Feb 1, 2018
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Highlights of Budget For Financial Year 2018-19

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Highlights of Budget For Financial Year 2018-19

I. Agriculture and Rural Economy

1. Minimum support price (MSP) for the majority of rabi crops and kharif crops at least at one and a half times the cost involved.

  1. If price of the agriculture produce market is less than MSP, then Government to purchase either at MSP or work in a manner to provide MSP for the farmers through some other mechanism.
    1. Niti Ayog, in consultation with Central and State Governments, will put in place a fool-proof mechanism for providing MSP to farmers.

2. APMC / e-NAM network / Introduction of GrAMS

  1. 470 of 585 APMCs have been connected to e-NAM network, rest 115 will be connected by March 2018.
  2. Upgrade existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs). GrAMS to provide farmers facility to make direct sale to consumers and bulk purchasers.
  3. Agri-Market Infrastructure Fund with a corpus of 2000 crore for upgrading infrastructure in GrAMS and APMCs.
  4. Link GrAMs to e-NAM and exempt from regulations of APMCs.
  5. Strengthen GrAMS physical infrastructure using MGNREGA and Govt schemes.

3. To support organized cultivation of specialized medicinal and aromatic crops, sum of Rs. 200 crore.

4. Allocation of Ministry of Food Processing is being doubled from Rs.715 crore in
FY 2017-18 to Rs.1400 crore in FY 2018-19.

5. ‘‘Operation Greens’’ shall promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and professional management. Sum of Rs.500/- crore allocated.

6. Re-structured National Bamboo Mission with an outlay of Rs.1290 crore to promote bamboo sector in a holistic manner.

7. Fisheries and Aquaculture Infrastructure Development Fund (FAIDF) for fisheries sector and an Animal Husbandry Infrastructure Development Fund (AHIDF) for financing infrastructure requirement of animal husbandry sector. Total Corpus of these two new Funds would be `10,000 crore.

8. Institutional credit for agriculture sector increased from 10L crore in 2017-18 to 11L crore in 2018-19.

9. Under Ujjwala scheme, target of women to be provided free LPG connections, increased from 5 crore to 8 crore.

10. Prime Minister Saubhagya Yojana for providing electricity to all households with an allocation of 16,000 crore (ongoing).

11. 2 crore more toilets to be constructed in addition to 6 crore already constructed under Swacch Bharat Mission.

12. Under Awas Yojana, 51 lakh houses to be constructed in Rural areas and 37 lakh houses in Urban areas during 2018-19.

13. Loans to Self Help Groups (SHG) of women will increase to 75,000 crore by March, 2019. Allocation of National Rural Livelihood Mission at 5750 crore in 2018-19.

14. Prime Minister Krishi Sinchai Yojna- Har Khet ko Pani in 96 deprived irrigation districts for an allocation of Rs.2600 crore.

II. Health / Education / Social Protection

1. Allocation on National Social Assistance Programme this year for widows, orphaned children and deprived socio-economic castes at Rs. 9975 crore.

2. For research in premier educational institutions, including medical/ health institutions, ‘‘Revitalising Infrastructure and Systems in Education (RISE) by 2022’’ with a total investment of `1,00,000 crore in next four years.

3. National Health Policy, 2017 with 1.5 lakh centres will bring health care system to every citizen, with an allocation of 1200 crore.

4. National Health Protection Scheme to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage upto 5 lakh rupees per family per year for secondary and tertiary care hospitalization. FUNDING TO BE OUTLINED LATER.

5. 600 crore allocated to provide nutritional support to all TB patients at the rate of Rs.500 per month for the duration of their treatment.

6. Govt to set up 24 new Government Medical Colleges and Hospitals by upgrading existing district hospitals. Achieve penetration of at least 1 Medical College for every 3 Parliamentary Constituencies and at least 1 Government Medical College in each State of the country.

7. ONGOING ALLOCATION – For Namami Ganga, 187 sanctioned projects for infrastructure development, river surface cleaning, rural sanitation and other interventions is allocated for Rs.16,713 crore. 47 of 187 projects completed, rest underway.

8. Increase in total earmarked allocation for SCs in 279 programmes from Rs.52,719 crore in FY 2017-18 to Rs.56,619 crore in FY2018-19, reflecting a 7.4% increase.

9. Increase in total earmarked allocation for STs in 305 programmes from Rs. 32,508 crore in FY 2017-18 in 305 programmes to Rs. 39,135 crore in FY2018-19, reflecting a 20.38% increase.

III. MSME / Employment

1. 3794 crore to MSME Sector for giving credit support, capital and interest subsidy and innovations.

2. 3 lakh crore allocated in FY2018-19 to Mudra Yojana towards lending predominantly to Women and SCs, STs and OBCs.

3. Govt to continue to contribute 12% of the wages of the new employees in the EPF for all the sectors for next three

4. Amendment in Employees Provident Fund and Miscellaneous Provisions Act, 1952 to reduce women employees’ contribution to EPF at 8% for first three years of their employment against existing rate of 12% or 10% with no change in employers’

5. 7148 crore allocated for comprehensive textile sector package in 2018-19. (up by 19.13% from allocation of Rs.6000 crore in 2016.

IV. Infrastructure / Financial Sector Development

1. 50 Lakh Crore in infrastructure to increase growth of GDP, connect and integrate the nation with a network of roads, airports, railways, ports and inland waterways.

  1. 9.46 lakh crore fast-tracked to road and rail projects.
  2. 2.04 lakh crore allocated for upgrading infrastructure of 99 Cities to Smart cities. Rs. 2350 crore have been completed and works of Rs.20,852 crore are under progress.
  3. 1.09 crore allocation under AMRUT programme, as under:
    1. State level plans of `77,640 crore for 500 cities have been approved.
    2. Water supply contracts for 494 projects worth `19,428 crore approved.
  • Sewerage work contract for 272 projects costing `12,429 crore has been awarded.

2. 5.35 lakh core allocated under Phase I of “Ambitious Bharatmala Pariyojana” to construct 35,000 kms of roads connecting interior and backward areas and borders of the country.

  • NHAI to organize road assets/projects into Special Purpose Vehicles (SPV) to monetize cost of development via Toll, Operate and Transfer (TOT) and Infrastructure Investment Funds (InvITs).

3. 1.485 lakh crore allocated to Railways in FY 2018-19 for capacity creation. To implement 18,000 kilometers of doubling, third and fourth line works and 5000 kilometers of gauge conversion.

4. Mumbai road (0.51 lakh crore)

  • Rs.11,000 crore to add 90 kilometers of double line tracks.
  • Rs.40,000 crore for providing elevated corridors and suburban network roads of approximately 150 kilometers.

5. Bangalore roads

  1. Rs. 17,000 crore for providing suburban network roads of Bengaluru.

6. Doubled the allocation on Digital India programme to 3073 crore in 2018-19.

7. Telecom/ Broadband Infrastructure

  • Rs. 10,000 crore allocated to Bharatnet project, to enable broadband access to over 20 crore rural Indians in about two lakh fifty thousand villages with five lakh wi-fi hotspots providing broadband access to five crore rural citizens.

8.  Cryptocurrency

  • The Government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.

9. Block chain technology

  • The Government will explore use of block chain technology proactively for ushering in digital economy.

10. Employment / Growth (5.97 lakh crore)

  • Rs. 5.97 lakh crore for Government’s estimated budgetary and extra budgetary expenditure on infrastructure for 2018-19 against estimated expenditure of Rs. 4.94 lakh crore in 2017-18, reflecting an increase of 20.85%

V. Building institutions and improving Public Service Delivery

1. Aadhar for Enterprises

  1. The Government will evolve a Scheme to assign every individual enterprise in India a unique ID.

2.  Disinvestment

2017-18 Budget Estimates for disinvestment at highest level of Rs.72,500 Assuming receipts of Rs.1,00,000 crore in 2017-18. Disinvestment target of `80,000 crore for 2018-19, reflecting a 11.1% increase.

3. 150 crore for the year 2018-19 for activities of Commemoration of 150th Birth anniversary of Mahatma Gandhi from 2nd October 2019 to 2nd October 2020.

VI. Fiscal Management

1. Revised Fiscal Deficit estimates for 2017-18 are 5.95 lakh crore at 3.5% of GDP. I am projecting a Fiscal Deficit of 3.3% of GDP for the year 2018-19.

2. Adopting the Debt Rule recommended by Fiscal Reform and Budget Management Committee to bring down Central Government’s Debt to GDP ratio to 40%.

VII. Tax Proposals

 Direct Tax

1. Direct tax growth rate in 2016-17 at 12.6% which has grown to 18.7% (from April 1st 2017 to 15th January 2018).

2. Excess revenue collected in the last two financial years from personal income tax approximately at Rs.90,000 crore.

3. Number of returns filed increased from 66.26 lakh in FY2015-16 to 51 lakhs in FY2016-17, reflecting a 29% increase.

4. Effective tax payer base increased from 47 crores at the beginning of F.Y.14-15 to 8.27 crores at the end of F.Y.16-17, reflecting a 27.82% increase.

5. Allowance of 100% deduction to companies registered as Farmer Producer Companies having annual turnover up to 100 crores in respect of their profit derived from such activities for a period of five years from financial year 2018-19.

6. 30% Deduction in respect of emoluments paid to eligible new employees who have been employed for a minimum period of 240 days during the year under section 80-JJAA of the Income-tax Act relaxed to 150 days in respect of apparel industry and extended to footwear and leather industry.

7. Income from capital gains, business profits, in respect of transactions from immoveable property, no adjustment shall be made in a case where the circle rate value does not exceed 5% of the consideration.

8. Reduction in corporate tax to 25% applicable to companies below Rs.50 crore turnover in FY15-16, extended to companies with reported turnover below Rs.250 crore in FY2016-17.

9. Standard deduction of 40,000/- in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses.

10. Senior Citizens

  1. Exemption of interest income on deposits with banks and post offices to be increased from 10,000/- to Rs.50,000/- and TDS shall not be required to be deducted on such income, under section 194A. This benefit shall be available also for interest from all fixed deposits schemes and recurring deposit schemes.
  2. Raising the limit of deduction for health insurance premium and/ or medical expenditure from 30,000/- to Rs.50,000/-, under section 80D. All senior citizens will now be able to claim benefit of deduction up to Rs.50,000/- per annum in respect of any health insurance premium and/or any general medical expenditure incurred.
  3. Raising the limit of deduction for medical expenditure in respect of certain critical illness from, 60,000/- in case of senior citizens and from Rs.80,000/- in case of very senior citizens, to Rs.1 lakh in respect of all senior citizens, under section 80DDB.
  4. Extension of “Pradhan Mantri Vaya Vandana Yojana” up to March, 2020 under which an assured return of 8% is given by Life Insurance Corporation of India for Senior Citizens. The existing limit on investment of 7.5 lakh per senior citizen under this scheme is also being enhanced to Rs. 15 lakh.

11. International Financial Services Centre (IFSC)

  1. Exemption of transfer of derivatives and certain securities by non-residents from capital gains tax.
  2. Non-corporate taxpayers operating in IFSC shall be charged Alternate Minimum Tax (AMT) at concessional rate of 9% at par with Minimum Alternate Tax (MAT) applicable for corporates.

12. Control cash economy

  1. For trusts/ institutions, payments exceeding 10,000/- in cash shall be disallowed and the same shall be subject to tax.
  2. To improve TDS compliance by trusts/institutions, in case of non-deduction of tax, 30% of the amount shall be disallowed and the same shall be taxed.

13. LTCG (Long-term Capital Gains Rationalisation)

  1. Total amount of exempted capital gains from listed shares and units is around 3.67 lakh crores as per returns filed for A.Y.17-18
  2. Major part of this gain has accrued to corporates and LLPs
  3. Tax on long term capital gains exceeding 1 lakh at the rate of 10% without allowing the benefit of any indexation.
  4. Value of gain to be calculated on the difference between the effective sale price and the higher of the price on 31st Jan 2018 and the purchase price.
  5. Gains from equity share held up to one year will remain short term capital gain and will continue to be taxed at the rate of 15%.
  6. Tax on distributed income by equity oriented mutual fund at the rate of 10%.
  7. Extend the benefit of exemption for withdrawal up to 40% from National Pension System Trust (NPS) to all subscribers and not only to employees.
  8. Every entity, not being an individual, which enters into any financial transaction of an amount aggregating to Rs.2.50 Lakh or more in a financial year shall be required to apply for a permanent account number (PAN). Directors, partners, principal officers, office bearer or any person competent to act on behalf of such entities shall also apply for PAN.
  9. Authority for Advance Ruling (AAR) constituted under the Income-tax Act shall act as an Appellate Authority in respect of the rulings given by the newly formed Customs Authority for Advance Ruling (C-AAR).
  10. Prosecution shall lie against companies for non-filing of return irrespective of the fact that whether any tax is payable or not.
  11. Existing provision relating to investment in capital gain bonds by providing that the exemption shall be available only in respect of long-term capital gains arising out of sale of immoveable property and investment in the bond shall be for a minimum period of 5 year from the existing 3 years.
  12. Compensation received in connection with termination or modification of business contract and employment contract shall be taxable.
  13. TDS at the applicable rate shall be made in respect of interest exceeding 10,000 from newly introduced 7.75% GOI Savings (Taxable) Bonds, 2018
  14. Deemed dividend under section 2(22)(e) of the Act shall be subject to dividend distribution tax at the rate of 30% without grossing up.
  15. Amend Finance Act, 2013 to rationalise levy of Commodities Transaction Tax (CTT) on options in commodity futures

14. Health and Education cess

  1. Existing three per cent education cess will be replaced by a four per cent “Health and Education Cess” to be levied on the tax payable.

15.  E-Assessment

  1. Amend the Income-tax Act to notify a new scheme where assessment will be done in electronic mode eliminating person to person contact leading to greater efficiency and transparency.

Indirect Taxes

1. Increase customs duty on mobile phones from 15% to 20%, on some of their parts. Accessories to 15% and on certain parts of TVs to 15%

2. Reduce customs duty on raw cashew from 5% to 2.5%

3. Abolish the Education Cess and Secondary and Higher Education Cess on imported goods. In its place impose a Social Welfare Surcharge, at the rate of 10% of the aggregate duties of Customs (for certain goods 3%), on imported goods. Goods which were hitherto exempt from Education Cesses on imported goods will, however, be exempt from this Surcharge.

4. Change the name of Central Board of Excise and Customs [CBEC] to Central Board of Indirect Taxes and Customs (CBIC)

 

Input Credit : Vikas Sahita

 

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