Here are the important highlights of Budget 2018 its impact on individuals, investors, and corporates.
Standard Deduction of ₹40,000
The salaried man has gotten a relief with the standard deduction of ₹40,000 on medical expenses.
All you need to do is deduct ₹40,000 from your taxable income and pay tax on the remaining amount.
The Education Cess has been increased marginally in the Budget. Investors belonging to the high-tax bracket will be the most benefited with this move on standard deduction.
Impact on Stock Market Investors
Equity investors would now have to pay 10% LTCG tax on sale of shares at profit after a time period of 1 year., while the Short Term Capital Gains Tax continues to be at 15%.
This move has placed equity shares at par with other classes of assets like Gold and Real Estate.
Employees Provident Fund Benefits
There is an estimate of a higher disposable income for women employees.
The amendment in EPF and Miscellaneous Provisions Act shall reduce contribution to the EPF account to 8% of the salary for women employees, without having any effect on the employer’s contribution, resulting in a higher disposable income for women employees.
The facility of Fixed Term Employment has been extended.
Government shall contribute 12% by way of EPF for new employment in all sectors.
The government has planned to strengthen the environment for growth of venture capital funds and angel investors investing in the startup sector across India. The focus is going to be on the promotion of the startup ecosystem in the country.
Mutual Funds Taxation
Tax on distributed income of equity oriented mutual funds at 10% has been announced.
Budget for Senior Citizens
There is a tax break for senior citizens on FDs, and the Health Insurance Tax benefits u/s 80D have been increased.
Senior citizens will now be able to claim tax exemption up to ₹50,000 on health insurance premium, as against ₹30,000.
Post Office schemes and Bank FDs will attract an income tax benefit for senior citizens, of ₹10,000. Additionally, ₹7.5lakh per senior citizen limit has been doubled to 15lakh for investment in interest bearing LIC schemes.
Health Insurance for the Poor
A flagship National Health Program has been launched by the government that will insure over 5 crore people, the amount for which would be around ₹5lakh for a single person.
Filtering down of this benefit to the poor families and its reach to the masses will be a problem.
The target was set during last year’s speech at 3.2% of GDP, which has now been increased to 3.5%. The target for 2018-19 has been set at 3.3%.