Budget 2018: Focus on these key areas as you listen to Arun Jaitley’s speech

Keeping an eye on these five points will just be enough for you to make out if this year’s Budget has been good or bad for you.

Finance minister Arun Jaitley and his team ahead of the Union Budget 2018 presentation. Image source: ANI

The Finance Minister Arun Jaitley will unveil Union Budget 2018 in just a few hours. If you’re clueless about what to look into FM Arun Jaitley’s Budget speech, don’t worry, we have covered you.

Keeping an eye on the following five points will just be enough for you to make out if this year’s Budget has been good or bad for you:

1) Income tax

TRENDING NOW

Currently, the basic exemption limit for income tax is capped at Rs 2.5 lakh. FM Jaitley would do well to increase it to Rs 3.5 lakh, keeping in view the inflation and the fact that the same has not been increased for the past three years. The upper limit for the tax slab of 5 per cent applicable for the taxable income ranging from Rs 2.5 lakh to Rs 5 lakh is expected to be increased from Rs 5 lakh to Rs 6 lakh.

Secondly, the overcrowded section 80C needs a relook too. Increase in exemption under 80C should be moved up from Rs 1.5 lakh to Rs 2.5 lakh. Lastly, salaried class will be a happy lot if FM Jaitley re-introduces the standard deduction for salaried class with limit of Rs 50,000 – 100,000.

2) Affordable housing

The FM must make way for developers to build smaller units in affordable segment because first time homebuyers, low on budget, mostly look for 1-bedroom-hall-kitchen (BHK) or 2 2BHK, not the bigger, villa units available now.

FM should also consider raising the interest rate subvention on home loans. “Recently, interest rate subsidies on home loans have been provided to Middle Income Group (MIG) households too. Currently, households earning between Rs 6 - 12 lakh a year can claim a 4 per cent subsidy on home loan amounts up to Rs 9 lakh. Similarly, households earning between Rs 12 -18 lakh annually receive a 3 per cent subsidy on loan amount up to Rs. 12 lakh. We expect these caps to be raised so that it is in sync with the increasing costs of real estate especially in urban areas,” said George Alexander Muthoot, MD - Muthoot Finance.

3) LTCG

In the run-up to every Union Budget announcement, fear of levy of long term capital gains (LTCG) tax, GAAR, haunt the stock market. At a time when retail participation in the market has expanded, ending the LTCG exemption will dampen retail investors’ spirit towards equities.

“We reckon that the government will not like to dent the improving investor sentiment, where equity participation still remains low around 5-6 per cent of the household savings. Having said that, it could change the long-term capital gain classification criteria from one year to two years,” Amar Ambani, Partner & Head of Research, IIFL said.

“But in the same breath, the government must then have a serious relook at STT, abolish Dividend Distribution Tax (DDT) as also reduce GST rates on share transactions from 18 per cent to 12 per cent. We may also see plugging of some loopholes like bonus stripping,” Ambani added.

4) Employment

The government should focus on the MSME sector in the Budget. “MSMEs in India play a crucial role in providing large scale employment opportunities at comparatively lower capital cost than large industries and also in industrialisation of rural and backward areas, noted Economic Survey 2017-18.

The government needs to boost job intensive sectors such as textiles and apparels, leather sector, gems and jewellery and infrastructure. The Textiles and Apparels sector has tremendous potential for growth in exports and employment, particularly, women’s employment. Leather and gems & jewellery are also highly labour-intensive sectors, while enhanced investment on infrastructure will certainly help create jobs both directly and indirectly.

5) Healthcare

In 1999, the government had introduced a special deduction of Rs 15,000 towards expenses reimbursed by an employer in relation to medical expenses. However, in the past 18 years, the cost of medical treatment has witnessed a manifold jump. Increasing the medical expense/health insurance expenses from Rs 15,000 to Rs 50,000 will be a good step.

Besides, medical rebate of Rs 30,000 under Section 80D for senior citizens needs to be revisited too.

Rolling out of universal access programme to essential medicines and medical services is also being hoped for.

TAGS: