An Insight on the Taxation as well as other Financial Aspects of the Union Budget 2018-19

By | February 4, 2018

The Finance Minister Mr. Arun Jaitley has today declared the union budget for 2018. Some of the key points related to the taxation structure as well as Finance Structure of India are as follows:

Financial year targets
The Government has an aim for 2018-19 “fiscal deficit” target of 3.3 % of GDP. The revised fiscal deficit for the year 2017-18 was Rs. 5.95 Lakh Crore or the 3.5 % of GDP.

Taxation related proposals
A) The government has proposed no change in the personal income-tax rates for the salaried class. The income tax applied to the salaried people is as shown in the table below:

S.NO Income Tax Slab Tax Rate (%)
1 Income up to Rs 2,50,000 No Tax
2 Income from Rs 2,50,000 – Rs 5,00,000 5 %
3 Income from Rs 5,00,000 – Rs 10,00,000 20 %
4 Income more than Rs 10,00,000 30 %

The income up to Rs. 2.5 lakhs is exempt from the tax, if your age is less than 60 years

Surcharge: The surcharge is 10% of the income tax, when the total income is between Rs 50 lakhs and Rs 1 crore. It is 15% of the income tax, when the total income is above Rs. 1 crore.

Cess: The Cess is 3% of the total of income tax + the surcharge.

B) The Income tax applied to the senior citizen who are above 60 years old but less than 80 years old is as shown in the table below:

S.NO Income Tax Slab Tax Rate (%)
1 Income up to Rs 3,00,000 No Tax
2 Income from Rs 3,00,000 – Rs 5,00,000 5 %
3 Income from Rs 5,00,000 – Rs 10,00,000 20 %
4 Income more than Rs 10,00,000 30 %

Surcharge: The surcharge is 10% of the income tax, when the total income is between Rs 50 lakhs and Rs 1 crore. It is 15% of the income tax, when the total income is above Rs. 1 crore.

Cess: The Cess is 3% of the total of income tax + the surcharge.

C) The Income tax applied to the senior citizen who are above 80 years old or more is as shown in the table below:

S.NO Income Tax Slab Tax Rate (%)
1 Income up to Rs 2,50,000 No Tax
2 Income up to Rs 5,00,000 No Tax
3 Income from Rs 5,00,000 – Rs 10,00,000 20 %
4 Income more than Rs 10,00,000 30 %

Surcharge: The surcharge is 15% of the income tax, when the total income is above Rs. 1 crore.

Cess: The Cess is 3% of the total of income tax + the surcharge.

Jaitley said in the speech that there is a 12.6 % growth in the direct taxes in the year 2017-18. An 18.7 % growth is there in the indirect taxes in the year 2017-18. As many as 85.51 Lakhs new taxpayers have filed the tax returns in the year 2017-18, as against of 66.26 Lakhs in the year 2016-17. This number has escalated from 6.47 crores in the year 2016-17 to 8.27 crores by the end of year 2017.

Jaitley has proposed the liberalization of the “presumptive income schemes” for the small businesses with an income below Rs 2 crores and similar schemes for the professionals with income less than Rs 50 lakhs. Rs. 90,000 crores extra Income-Tax “collection” is witnessed in the year 2016-17 and year 2017-18.

The Corporate tax is reduced from 30 % to 25 % for the companies with a turnover up to Rs 250 crore, to enhance the MSME sector. Jaitley has also proposed the revision in “monthly emoluments” of the President of India at Rs. 5 Lakhs, Rs. 4 Lakhs for the vice president and Rs. 3.5 Lakhs for the governors.

A Standard deduction of 40,000 INR for the salaried taxpayers is also announced. In terms of the capital gains tax, the long-term capital gains are to be taxed at 10 % on the investments over Rs. 1 lakh. The short term capital gains tax will remain unchanged at 15%.

For the senior citizens, the Finance Minister proposed the exemption of interest income on the bank deposits, which was raised to Rs 50,000 for the senior citizens as well as an exemption of Rs. 10,000 on the income from the Bank FDs as well as post offices. The budget proposes a 10 % tax on the distributed income by the equity oriented mutual funds and a 100 % deduction for the “cooperative societies”.

In terms of the revenue loss, FM said that Rs. 8,000 crores was lost due to the “standard deductions” for the salaried employees. Also, about Rs. 7,000 crores was forgone due to the lower corporate tax on the firms with turnover below Rs 250 crores. Rs. 19,000 crores was also lost last financial year in terms of the revenue from the direct taxes.

Finance and Insurance

The Government aims to encourage a very strong environment for the VCs as well as angel investors. Meanwhile the SEBI would make it essential for the “large corporations” to meet one fourth of their debt requirements from the bond markets.

The target of disinvestment for the financial year 2019 is set for Rs. 80,000 crores. The targets of disinvestment for the current financial have been set at Rs. 1 lakh crores. The government also intends to come up with a scheme that would now assign the unique IDs for the companies. The National Insurance Co, United Assurance and Co Oriental Insurance Co will be merged into a single entity, which will be listed. For the bank recapitalization, FM said it that many set the paths for the public banks to lend an additional Rs. 5 lakh crores.

Thus, these are the key points, which were declared in the union budget 2018.

Leave a Reply

Your email address will not be published. Required fields are marked *