Union Budget Highlights 2018-2019 in Simple and Detailed
Today, Mr.Arun Jaitley, Finance Minister has presented Union Budget of 2018-2019. There are no major positive things in this budget for an investor or for individuals. However, as anticipated, Rural / agriculture sector was a focus area. What are the key budget highlights of 2018-2019? What are the budget highlights which would have impact on personal finance? Which are the budget changes which would impact employees? What are the key measures Govt. of India proposed in this budget which would benefit the common man in 2018? Does an investor get benefitted out of this Budget of 2018-2019?
Also Read: Best Rural based Mutual Funds that would benefit from Govt of India spending in 2018
Union Budget Highlights 2018-2019 in Simple Terms
Finance Minister Arun Jaitley presented the Union Budget for 2018-19 indicating that Indian economy is on track. Here are the key highlights.
Budget highlights 2018 which affect in Personal Finance
1) No change in personal income slab rates.
2) Govt to contribute 12% of basic salary for new employees for next 3 years across sectors. Women contribution to EPF for first 3 years is reduced to 8%.
3) Standard deduction of Rs 40,000 included for salaried class employees for medical expenses/transport allowance.
4) Senior Citizens medical insurance exemption u/s 80D has been increased from Rs 40,000 to Rs 50,000 per annum. For senior citizens with critical illnesses will get deduction of Rs 1 lakh.
5) Senior Citizens FD income exemption of Rs 10,000 introduced now. These can be available from Bank FD or Post Office FD Schemes.
6) While short term capital gains remains at 15%, long term capital gains exceeding Rs 1 Lakh would be taxed at 10% without indexing.
7) Capital gains tax has been reintroduced, with certain caveats, at 10% on gains of over Rs 1 lakh on investments.
Budget highlights 2018 which would affect Mutual Funds
Mutual fund houses will now have to pay a Dividend Distribution Tax (DDT) of 10 percent on dividends declared under equity schemes. Earlier DDT was applicable only to debt funds and not to equity mutual funds.
However, such tax need to be paid by fund houses and not by investors.
Budget highlights 2018 that affect Banking sector
Recapitalizatoin will help PSU Banks to lend additional Rs Lakh Crore. PSU Banking Stocks are already sky rocketeing in terms of their share prices. These would continue to perform well in 2018.
Investors can invest in good PSU stocks as and when these dip in next few weeks.
Budget highlights 2018 on key initiatives / spending by Govt.
1) Rs 27,500 cr to PM Affordable Housing Plan FY19
2) Rs 19,000 cr to PM Rural Road Plan FY19
3) Rs 32,600 cr to National Education Mission FY19
4) Rs 17,800 Cr to Swachh Bharat Mission in FY19
5) Rs 600 cr for nutritional support to all tuberculosis patients
6) Rs 5,750 cr to national livelihood mission
7) Rs 10,000 cr for fisheries & aquaculture, animal husbandry funds
8) Rs 1,290 cr to national bamboo mission
Key Budget highlights 2018 on Healthcare
National Healthcare protection scheme will benefit 50 crore people for Rs 5 Lakh per family per year for secondary and tertiary care hospitalization.
This would be the largest govt funded healthcare programme across the world.
Budget highlights in Investments and infrastructure sector
1) Out of 100, 99 smart cities has been selected with an outlay of Rs 2.04 Lakh Crores.
2) To develop Rs 35,000 km under phase-1 with an investment of Rs 5.35 Lakh Crores.
Budget highlights 2018 for Agriculture sector
1) Agricultural market fund created for Rs 2,000 Crores.
2) Food processing sector allocation increased to twice to Rs 1,400 Crores.
3) Rs 10,000 Crores allotted for fisheries, aquaculture and animal husbandry funds.
4) Rs 500 Crores fund would be allocated for “Operation Green” which would focus on promoting agricultural products.
5) 8 Crore poor women will get new LPG connections.
6) Govt allots Rs 9,975 Crores for Social Security Schemes for next year.
Other key budget highlights of 2018 in detail
- Propose to increase the custom duty on mobiles from 15% to 20% and on some other mobile parts to 15%, and some parts of TVs to 15%.
- Propose to increase the health and education cess to 4%.
- Rs 7000 crore will be the revenue foregone for the reduced corporate tax on MSMEs.
- Proposes to extend the benefit of the reduced corporate rate of 25% for companies with reported turnover of up to Rs 250 crore.
- 100% tax deduction for the first five years to companies registered as farmer producer companies with a turnover of Rs. 100 crore and above.
- 41% more returns were filed this year, which shows that more people have joined the tax net.
- Demonetisation was received by honest taxpayers as ‘Imaandaari ka utsav’.
- Revised fiscal deficit estimate for 2017-18 is 3.5% of GDP, fiscal deficit of 3.3% expected for 2018-19.
- The government insurance companies to be merged into a single entity, and subsequently listed in the stock exchange, as part of the disinvestment programme.
- The government will assign every enterprise in India a unique ID on the lines of Aadhaar.
- 5 lakh WiFi hotspots to be set up in rural areas to provide easy Internet access.
- Redevelopment of 600 major railway stations has been taken up; Mumbai transport system is being expanded; suburban network of 160 km planned for Bengaluru.
- The government proposes to revamp the system of sanctioning of loans to SMEs. The information required for sanctioning the loan will be linked with GSTN and all required information can be fetched from GSTN Portal.
- It will help to grant the loans quickly and will help in reducing processing time.
- UDAN will connect 56 unserved airports in India.
- An institute is coming up at Vadodara to train people for the bullet train programme.
- AMRUT programme will focus on water supply to all households in 500 cities. Water supply contracts for 494 projects worth 19,428 core awarded.
- Rs 1,48,528 crore is the capital expenditure for the Indian Railways for 2018-19… All trains to be progressively provided with WiFi, CCTV and other state-of-the-art amenities.
- Bharatmala project approved for better road connectivity at Rs 5.35 lakh crore.
- Proposal to develop 10 prominent tourist destinations as Iconic tourism destinations.
- 70 lakh farming jobs have been created this year, shows an independent study.
- Rs 3 lakh crore allocated for PM MUDRA Yojana.
- Announce allocation of Rs. 56,619 crore for SC welfare and Rs. 39,135 crore for ST welfare
- Healthcare stocks trading higher after the government said it proposed to cover 100 million families via healthcare protection scheme. Apollo Hospital Ltd rose 4.1%, Thyrocare Technologies Ltd 2.6%, Healthcare Global Enterprises Ltd rose 3%.
- Mass formalization of MSME sector is happening after demonetization and GST.
- Total 187 projects sanctioned under the Namami Gange programme.
- 24 new government medical colleges and hospitals to be set up by upgrading existing district hospitals.
- Rs 600 crore for nutritional support to TB patients.
- One medical college per every three constituency.
- Have decided to take healthcare protection to a new aspirational level.
- Launching a flagship National Health Protection Scheme to cover 10 crore poor and vulnerable families, benefiting approx. 50 crore. Providing Rs 5 lakh per family per year for medical reimbursement, under National Health Protection Scheme. This will be world’s largest health protection scheme.
- Rs 1200 crore for the flagship programme in health wellness centres.
- Eighteen new schools of planning and architecure will be set up.
- Propose railway university in Vodadara.
- Eklavya schools to be started for Scheduled Tribe population
- Scheme for revitalizing school infrastructure, with an allocation of 1 lakh crore rupees over four years. Called RISE – Revitalizing Infrastructure in School Education.
- Integrated B.Ed programme to be initiated for teachers, to improve quality of teachers.
- Technology will be the biggest driver in improving education.
- Rs 14.34 lakh crore to be spent for providing livelihood to rural India through infrastructure building.
- Loans to self help groups will increase to Rs 75,000 crore by March 2019.
- Aim that by 2022, all poor people have a house to live in.
- In the next financial year, they target the construction of two crore toilets.
- Removal of crop residue to be subsidised in order to tackle the problem of pollution due to burning of crop residue:
- Ujwala will give 8 crore women new LPG connections.
- Special scheme to address air pollution in Delhi-NCR region.
- Credit for agricultural activities is up from Rs 10 lakh crore to Rs 11 lakh crore .
- Fishery and aquaculture and animal husbandry funds with a total corpus of Rs 10,000 crore.
- Agri-Market Development Fund with a corpus of Rs 2000 crore to be set up for developing agricultural markets.
- Restructured National Bamboo Mission to be launched with an allocation of Rs 1290 crore to promote bamboo sector in a holistic manner.
- Grameen Agricultural Market (GRAM) will provide farmers a means to sell directly to buyers.
- Allocation to food processing ministry is being doubled from Rs 715 crore to Rs 1400 crore.
- Cluster-model approach to be adopted for agricultural production.
- The focus is on low-cost farming, higher MSP. Emphasis is on generating farm and non-farm employment for farmers.
- 470 APMCs have been connected to eNAM network, the rest to be connected by March 2018
- Agri-Market Development Fund with a corpus of 2000 crore to be set up for developing agricultural markets
- Agri-related stocks gain after it is said MSP for all crops to be increased by 1.5 times.
- The government will ensure payment of full MSP even if farmers sell below MSP.
- The Minimum Support Price of all crops shall be increased to at least 1.5 times that of the production cost.
- It says government has ensured that services and benefits reach people directly. The direct benefit transfer in India is the biggest such exercise in the world.
I would start sharing early next week about some of the best stocks that would benefit from Budget 2018
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Union Budget Highlights 2018-2019 in Simple Terms
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Is it a good idea, post budget, to invest in dividend reinvestment option instead of growth option since I can withdraw the capital amount if needed within 1 year of my investment and leave the dividends to be reinvested further and withdraw after 1 year if needed.
In case of dividend reinvestment option will the mutual fund houses have to pay DDT before declaring and giving dividends. I have invested 5 lakhs in Indiabulls Liquid Fund-Daily Dividend-Reinvestment.
Post budget and the impementation of LTCG which option is better- Growth or Daily Dividend-Reinvestment or Daily Dividend