Income Tax


Sunday 4 February 2018

Key Points Highlighting Union Budget 2018-19

On Thursday, 1st February 2018, Finance minister Arun Jaitley has declared and presented the union budget of 2018-2019. It’s interesting to see what kind of changes we can observe in this budget because this is the first union budget after GST implication in the the country. Point to be noted is Agriculture, health, rural development and basic infrastructure is highlighted but salaried people, investors and job creators are seems to be avoided at some level. This is the major key point explaining the fact that, this budget will focus on improvement of basic infrastructure of the country. Educational sector is blessed with some good schemes which is not actually bad. Still one question  arises after going through whole budget,  whether this is the strategy for upcoming elections or what ?  Most of the population of country such as salaried people are seems to be unhappy with this. Of course there are some significant announcements we have to discuss. A special scheme has been launched to control the air pollution in Delhi. This scheme is promising because,  Delhi has secured the top rank in the list other polluted cities from India. Also digital education system, digital marketing strategies for the digital India are also focused. 

Focus of the budget is to cover poor population in the country thus the Scheme Called 'National Health Protection scheme' has also been declared. One thing which is catching every ones attention is poor people will get the advantage of this budget. Now to Discuss On Direct Tax (Income Tax) 

1. No change in Tax Rate. All persons including individuals, HUF, Firms and Companies to pay same tax
2. Education Cess is being increased from 3 to 4 % to be known as Education and Health Cess.
3. Corporate tax has been reduced in certain amount such as 30% to 25% for companies having turnover upto Rs. 250 crore, On Domestic Company Only.
4. Capital gain at 10%, if Capital gain is more than 1 lakh, But no Tax upto 31 Jan 2018 on capital gain u/s 10(38) on listed Shares, This section has been withdrawn with effective Date of 01 Feb, 2018,  Tax on STT paid long term capital Gain 112A. Further such tax will be liable for TDS
5. Medical Reimbursement  of Rs 15,000 under Section 17(2) are being withdrawn & Transportation allowance of Rs 19,200 for salaried people is to be replaced by Standard Deduction of  Rs. 40,000, This Deduction is also applicable to Pensioners.
6. Provision of Section 43CA, 50C and 56(2)(x) being amended to allow 5%  of sale consideration in variation vis a vis stamp duty value. On account of location, disadvantage etc.
7. Provision of section 40(ia) and 40A(3) and 40A(3A)are being made applicable to Charitable Trust . Hence expenditure incurred without deduction of tax and in cash will not be eligible as application of income under section 10(23C) and section 11(1)(a).
8. Agriculture Commodity Derivates income /loss  also not to be considered as speculative under section 43(5).
9. Income Computation and Disclosure Standards (ICDS) being given statutory backing in view of decision of Delhi High Court decision.
10. Marked to market loss computed as per ICDS to be allowed under section 36.
11. Gain or loss in Foreign Exchange as per ICDS to be allowed under new section 43AA.
12. Construction Contract income to be computed on percentage completion method as per ICDS.
13. Valuation of Inventory including Securities  to be as per ICDS.
14. Interest on compensation, enhanced compensation. Claim or enhancement claim and subsidy, incentives to be taxed in the year of receipt only as per new Section 145B.
15. Conversion of stock in trade to capital asset to be charged as business income in the year of conversion on Fair Market value on the date of conversion.
16. 54EC benefit of investment in Bonds to be restricted to Capital gain on land and building only. Further period of holding being increased from 3 years to 5 years.
17. PAN to be obtained by all entities  including HUF other than individuals in case aggregate of financial transaction in a year is Rs 2,50,000 or more. All directors, partners, members of such entities also to obtain PAN.
18. All companies irrespective of income to file return and in case it is not filed, such companies will be liable for prosecution irrespective of the fact weather it has tax liability of Rs 3,000 or not.
19. Assessments to be E assessment under new section 143(3A)
20. No adjustment under section 143(1) while processing on account of mismatch with 26AS and 16A.
21. Deemed dividend to be taxed in the hands of the company itself as Dividend Distribution of tax @ 30%.
22. Penalty  for non filing financial return as required under section 285BA being increased to Rs 500 per day.
23. Government to contribute 12% Employees' Provident Fund for new employees for 3 years, Only Women can Contribute 8% to EPF upto first 3 year & for man as earlier policy no change.
24. 100% deduction will be allowed to Farmer Producer Company.
25. Mediclaim Benefits for Senior Citizen upto 80,000/, this is an additional benefit of Rs 50,000/- given by government.
26. Interest on FD, Saving Bank, Post office or any upto 50000/- allowed as Deduction u/s 80TTA only for Senior citizen & for other upto Rs 10,000 as earlier no change. 
27. Projected fiscal deficit upto 2019 will be 3.3% & upto Mar 2018 will be 3.5%

The budget focuses on the needs of the rural areas, hence the definition of 'Navbharat' can be strengthened. The 'Aayushyaman Bharat Yojana' can provide great medical care to the poor and this will be a milestone in upcoming era. One positive aspect of this budget is, government has reduced the corporate rates on micro, small and medium scale industries. Government says that, the budget is helpful in increasing the progress of basic stuff.

Let's focus on some important other announcements -

Increase in TV, Mobile phones rates, Last year, 8.27 crore populations has paid the tax. This year,  number of this population will increase. There is an increase in the Income tax with Rs. 90 thousand crore. Parliament members will be happy with the increased salary from April 2018. There will be increase in the payment of President, vice president & Governor. Two government insurance company will be established in the share market.Investment of Rs.7148 crore for Clothing industry. Expansion of railway routes in Mumbai upto 90 km. All railway station, railways will have CCTV cameras & wifi connection..Number of airports will increase by 5 %. Upgradation of 600 railway station in all over the country.Development in the production industry-Arun Jaitley. India's Economy will be on the 7th rank.Indirect taxation system has become easier due to GST.Digital education system will be focused. Training will be provided to 13 lakh teachers. Providing  training to workers,  for Mumbai-Ahemadabad bullet project has been started  at vadodara. Womens will get Ujjwala gas connection. Rs.600 crore invested for TB treatment. Eklavya school will be opened for Aadivasi Children. Investment for 24 Medical colleges in all over country.Through, National Defence conservation fund new scheme for safety of passenger will be launched soon.Investment of Rs. 600 crore on Pure water scheme.

Other schemes such as, Swaccha Bharat Abhiyan will play a crucial role for constructing the toilets in needed areas. Mudra yojana will be helpful for 10.38 crore people. In upcoming year,70 lakhs Job opportunity will be developed says Jaitley. 50 lakhs youngsters will be provided with the training for job. Investment of Rs.3700 crore as a loss compensation after demonetization. This is the promising factor seen in the budget. New Employees will get 12% amount in their E-PF. 187 schemes will be approved for cleaning project of river Ganga. 40% people in the country will get health insurance. Every year, Rs 5 lakhs will be invested on each & every family for medical services. Donation of  Rs.1 crore for educational field. ‘Operation flood to be launched like Operation green. Approval of Loan of Rs.75 crore for Saving groups by government. 4 crore house will get free electricity /power connection under Pradhan Mantri Sobhagya Yojana. Expectation of economic growth to be 7.5 percent. Rs.11 lakhs crore reserved for agriculture loan. Investment of Rs.500 crore for Operation Green. Livestock & fishery industries to be blessed with Rs.10,000 crore. This is wonderful for the growth of sea food industries. 42 food parks will be established throughout the country says finance minister. Investment of Rs. 1400 crore for food processing industries. Marketing of agricultural product is needed & government will take the responsibility of that. 

Food oil, olive oil, peanuts oil vegetable oil,  material required for manufacturing of ear machines, solar panels will get cheaper. Major factor to be noted in the recent budget is, the government proposed the provision of the economic development of Industry, self employment. f and for this purpose, more than one lakh crores than last year has been invested.

Many people are saying  this year’s budget is seems to be disappointing in many ways but it is definitely promising in many sectors says finance minister. it is needed for basic economy development. Modi government has focused on the development of rural areas & poor people. This the the key factor explaining each and everything about budget. Medical services, health, education, agriculture is on the top.