The 2018 Union Budget and the Investor Class -KredX

The 2018 Union Budget and the Investor Class

The 2018 budget lays out a comprehensive action plan for the government’s financial blueprint. Here are they key points you need to be aware as an investor operating out of this country.

Key Highlights of the 2018 Budget

  • The government will contribute 12 percent of wages as EPF (Employees’ Provident Fund) in all sectors for the next three years. Contributions from women employees will be brought down from 12 per cent to 8 per cent.
  • Take home salary of new women employees to go up in the formal sector. Only 8% PF to be cut in first three years. There is no change in EPF
  • Redevelopment of 600 major railway stations taken up
  • World’s largest government funded healthcare program introduced. The National Health Protection Scheme will cover 10 crore poor and vulnerable families by providing upto Rs 5 lakh per family every year.
  • Institutional credit for the agricultural sector is up by 10 per cent to Rs.11 lakh crore.
  • For senior citizens there is an increase in interest earnings to 50,000 rupees.
  • Personal income tax slabs remain unchanged. A standard deduction has been reintroduced at Rs 40,000 in lieu of the medical and transport allowance.
  • While Excise duty on petrol/diesel has been cut by Rs 2
  • Mutual fund houses will now have to pay a Dividend Distribution Tax (DDT) of 10 percent on dividends declared under equity schemes.
  • Proposed spending on rural infra is Rs 14.34 lakh crore.

At some point during Arun Jaitley’s budget speech, the suggestion was laid out that a 5 percent hike on customs duty levied on imported mobile phones will directly result in increased jobs in the smartphone sector. Make what you will of the dubious logic of it all but the increased prices on mobile phones is a noticeable paradigm present in the 2018 budget. Consumer durables the middle class of this country frequently buy to augment their lifestyles are going to get more expensive. There are very obvious losers and very obvious winners in this budget. Corporates, salaried individuals in general are not fondly acknowledged in the financial strategy the BJP government seems to have adopted for the year 2018. The introduction of 10 percent LTCG (Long Term Capital Gains) tax for capital gains over 1 lakh is case in point of this narrative. The winners of this particular budget seem to be the poor, small industries, infrastructure development and the farmers. Proposal for the provision of gas connections for 8 crore poor women under Ujwala Yogana as well as the plan to complete 9000 kms of national highway in this year, translates the 2018 budget into a systematically election oriented one.

Another reason for an average investor to be disappointed comes from the additional burden of Securities Transaction Tax that will be levied on them despite the fresh imposition of LTCG. It looks like the individuals who proliferate the Indian market’s value by indulging in investments have little reason to cheer from this budget. This paints a very grim picture when added to the fact that the projected fiscal deficit based slippage for the year 2018 stands at 3.5 percent from the earlier predicted 3.2 percent.

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