Highlights of Union Budget
The team of recruitmentresult.com is providing Important Highlights of Union Budget 2018–19 presented by Finance Minister Arun Jaitley.
Every year, the Union Budget presents the Government with an opportunity to tweak the direction that the Indian economy is taking. Interested individuals can check the Key Points, Facts, and Features of Union Budget 2018–19.
Key Points of Union Budget 2018–19
Sometimes, hard decisions are taken which, while necessary, do not necessarily go down well. This invariably happens when the current Government is finishing its term and general elections be about to happen, for obvious reasons.
Union Budget 2018–19 is the most comprehensive report of the Government’s finances in which revenues from all sources and outlays for all activities are consolidated. The Budget also contains estimates of the Government’s accounts for the next fiscal year.
Highlights of Union Budget
Previous budget was referred as mediocre and this is the last full budget of Modi-led NDA government for this term. Everyone have many expectations for the much touted economic reforms. Check out the Facts of Union Budget 2018–19 through below page.
“LTCG over 1 lakh in a year will only attract tax @ 10%. So it still make sense for investors in equity funds to opt for growth option in stead of dividend option.” – Balwant Jain, CA & CS.
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Knee-jerk reaction in stock markets on the proposed capital gains tax. Sensex now down nearly 450 points.
“Equity Oriented Mutual Funds will now face a dividend distribution tax of 10% to bring it at parity with the new LTCG of 10%. This will be a negative for mutual funds.” – Manoj Nagpal, Moneycontrol Consulting Editor.
The total amount of exempted capital gains has surged to nearly Rs 360,000 crore as of last years returns. Considering return on equity is already high, the FM proposes to tax capital gains exceeding Rs 1 lakh at 10% without indexation benefit with certain caveats
Capital gains made on shares until Jan 31 will be grandfathered. Short term capital gains remains at 15%.
“ETFs – have been a huge success for raising funds for Govt through Bharat ETF and CPSE ETF. Interesting to see that Govt will now also launch a debt ETF for raising debt financing for the govt.” – Manoj Nagpal, Moneycontrol Consulting Editor.
The standard deduction is in lieu of travel and medical expense reimbursement, which amounts to Rs 30,000. So the actual tax benefit would Rs 10,000 crore for each taxpayer.
So finally, something for the middle class, that section of society that is usually the most-ignored. Jaitley has said that the government has decided to allow a standard deduction of Rs 40,000 for salaried taxpayers, keeping in mind that they have been paying way more tax than individual business owners.
No perks for the salaried class as FM proposes to maintain status quo on tax slabs. However, he does reintroduce standard deduction of Rs 40,000 in lieu of medical and transport allowance. Other medical reimbursements in case of hospitalisation will continue.
The total number of salaried employees and pensioners who will benefiit from these changes is pegged at 2.5 crore.
No changes in the structure of income tax of individuals.
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Rs 7000 crore will be the revenue foregone for the reduced corporate tax on MSMEs.
I propose to extend the benefit of the reduced corporate rate of 25% for companies with reported turnover of up to Rs 250 crore.
Finance Minister now explains the benefits accrued from various tax measures. 41% more returns were filed this year under simplified tax scheme, he says. He reiterates the government’s pledge to continue to take measures which will continue to cut down black money
Stay tuned as the FM now moves to direct taxes. The growth rate of direct taxes in 2017-18 has been significant of nearly 12.6% in current year in direct taxes, he says. 81.51 lakh new taxpayers filed their returns in the last year, he says.
So that answers all the concerns about fiscal deficit, doesn’t it. A deficit of Rs 5.95 lakh crore for the current year might come as a pleasant surprise for many, particularly because Jaitley has said that the target is to bring it down to 3.3% of GDP in the next fiscal. This year’s estimated figure is 3.5% of GDP.
In 2017-18 the central govt will be received GST revenue of only 11 months and this will have a fiscal effect. There will also be shortfall of non-tax revenue. The total revised estimated expenditure is Rs 21.57 lakh crore against 21.47 lakh crore.
We embarked upon path of consistent reduction of fiscal deficit. Revised fiscal deficit for 2017-18 is at Rs 5.95 lakh crore or 3.5% of GDP. Projecting fiscal deficit at 3.3% of GDP for 2018-19.
FM proposes to revise the emoluments of President to Rs 5 lakh per month, Rs 4 lakh for Vice President and Rs 3.5 lakh for Governor.
He also proposes inflation-linked revision of salary of Members of Parliament
“Need to be seen how they will popularise InVITs for Road Projects – especially after tepid market response to IRB, etc.” – Ambareesh Baliga, Fundamental Analyst.
“As expected, disinvestment of Rs 1 lakh cr seems to be one of the main ways of financing various initiatives announced.” – Anil Rego, CEO & Founder, Right Horizons.
It doesn’t look like the government wants to slow down divestment at all, especially since it is likely to be one of the most important modes of financing budget deficit in the coming fiscal year. Divestment target for FY19 has been set at Rs 80,000 crore.
Disinvestment was pegged at highest level of Rs 72,500 crore in last years Budget and the government has been successful in exceeding the target. For 2018-19 the disinvestment target is set at Rs 80,000 crore.
Recapitalisation of PSU Banks will allow banks Rs 5 lakh cr of additional lending in FY19, he says.
“MSP to have inflationary effect on food.” – Ambareesh Baliga, Fundamental Analyst.
Moving on to the government’s aim of increasing coverage of of Aadhaar in the country, FM Jaitley says it is now mulling a scheme for providing unique identity for every business
Get Here: Latest BUDGET Details
Below are CRISIL’s like takeaways from the Budget speech
- Increase in MSP will further boost tractor sales, currently growing at 16%
- Of 2,000 APMCs, those connected to E-NAM is 470, which is less than the target of 585 for last fiscal #budget2018
- Liberalisation of agri exports to benefit the pulses sector
- Out of a production of 22 MT in 2016, exports were just 1.3 MT
- LPG demand growth to rise to over 10% next 2 years given 8 crore new BPL connections targeted
- Power, LPG via Ujala and Saubhagya remains area of concern for discoms, OMCs because of lack of recovery
- Dedicated fund for affordable housing to improve formal finance penetration
- Focus on rural housing, rural roads and rural infra spend will push up employment
- Rs 10,000 cr for fisheries to boost seafood exports
- India already world’s largest shrimp exporter
- Rising rural income to improve demand for cement
- Rural demand is 33% of total cement demand
- Massive health insurance plan a boost for hospitals, health insurers
- 18 architecture schools show construction sector importance to economy, govt
- Ragi, jowar, moong, maize, paddy to benefit the most
- Increase in MSP by 1.5 times cost of production
- Huge health insurance plan could cost govt around Rs 50,000 crore annually
- 7 lakh km rural roads plan huge boost for construction cos
- Rail University in Vadodara to boost R&D initiatives, help improve rly ops
- Micropension, insurance via Jan Dhan to boost fin inclusion
- 23% growth in Mudra target will help micro-entrepreneurs
- Agri-commodity exports limited now
- Liberalisation is a big boost to sector
- 1 cr houses under PMAY augurs well for lenders
- Growth in affordable housing loans to remain strong
- Govt’s 12% contribution to EPF for new employees
- Will encourage formal sector coverage
- Textiles subsidy under TUFs up 18% at Rs 7,140 cr
- Textiles subsidy under TUFs up 18% at Rs 7,140 cr
- Fisheries fund a big boost to Rs 140,000 cr seafood industry
“Cryptocurrency not recognised. Will that money now come to the stock markets?” – Dr CK Narayan, Chart Advise.
“Focus of government seems to be rural India even in the case of infrastructure like roads. On the other hand government is trying to encourage private investments into infrastructure through innovative structures like InvITs and AIFs.” – Anil Rego, CEO & Founder, Right Horizons.
Cryptocurrency investors in India have to bear in mind that the government doesn’t consider them legal tender. But they needn’t worry too much because Jaitley has only said that the government will look to eradicate their usage for illegitimate activities, nothing about investing in them.
FM stresses that the government does not consider cryptocurrencies as legal tender and will take measures to curb illegitimate transactions funded by crytocurrencies
Check Out: Budget Price Alert
Even as there is increased talk of higher credit offtake from the banking sector, SEBI is considering asking corporates to meet 25 percent of their debt requirements by borrowing from the market by issuing securities. This may be a positive for the market as a whole, but what it means for the banking system only time will tell.
Sebi will consider mandatng large corps to meet 25% of debt needs from the market, he says, adding the Reserve Bank of India will nudge companies to access bond markets for fundraising.
Will flying soon become the primary mode of travel for the Indian citizen? It certainly seems that way because Jaitley just said that the government intends to multiply India’s 124 airports to 5 times that number.
After announcing allocation of Rs 11,000 cr for mumbai rail network and Rs 17,000 cr for Bengaluru Metro Network, the FM now moves on to details on Ahmedabad- Mumbai Bullet train project and regional air connectivity initiatives.
Mumbai locals are going to get even better at getting you to your destination on time. The government will spend as much as Rs 11,000 crore to add tracks to the Mumbai local train network, Jaitley said.
“The reduction of EPF contribution to 8% in the first three year for women does not seem to add any significant benefit in terms of cash flow. It will only increase administrative & compliance burden.” – Harshvardhan Roongta, Principal Financial Planner, Roongta Securities.
AMRUT programme will focus on water supply to all households in 500 cities. Water supply contracts for 494 projects worth 19,428 core awarded.
Rs 1,48,528 crore is the capital expenditure for the Indian Railways for 2018-19.
Bharatmala project approved for better road connectivity at Rs 5.35 lakh crore.
Proposal to develop 10 prominent tourist destinations as Iconic tourism destinations.
Women’s contribution reduced to 8.33% towards PF in the first 3 years for new EPF accounts… The government will contribute 12% of EPF contribution for new employees in all sectors for the next three years.
70 lakh farming jobs have been created this year, shows an independent study.
Rs 3 lakh crore allocated for PM MUDRA Yojana.
The government is slowly but steadily progressing towards universal health coverage.
Announce allocation of Rs. 56,619 crore for SC welfare and Rs. 39,135 crore for ST welfare
Check Out: Highlights of Rail Budget
Healthcare stocks trading higher after the government said it proposed to cover 100 million families via healthcare protection scheme. Apollo Hospital Ltd rose 4.1%, Thyrocare Technologies Ltd 2.6%, Healthcare Global Enterprises Ltd rose 3%.
Mass formalization of MSME sector is happening after demonetization and GST.
Total 187 projects sanctioned under the Namami Gange programme.
24 new government medical colleges and hospitals to be set up by upgrading existing district hospitals.
Rs 600 crore for nutritional support to TB patients.
One medical college per every three constituency.
Have decided to take healthcare protection to a new aspirational level. Launching a flagship National Health Protection Scheme to cover 10 crore poor and vulnerable families, benefiting approximately 50 crore. Providing Rs 5 lakh per family per year for medical reimbursement, under National Health Protection Scheme. This will be world’s largest health protection scheme.
Rs 1200 crore for the flagship programme in health wellness centres.
Eighteen new schools of planning and architecure will be set up… I propose railway university in Vodadara.
Eklavya schools to be started for Scheduled Tribe population… Scheme for revitalizing school infrastructure, with an allocation of 1 lakh crore rupees over four years. Called RISE – Revitalizing Infrastructure in School Education.
Integrated B.Ed programme to be initiated for teachers, to improve quality of teachers.
Technology will be the biggest driver in improving education.
Rs 14.34 lakh crore to be spent for providing livelihood to rural India through infrastructure building.
Loans to self help groups will increase to Rs 75,000 crore by March 2019.
We aim that by 2022, all poor people have a house to live in.
In the next financial year, we target the construction of two crore toilets.
Swachh Bharat Mission has led to over 6 crore toilet facilities being provided so far. In the next 2 years another 2 crore toilets will be added for defecation free country, Jaitley says
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Removal of crop residue to be subsidised in order to tackle the problem of pollution due to burning of crop residue:
Ujwala will give 8 crore women new LPG connections.
Special scheme to address air pollution in Delhi-NCR region.
Credit for agricultural activities is up from Rs 10 lakh crore to Rs 11 lakh crore .
Fishery and aquaculture and animal husbandry funds with a total corpus of Rs 10,000 crore.
Agri-Market Development Fund with a corpus of Rs 2000 crore to be set up for developing agricultural markets.
Restructured National Bamboo Mission to be launched with an allocation of Rs 1290 crore to promote bamboo sector in a holistic manner.
Grameen Agricultural Market (GRAM) will provide farmers a means to sell directly to buyers.
Rs 500 crore announced for Operation Green.
Allocation to food processing ministry is being doubled from Rs 715 crore to Rs 1400 crore.
Cluster-model approach to be adopted for agricultural production.
The focus is on low-cost farming, higher MSP. Emphasis is on generating farm and non-farm employment for farmers.
470 APMCs have been connected to eNAM network, the rest to be connected by March 2018… Agri-Market Development Fund with a corpus of 2000 crore to be set up for developing agricultural markets
Desh mein krishi utpadan record star par hai, 2022 tak kisaano ki aay dugni karenge.
Agri-related stocks gain after it is said MSP for all crops to be increased by 1.5 times. Kaveri Seeds Co Ltd rose 2.4%, Jain Irrigation Systems Ltd 2.1%, Escorst Ltd rose 5%, Mahindra & Mahindra Ltd rose 2.2%.
Check Now: Announcements of Rail Budget
The government will ensure payment of full MSP even if farmers sell below MSP.
The Minimum Support Price of all crops shall be increased to at least 1.5 times that of the production cost.
Our government has ensured that services and benefits reach people directly. The direct benefit transfer in India is the biggest such exercise in the world.
Maximum governance, minimum government has ensured India has climbed 42 places in the ease of doing business… We are now working toward easing of living in India
Budget 2018 will focus on agriculture and rural economy, health, infra, senior citizens: FM
This year’s budget will focus on strengthening rural and agricultural economy.
India grew at an average of 7.5% in the first three years since 2014. It is now a 2.5 trillion dollar economy.
All the structural reforms will help the economy in the short and long-term… India is expected to become the fifth largest economy very soon.
Our government has implemented structural reforms.
India stands out as the fastest growing economy in the world… There is a premium on honesty.
Finance minister Arun Jaitley begins his Budget speech.
The Cabinet has approved the Union Budget 2018.
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Some More Updates:
- Export of agri goods will be liberalized
- 10000/- for fishries and aqua culture
- Agri exports have 100 billion potential
- Will issue Kisan credit cards
- Allocation for food processing doubled
- Government to increase crop production
- Operation green on lines for operation floods
- FM proposes to extend kisan credit card to fisheries & animal husbandry farmers and allocate Rs 10,000 cr for fisheries & aquaculture, animal husbandry funds
- 200 crore allotted for agricultural sector
- Niti ayog to work with states for better price
- Government proposes to launch Operation Green for which a sum of Rs 500 crore will be allocated.
- Free LPG to 8 Crore poor famili9es under Ujjawa Scheme
- 116000 to Pradhan Mantri Saubhagya Yojna
- 50 Lakh to promote infrastructure
- 18000 km of tracks to be laid down by 2019
- WIFI and CCTV’s on all trains
Check Here: Meetings And Summits Current Affairs
Apart from these major reforms, several economists are urging the government to cut corporate tax rates in order to make the Indian industries competitive on a global level.
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