, I am proposing to accept key recommendations of the Fiscal Reform and Budget Management Committee relating to adoption of the Debt Rule and to bring down Central Government's Debt to GDP ratio to 40%," he said.

The government announced a health coverage called National Health Protection Service of upto Rs 5 lakh per family in secondary and tertiary treatments, which is expcted to cover 10 crore poor families. The government is likely to make an expenditure of Rs 4,000 crore on this. The finance minister called it the world's largest health scheme.

To pay for the social welfare schemes, the government has imposed Social Welfare Surcharge at the rate of 10% on aggregate customs duties. The Surcharge replaces the earlier Education Cess and and Secondary and Higher Education Cess.

The stock markets reacted sharply initially, later recovering, to impostion of long term capital gains on shares held beyond one year exceeding Rs 1 lakh in value, which was exempted so far. However, shares bought earlier, but sold by July-end this year would be "grandfathered" where 20% of the gains (upto January 31) would be exempted, beyond which the 10% clause would kick in. 

There will be no indexation and there's no change in the short-term capital gains tax of 15%. The total amount exempted under capital gains, according to the minister, was Rs 3,67,000 crore. The government, therefore, may gain over Rs 36,000 crore from this one measure.

Jaitley also imposed a 10% dividend distribution tax on mutual fund companies which invest in equities.

Individual tax payers were allowed a standard deduction of Rs 40,000 in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses. Also, interest on deposits with banks has been increased from Rs 10,000 to Rs 50,000 and money spend on health insurance premium exempted from tax raised to Rs 50,000 from Rs 30,000. Cess on personal income tax, though, was increased from three to four per cent, thus raising Rs 11,000 crore for the government from individual tax payers. It will now be called Health and Education Cess.

In his one hour 45 minutes long speech, the finance minister spoke in English but delivered large tracts in Hindi, unlike earlier finance ministers who briefly peppered their speeches with poems or couplets in hindi.

The government has set a target of Rs 80,000 crore divestment target for 2018-19, the finance minister said adding that target for 2018-19 had exceed the target of Rs 72,500 crore and would touch Rs 1 lakh crore. Despite that, he did keep his aim low for the next year. He announced that the three public sector insurance companies would be merged. The merged entity is expected to be listed at some stage.

In keeping with his earlier announcement of reducing corporate taxation rate to 25%, the finance minister made the change for companies with turnover of upto Rs 250 crore, up from Rs 50 crore announced during his last year budget speech. He said this would take care of almost 99 per cent of the companies and would have an impact of Rs 7,000 crore on government finances. Only about 250 companies would have a turnover above the cut-off level. An ID on lines of Aadhaar would also be set up for companies.

Jaitley also proposed to increase customs duty on mobile phones from 15% to 20%, on some of their parts and accessories to 15% and on certain parts of TVs to 15%. "This measure will promote creation of more jobs in the country," he said.

The minister started his speech by reading out the achievments made by the government led by Prime Minister Narendra Modi and was optimistic about the path taken by the country. "We are now a $ 2.5 trillion economy, and we are firmly on path to achieve 8% plus growth soon," Jaitley said. "We hope to grow at 7.2% to 7.5% in the second half of 2017-18."

"Our exports are expected to grow at about 15 per cent in 2017-18," he added.

Talking about rural infrastructure, he said in 2018-19, for creation of livelihood and infrastructure in rural areas, total amount to be spent by the ministries would be Rs 14.34 lakh crore, including extra-budgetary and non-budgetary resources of Rs 11.98 lakh crore. Overall, Rs 5.97 lakh crore was allocated for infrastructre.

"Apart from employment due to farming activities and self employment, this expenditure will create employment of 321 crore person days, 3.17 lakh kilometers of rural roads, 51 lakh new rural houses, 1.88 crore toilets, and provide 1.75 crore new household electric connections besides boosting agricultural growth."


Print Rate this article:
No rating

Number of views (189)/Comments (0)

Kavita Giridhar Mallya


Other posts by IANS
Contact author

Leave a comment

Add comment



Ask the Finapolis.

I'm not a robot
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest



The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free