Budget Leaves Personal Rates of Income Tax unchanged / No change in corporate tax

Sarkaritel
By Sarkaritel February 1, 2018 14:10

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By TN Ashok

New Delhi, Feb 01 : Contrary to popular expectations in an election eve year budget, the government left personal rates of taxes unchanged and left millions disappointed who expected exemption limit to be raised to rs 3 lakhs per year from existing Rs 2.5 lakhs. Finance Minister Arun Jaitley felt there was no justification of raising the limits further as it had been raised significantly in previous years while presenting the FY 2018-19 budget, considered the last before general elelctions kick in May 2019. Also, eight state assemblies go for elections next year.

Instead, Jaitley announced re introduction of the Standard Deduction by raising it to Rs 40,000 per tax payer on expenses incurred on transportation and medical expenses. For senior citizens, he announced major reliefs under what he called giving them a “Life with Dignity”.

Jaitley raised tax relief on term deposits interest incomes to a whopping Rs 50,000 from a mere Rs 10,000 and to a uniform rs one lakh relief for senior citizens and super senior citizens in the age band of 60 yrs. and above and 80 yrs and above respectively from Rs 40k to rs 60k. Total benefits doled out to senior citizens touched rs 4,000 crore.

Jaitley claimed that tax buoyancy was high and had brought in an additional Rs 90,000 crore in FY 2017-18 due to anti-tax evasion measures introduced by the government. He also said that the returns filed by tax payers jumped from 66.2% in FY 2016-17 to 85% in FY 2017-18. Effective tax payers increased by 6.47 lakh to 8.27 lakh by FY 2016-17 end.

Income tax data revealed a starting comparision between salaried class of tax payers and business class and service providers. That’s the former was paying higher tax per person against the latter. In FY 2016-17 a toal of 1.89 lakh crore salaried class paid a total of Rs 1.44 lakh crore taxes as compared to 1.88 lakh crore business class and service providers as consultants paid only Rs 48.000 crore. This meant that each salaried tax payer was shelling out Rs 76,306 as taxes every year compared to the business class which paid only Rs 25,753 per person.

Prime Minister Narendra Modi said the budget was aimed at being common man, and farmer friendly . It also enhanced ease of doing business for the business community. It also aimed at development and providing more jobs to the people and putting more money into their hands to encourage their savings to increase significantly. His government was alunching the worlds biggest health care scheme for the poor which gave medical reliefs of rs 5 lakhs per person. He said sr citizens would benefit greatly. 

Finance Minister Jaitley claimed his budget was guided by mission to strengthen agriculture, rural development, health, education, employment, MSME and infrastructure sectors.

Government says, a series of structural reforms will propel India among the fastest growing economies of the world. Country firmly on course to achieve over 8 % growth as manufacturing, services and exports back on good growth path.

MSP for all unannounced kharif crops will be one and half times of their production cost like majority of rabi crops: Institutional Farm Credit raised to 11 lakh crore in 2018-19 from 8.5 lakh crore in 2014-15. 22,000 rural haats to be developed and upgraded into Gramin Agricultural Markets to protect the interests of 86% small and marginal farmers.

Operation Greens” launched to address price fluctuations in potato, tomato and onion for benefit of farmers and consumers. Two New Funds of Rs10,000 crore announced for Fisheries and Animal Husbandary sectors; Re-structured National Bamboo Mission gets Rs.1290 crore. Loans to Women Self Help Groups will increase to Rs.75,000 crore in 2019 from 42,500 crore last year.

Higher targets for Ujjwala, Saubhagya and Swachh Mission to cater to lower and middle class in providing free LPG connections, electricity and toilets. Ø Outlay on health, education and social protection will be 1.38 lakh crore. Tribal students to get Ekalavya Residential School in each tribal block by 2022. Welfare fund for SCs gets a boost.

World‟s largest Health Protection Scheme covering over 10 crore poor and vulnerable families launched with a family limit upto 5 lakh rupees for secondary and tertiary treatment.

Fiscal Deficit pegged at 3.5 %, projected at 3.3 % for 2018-19. 2 Ø Rs. 5.97 lakh crore allocation for infrastructure Ø Ten prominent sites to be developed as Iconic tourist destinations . NITI Aayog to initiate a national programme on Artificial Intelligence(AI). Centres of excellence to be set up on robotics, AI, Internet of things etc.

Disinvestment crossed target of Rs 72,500 crore to reach Rs 1,00,000 crore.

Jaitley also announced a Comprehensive Gold Policy was on the anvil to develop yellow metal as an asset class. For the farm sector activity benefit , 100 percent deduction proposed to companies registered as Farmer Producer Companies with an annual turnover upto Rs. 100 crore on profit derived from such activities, for five years from 2018-19.

Deduction of 30 percent on emoluments paid to new employees Under Section 80-JJAA to be relaxed to 150 days for footwear and leather industry, to create more employment. No adjustment in respect of transactions in immovable property where Circle Rate value does not exceed 5 percent of consideration.

Proposal to extend reduced rate of 25 percent currently available for companies with turnover of less than 50 crore (in Financial Year 2015-16), to companies reporting turnover up to Rs. 250 crore in Financial Year 2016-17, to benefit micro, small and medium enterprises. Ø

Standard Deduction of Rs. 40,000 in place of present exemption for transport allowance and reimbursement of miscellaneous medical expenses. Some 2.5 crore salaried employees and pensioners to benefit.

Relief to Senior Citizens proposed:- § Exemption of interest income on deposits with banks and post offices to be increased from Rs. 10,000 to Rs. 50,000. § TDS not required to be deducted under section 194A. Benefit also available for interest from all fixed deposit schemes and recurring deposit schemes. § Hike in deduction limit for health insurance premium and/ or medical expenditure from Rs. 30,000 to Rs. 50,000 under section 80D. § Increase in deduction limit for medical expenditure for certain critical illness from Rs. 60,000 (in case of senior citizens) and from Rs. 80,000 (in case of very senior citizens) to Rs. 1 lakh for all senior citizens, under section 80DDB.

  • Proposed to extend Pradhan Mantri Vaya Vandana Yojana up to March, 2020. Current investment limit proposed to be increased to Rs. 15 lakh from the existing limit of Rs. 7.5 lakh per senior citizen.

More concessions for International Financial Services Centre (IFSC), to promote trade in stock exchanges located in IFSC. To control cash economy, payments exceeding Rs. 10,000 in cash made by trusts and institutions to be disallowed and would be subject to tax.

Tax on Long Term Capital Gains exceeding Rs. 1 lakh at the rate of 10 percent, without allowing any indexation benefit. However, all gains up to 31st January, 2018 will be grandfathered. Ø Proposal to introduce tax on distributed income by equity oriented mutual funds at the rate of 10 percent. Ø Proposal to increase cess on personal income tax and corporation tax to 4 percent from present 3 percent.

Proposal to roll out E-assessment across the country to almost eliminate person to person contact leading to greater efficiency and transparency in direct tax collection. ØProposed changes in customs duty to promote creation of more jobs in the country and also to incentivise domestic value addition and Make in India in sectors such as food processing, electronics, auto components, footwear and furniture.

Sarkaritel
By Sarkaritel February 1, 2018 14:10