Union Budget 2018-2019 – A Review

Budget 2018

It’s time for Union Budget 2018-19. Budget 2018 is already announced by Arun Jaitely. This budget was last full budget of the incumbent BJP lead NDA government before Lok Sabha Election 2019. This time budget was a special event as it was released post GST Implementation. The expectation of common man from Union Budget 2018-19 was very high. Tax relief, Inflation control and social security was major demand by the common man. Finance Minister has failed in fulfilling this requirement in budget 2018. Overall its Bad Budget. No Big Announcement. No change in Income Tax rate 🙁 Introduction of Long term capital gain tax for profit above 1 Lakh in the Stock market 🙁

Over all It can be said that “No Acche Din for Common Man” Except few changes.

Let’s take a look at Key Announcements of Union Budget 2018-19.

Union Budget 2018-19 – Key Announcements

  • Introduction of new National Health Protection Scheme to cover 10 crore poor and vulnerable families by providing up to Rs 5 lakh per family per year.
  • The launch of ‘Revitalising of Infrastructure and Systems in Education’ by 2022 with a total investment of Rs 1 lakh crore in next 4 years.
  • The government will contribute 12 per cent of wages of new employees in EPF for all sectors for the next 3 years.
  • The government to take all steps to eliminate use of cryptocurrencies which are being used to fund illegitimate transactions.
  • The government insurance companies will be merged into a single entity, and subsequently listed in the stock exchange.
  • Introduction of new gold policy to revamp Gold Monetisation Scheme.
  • No Change in Personal Income Tax Rate for salaried class.
  • Standard Deduction for a salaried employee of Rs 40,000 provided. This Standard Deduction is towards transport, medical reimbursement.
  • 80 D Health Insurance Premium limit is increased from Rs.30000 to Rs.50000 for senior citizen.
  • Introduction of Long Term Capital Gain @ 10% for profit above Rs 1 Lakh on stock and mutual fund investments.
  • Equity-based Mutual Funds are now being taxed. FM introduce tax on Distributed Income Of MFs at 10%.

Also Read  – Capital Gain Tax Calculator – Download

Union Budget 2018-19 – Review

Income Tax

It was expected that tax exemption limit will be enhanced from 2.5 Lakh to 4 Lakh. However this limit was not modified.

  • Only standard deduction of Rs.40000 towards transport and medical reimbursement is introduced. This is against earlier exemption of transport allowance Rs.19200 and medical Rs.15000. So overall against Rs.34200 limit is set to Rs.40000. This means benefit of Rs.5800 towards deduction. Overall from tax saving it is like peanut.
  • No change in Income Tax Slab or Tax Rate. This means earlier tax rate and slab of year 2017 shall be applicable in 2018. Only change is if we consider standard deduction of Rs.40000. You need not to pay tax up to 2.9 Lakh
  • Income tax 80 C investment limit remains unchanged 1.5 Lakh.
  • For Senior citizen there will be no TDS on Fixed Deposits and Post Office deposits upto Rs 50,000.
  • Another relief to senior citizen is increase in the limit of deduction for medical expenditure of certain critical illnesses to 1 lakh under section 80DDB.
  • 80 D limit enhancement up to Rs.50000 for senior citizen.

Income Tax Slab FY 2018-19

Income Tax Slab 2018

Capital Gain Tax

  • For stock market investment Long term capital gain tax exceeding profit above Rs.1 Lakh will be taxed at 10% without indexing.
  • Short term capital gain remains unchanged 15%.
  • Tax on distributed income @ 10% is introduced for equity based mutual funds. This does not mean that investor have to pay any tax. Mutual Fund house needs to pay extra tax 10% as dividend distribution tax. So, overall impact would be less gain in dividend based mutual funds.

Our Take –

Good days are coming” this was main slogan given by BJP government before coming in to power. Every citizen of India believed in this dream and voted for BJP, but it seems No good days for at least common man or salaried people. Union Budget 2018 was big disappointment from good day’s point of view. It seems that finance minister has just completed formality of releasing budget before time.

No tax change, No Slab Change, Introduction of Tax at Equity, No social security scheme. No significant benefit to common man. Only lollipop of National Health Protection Scheme and focus only to farmers and senior citizens. This is what we have got for budget this year.

Most-liked about Budget 2018:

  • National Health Protection Scheme.
  • Contribution of 12% by the government towards EPF for new employees for 3 years.
  • New Gold Policy.

Most-disliked about Budget 2018:

  • No change in Income tax rate and slab.
  • Introduction of LTCGT at Equity Investments.
  • 10% Distribution tax on Mutual Funds.

What is your take on budget 2018?

Do share your views on Union budget 2018-19

Check out more Budget details here.

Share this knowledge:

Article by Raviraj

Raviraj is the man behind moneyexcel.com. He is graduate in finance, engaged in blogging since 6 years. Moneyexcel blog is ranked as one of the Top 10 Personal Finance Blog in India. He is not affiliated with any financial product, service provider, agent or broker. The purpose of this blog is to spread financial awareness and help people in achieving excellence for money. Please note that the views expressed on this Blog/Comments are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion.

Subscribe to Blog

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

2 Comments

  1. Vipin says:

    could you please advise how this would benefit a salaried person

    “Standard Deduction for a salaried employee of Rs 40,000 provided. This Standard Deduction is towards transport, medical reimbursement.”

Leave a Reply

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