The first budget post Goods and Services Tax (GST) announced by the NDA Government seems to have impressed many while for some it remained unaltered. We spoke to a panel of experts who gave their insights on the Union Budget 2018-19.
Dr Anil Lamba, practising CA, financial literacy activist, international corporate trainer and author says,”What I like about the budget is that corporate tax rate for domestic companies having total turnover or gross receipts not exceeding Rs 250 crores (as against present ceiling of Rs 50 crore) is reduced to 25%.
Relief To Senior Citizens:
- Mediclaim premium limit increased: At present, section 80D provides a deduction upto Rs 30,000/- in respect of payments towards annual premium on health insurance policy, or preventive health check-up, of a senior citizen, or medical expenditure in respect of very senior citzen. It is proposed to amend section 80D to raise this monetary limit of deduction from Rs 30,000/- to Rs 50,000/-.
- Deduction for medical treatment of specified diseases increased: Section 80DDB provides for a deduction with regard to amount paid for medical treatment of specified diseases in respect of very senior citizen upto Rs 80,000/- and in case of senior citizens upto Rs 60,000/- It is proposed to amend the provisions of section 80DDB of the Act so as to raise this monetary limit of deduction to Rs 1,00,000/- for both senior citizens and very senior citizens.
- Interest exemption increased: At present, a deduction upto Rs 10,000/- is allowed under section 80TTA for interest income from savings account. It is proposed to insert a new section 80TTB so as to allow a deduction upto Rs 50,000/- in respect of interest income from deposits held by senior citizens.
- TDS limit increased: It is also proposed to raise the threshold for deduction of tax at source on interest income for senior citizens from Rs 10,000/- to Rs 50,000/-.
What the left hand giveth, the right taketh away
The salaried class has always received a raw deal in successive budgets.
In what is touted as a relief to salaried class is the provision of standard deductions of Rs40,000. This deduction was available till 2005 but was withdrawn by P Chidambaram.
However, the deduction replaces existing reimbursements towards medical and transportation of RS 34,200.
So salaried persons in the 20% tax slab with taxable income 10 lacks get a net reduction in their taxable income of 5800 (40000-34200) and a tax benefit at 20% of 1160.
But at the same time education cess has been increased from 3 to 4%. So, if your income is 10 lakhs, you are paying Rs 1,12,500 tax. 1% additional tax on this i.e., 1125. So, ?1160-?1125, salaried class get Rs 35 relief.
For salaried persons having Taxable income above Rs.12,20,132, the tax benefit turns negative.
What I Don’t Like:
- No change in Tax Rate. There was an expectation of tax relief either by way of reduction in rate or increase of tax free slab. However, all persons including individuals, HUF, Firms and Companies are to continue to pay the same tax. Instead, Education Cess is being increased from 3 to 4 % to be known as Education and Health cess
- Long Term Capital Gain exemption under section 10(38) in respect of listed STT paid shares is being withdrawn. Tax on STT paid Long Term Capital Gain will be 10% under Section 112A. Further such tax will be liable for TDS.
- 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.
Section 54EC of the Act provides that Capital Gain, arising from the transfer of any long-term capital asset, invested in certain bonds at any time within a period of six months after the date of such transfer, shall not be charged to tax subject to certain conditions.
The section also provides that the Bonds should not be redeemable within three years.
It is proposed to amend the section 54EC deduction will only be available to capital gain arising from the transfer long-term land or building or both. And the bonds so invested in should be redeemable after five years.
4.Deemed dividend to be taxed in the hands of the company itself as Dividend Distribution of tax @ 30%.
Sharing his view, Mr Sachin Bhandari, CEO, VTP Realty says, “The budget did have some interesting inclusions. In fact, prior to the budget being announced, the Government had declared reduction of GST to 8% for all houses qualifying under credit link subsidy scheme under Pradhan Mantri Gramin Awaas Yojana (PMAY). This itself shows the government’s keenness and commitment to make housing for all a reality by 2022. Funds have also been allocated by the government for building 37 lakh houses in urban areas. This is encouraging for the reality sector and its customers.
“The Finance Minister further announced that the Centre will create a dedicated affordable housing fund in collaboration with the National Housing Bank. The Government’s initiative to focus on both rural and urban housing will further help in accelerating reality sector growth,” he adds.
Mr. Nilesh Palresha, Executive Director, EarthFood also shares his thoughts on the Union Budget.
“The budget is very promising, especially for the agriculture sector. The government’s plan to set up an agriculture market infrastructure fund of Rs 2000 crore is a great move.
“It is heartening to see that the government is committed to generate higher income for farmers and encourage them to produce more and realise higher prices. Additionally, farmer welfare, which has been a major topic of discussion, especially in Maharashtra, is well taken care of.
“The Warehousing Development Regulations Act (WRDA), which was in the back burner since 2012, will be revived. This is a welcome move, as India needs to focus on warehousing for agriculture.
“We are looking forward to the taxation scheme for start-ups by the Government. They will be taking additional measures to strengthen environment for venture capitalists and angel investors. This is one of the most welcome moves for the startup ecosystem. Since startup deductions could be helpful to new businesses when it comes to dealing with their taxes.
“From a business standpoint, 25% corporate tax which is now stretched to companies with turnover of 250 crore rupees is going to really boost the Ministry of Micro, Small and Medium Enterprises (MSMEs) and help them grow and survive.”
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