The budget 2018, which was released on February 1, has been mentioned as a pro-farmer and pro-poor budget, but the middle-class salaried Indian has been largely ignored.
Although many were expecting a change in the income tax structure to bring down the tax liability of individual taxpayers in the Union Budget 2018. But no change in individual tax structure has been suggested in the budget. The government has proposed to reintroduce the standard deduction for salaried individuals, which was abolished by the Finance Act, 2005. However, the reintroduction of this benefit would not make too much of a difference in the total tax outgo of individual tax assesses. It has been made available in lieu of the existing medical reimbursement and transport allowances. Besides reintroducing standard deduction, the finance minister did not propose any other major relief in the direct taxes space. Besides this, cess on income tax has increased from 3 to 4 percent.
For small and medium businesses, measures like reduced corporate tax rate
The 2017 Budget saw a key initiative for small and medium-sized enterprises (MSMEs). Finance Minister Arun Jaitley announced in the Lok Sabha today that the corporate income tax rate for businesses with turnover less than or equal to Rs. 50 crore will get a 5% reduction in corporate income tax. This means that the corporate income tax rate will now effectively be 25% from the earlier 30%.
This move will help small and medium-sized enterprises considerably and provide more impetus to small business owners to set up and grow their businesses.
Senior citizens will have lower tax burden now. For senior citizens, the exemption of interest income on deposits with banks and post offices has been increased from 10 k to 50 k and tax deduction at source will no longer be required.
Rural farmer and poor
Farmers will be benefited as there will be more electricity coverage in rural households. Govt. has decided that it will allocate Rs 16,000 crores to provide electricity to rural areas under the Pradhan Mantri Saubhagya Yojna. The government also said that support prices for Kharif crops will be fixed at 50 per cent higher than the cost of production and has raised the farm credit target for the next year.
Finance Minister has proposed health coverage of Rs. 5 lakhs per annum to 10 crore poor and vulnerable Families under National Health Protection Scheme. This scheme will provide benefits to 50 crores Indian Citizens.
Budget 2018 is an election budget and has kept the rural and poor section of the society in consideration. However, the implementation and actual benefit that people get from the budget may impact the outcome of the results of the 2019 elections.