Everyone’s talking about the Budget 2018 and you’re not in the loop? Don’t worry, we will update you on all the latest budget goss. But before we discuss all the rumors and expectations know the 2 very important things Budget 2018 is riding on:
#1. It will be the first budget after G.S.T. came into our lives
#2. And it will PM Modi’s last budget before the general elections in 2019. (Yes, it’s already been 4 years of us being #ModiManaged!) Keeping this in mind here’s everything you need to know:
When someone says the Budget is going to be populist here’s what they mean:
Let’s face it, our Prime Minister messed up pretty badly first with demonitization and then again with G.S.T. Though his intentions were keeping our best interests at heart he kinda left us in a mess. And now he’s got to find a way to make it up to us because his only chances at winning the elections in 2019 lie in our hands. And the Budget 2018 will decide this fate. That’s why people believe this budget is going to be more populist (which means in favor of the masses and focuses on development) instead of a reformist budget (which means focusing on progress and growth).
People are expecting him to figure a way to find jobs for the unemployed as he promised in 2014, to help the farmers who are deeply stressed, to help the rural areas, to reduce tax burden for common man and to give the common man more benefits. But the PM has denied these rumors describing the budget as anything but a populist one this time. He thinks the common man expects too much from the budget and like other politicians he’s not going to spoil people by promising freebies before elections.
When someone talks about tax expectations tell them this budget the government may make changes to direct taxes:
For reviewing the existing structure of direct taxes in the country a task force headed by CBDT member Arbind Modi has been created by the government to make direct taxes more rationale and in line with global standards. So just how the government changed indirect taxes by introducing G.S.T. this budget might witness changes in direct taxes. Here are the expectations:
#1. In order to encourage working class to file tax returns and pay taxes tweaks to the current tax slabs are expected. This would leave people with more disposable income. Currently income up to Rs. 2.5 lakhs is exempt from tax but this limit might be increased to Rs. 3 lakh.
#2. Currently section 80C allows you to deduct Rs. 1.5 lakh from your taxable income if you invest in tax saving investments like PPF, EPF etc. This limit is expected to be increased by Rs. 50,000 extending the limit to Rs. 2 lakhs.
#3. To make India more competitive globally and attract foreigners to start businesses here reductions in corporate tax (which is taxes companies pay to the government on their profit) to 25% are also expected.
However, all these are just speculations which will be ascertained only after the Budget is announced.
When someone talks about healthcare, tell them that the budget might spend 11% extra on this:
The Health Minister demanded a very big increase in the budget, almost $10 billion, to ramp up the disease control in the country. Though the Government is not abiding to the demands but they do plan on increasing their spending by 11% giving them a budget of $8.2 billion. The funds are needed for expanding vaccination coverage and free drugs distribution, and also to ward off a growing threat of non-communicable diseases, such as cancer and diabetes, which killed 6 million people in India in 2016.
When someone talks about shares tell them about the tax on these shares:
The profits made by selling shares or other investments are called as capital gains. If you sell shares within one year of buying them the gains are called as short term capital gains (STCG) and if you sell after holding them for a year they are called as long term capital gains (LTCG). Currently STCG are taxed at 15% but LTCG are tax free. This has led to a lot of tax losses for the government and that’s why experts have insisted on bringing back tax on LTCG or increase the holding period from 1 year to at least 2 or 3 years.
Reinstating this on the listed shares will be a way of the Government trying to increase their revenues from their tax collection. That’s why this budget expect a comeback on taxes on your shares.
When someone talks about cryptocurrencies, tell them this Budget they may discuss its legality and taxability:
There has been a lot of talk about Cryptocurrencies in the past few months. With its volatility the Government has been skeptical about it from the start. The Finance Minister and RBI called it illegal tender and the Income Tax Dept. carried out searches at major Bitcoin exchanges for tax evasion. An overview on how the Government is dealing with cryptocurrencies is a needed measure in the upcoming budget. Currently the exchanges are charging people 18% G.S.T. on their transactions but their taxability on the personal front is still a bit unclear.
When someone says talks about the sector focus this budget tell them infrastructure, rural development and public sector banks are on the governments agenda this budget:
According to the Finance Minister the government is planning to maintain the momentum at which new infrastructure is being developed in the country. They will focus on developing rural and railway infrastructure. They will also help public sector banks solve their big loan problem that cannot be recovered and are fetching them no interests. And lastly through all their attempts at improving the infrastructure, easing foreign investor policies and focusing on rural development they hope to create more jobs for our unemployed population.
Now that you know these topics, the next time someone mentions them you know what to say. If there are any such topics spoken about at a party that have made you feel out of the loop, write to us at firstname.lastname@example.org and we will cover it in our next edition.