According to the Finance Minister, India is now a $2.5 trillion economy which will soon have 8% economic growth.
Budget 2018 has primarily focused on the upliftment of the agricultural sector along with a major push to healthcare and education sectors.
For instance, the budget has allotted Rs 500 crore for ‘operation green’ to promote Farmer Producer Organizations, agri-logistics and processing. It is a social sector budget with little focus on private investment. Also, long-term capital gain taxes have been increased – perhaps to pay for the schemes.
Among other things, the Budget 2018 promises to provide free LPG to eight crore women, electricity to four crore families, 24 new medical colleges, 18 new schools of planning and architecture, Rs 1 lakh crore over four years to revitalise school infrastructure, construction of two crore toilets and Rs 2 lakh crore for developing 100 smart cities.
It also promises to make a 12% EPF contribution for new employees in all sectors for the next three years, allocation of Rs 56,619 crore for SC welfare and Rs 39,135 crore for ST welfare.
Here is what you should know about the budget:
Introduced World’s largest health protection scheme
The prime focus of this year’s budget is healthcare. To make it more affordable, the government has introduced medical reimbursement worth Rs 5 lakh per family per year.
The finance ministry has promised this health coverage, of Rs 5 lakh per annum, to 10 crore poor and vulnerable families under the National Health Protection Scheme. This scheme is likely to benefit over 50 crore citizens.
Farmers promised relief
Upset farmers have been protesting across the nation to get some financial assistance/ benefit. The FM promises to raise the minimum support price of crops offered to farmers to one and a half times the cost, while investing heavily in agricultural markets across the nation.
This includes irrigation and aquaculture projects and also directs state governments to purchase extra solar power generated by farmers using solar-powered pumps.
For the upliftment of the agriculture sector, the government has initiated agriculture diversification and has set aside Rs. 10,000 crore each for Fishers and Aquaculture Development Fund and Animal husbandry Infra Fund.
Budget shines brightly on transport and consumer companies
With the budget focusing on infrastructure, construction and engineering firms like Larsen & Turbo Ltd., NCC Ltd, Hindustan Construction Co. Ltd are likely to benefit. At the same time, consumer companies with rural exposure like Mahindra & Mahindra Ltd. and Britannia Industries Ltd will benefit.
No more dealing in Cryptocurrencies- The finance minister has cleared the air around bitcoins once and for all. Arun Jaitley has clarified that bitcoins are not deemed to be as legal tender, and the government will take strict actions against those dealing in cryptocurrencies. However, it is yet to be clarified that if such transactions will attract GST or not.
Big boost for senior citizens
In a major boost for senior citizens, they can claim a reduction benefit of Rs 50,000 per year on health care expenditure as well as from health insurance premium. The FM also announced standard deduction of Rs 40,000 which will ultimately benefit pensioners.
In addition to this, there will be no TDS on Fixed Deposits and Post Office deposits up to Rs 10,000. Senior citizens can now invest up to 15 lakhs, which was earlier only Rs 7.5 lakh in interest-bearing LIC schemes.
More fuel to ‘Make in India’ Campaign
Buying a mobile phone or television will become expensive after this budget as customs duty on phones and TVs has been increased from 15 to 20 percent. Also, a Social Welfare surcharge of 10 % will be imposed on imported goods.
All of this has been done keeping in mind the Make in India campaign.
Long-term capital gains
The government’s decision to impose a 10 percent long-term capital gain tax on equity investments is causing a dent in investor sentiment.
No change in the income tax slab rates
There is no change in the personal income tax slab rates. A standard deduction of Rs. 40,000 for salaried classes was introduced. Further, education cess has been increased to 4% from 3%.
PAN mandatory for certain transactions
Any entity entering into a financial transaction of Rs. 2.5 lakh or more is required to have a PAN. This will ensure better compliance to the tax regime.