1. UNION BUDGET – 2018
-AN ANALYSIS
CA K. Raghu

2. Union Budget 2018
Union Budget is the most comprehensive report of the Government’s finances in which revenues from all sources and outlays for all activities are consolidated in the Budget documents.
The Budget consists of the Budget Estimates for , Revised Estimates for and Actuals for
The Budget preparation process consists of Budget Formulation, Budget enactment, Budget execution and Legislative review of the Budget Implementation.
The Budget formulation is initiated by the Department of Economic Affairs, Ministry of Finance and is an extremely confidential process.
The current Budget 2018 mainly focusing on Agriculture, Employment creation, Health & Education and has been widely appreciated as a good budget and most of the leading experts have called it a “Populist Budget”.
This Union Budget 2018 holds special significance being first budget post the implementation of GST in July 2017.

3. Indian economy – On the fast track
GDP growth projections for is expected to be around 6.75%, which is further expected to reach to 7.2 to 7.5% in
The fiscal deficit target is pegged at 3.3% of GDP.
India is now one of the fastest growing economies in the world trillion dollars economy - 7th largest economy in the world and is poised to be the 5th largest economy soon
Structural reforms like Demonetization and GST has put the economy on a new track of development.
Demonetization has reduced the amount of cash in circulation and has helped the Govt. to promote digital transactions.
GST data shows 50% rise in number of indirect taxpayers
Direct tax payers have also increased from 6.47 crores to 8.27 crores in the current year.
India has improved its ranking by 42 places and now ranks within the top 100 countries for “Ease of doing Business”.

4. Indian economy – On the fast track
Foreign Direct Investments have gone up.
GST and Demonetisation has impacted the economy in the short run but in the long run it will augur well for the growth of our economy
Greater push for digitization.
Re-capitalisation of Public Sector Banks.
Insolvency and Bankruptcy Code has changed the lender–debtor relationship.
Manufacturing sector is on the growth path.
Exports are expected to grow.
In a nutshell, the Budget has continued its primary focus on growth, revitalising rural and fiscal economy, agriculture, infrastructure, health care and education.

5. Agriculture
Emphasis is to generate higher income for farmers so that they can generate more produce from the same land parcel and also realize a higher price for their products.
Food production has increased to 275 million tonnes food grains and 300 Million tonnes of fruits & vegetables.
E – NAM (National Agricultural Market) to be set up by March
Agri-Market Infrastructure Development Fund with a corpus of Rs. 2,000 crore to develop and upgrade marketing infrastructure.
To support Food processing sector, Agri–logistics & Agri– Exports.
Improve the volume of institutional credit for agriculture sector to Rs. 11 lakh crores for the year

6. Rural economy
2 crore toilets proposed to be constructed under Swachh Bharat Mission.
Loans to Women Self Help Groups Rs. 42,500 crores.
Free LPG connection to 8 crore poor people.
Rural housing - 51 lakhs houses in year and 51 lakh houses during will be constructed exclusively in rural areas.
4 crores poor households are being provided with electricity connection free of charge by spending Rs. 16,000 crore.
Direct Benefit transfer mechanism has been implemented efficiently and has become a global success story.

7. Education
Integrated B.Ed programme to be initiated for teachers to improve quality of teaching.
Government has also taken steps to set up a specialised Railway university in Vadodara and two full-fledged schools of planning and Architecture.
Additionally, 18 schools for Planning and Architecture will be set up in IITs and NITs as autonomous schools.
To increase digital intensity in education and move gradually from ‘‘black board’’ to ‘‘digital board’’;
Technology to upgrade the skills of teachers through the recently launched digital portal ‘‘DIKSHA’’.
Ekalavya Model Residential School for providing education to tribal children.

8. Health
This year's budget can be termed as an "Ayushman Bharat" Budget – since the main highlight is on healthcare for all.
At least 24 new government medical colleges and hospitals will be set up by upgrading existing district hospitals.
The world’s largest government-funded health care programme, aimed at benefiting 10 crore poor families (50 crore beneficiaries) by providing coverage of up to Rs. 5 lakh per family per year for secondary and tertiary care hospitalisation.
Allocated Rs. 1,200 crore towards the National Health Policy 2017, which will go towards 1.5 lakh health and wellness centers to provide comprehensive health care services including maternal & child health services.
Providing of free essential drugs & diagnostic services to the needy; adoption of such centers by private sector through their CSR initiatives.
Expenditure on health, education and social protection to go up by at least 15,000 crore in

9. Infrastructure
Infrastructure is the growth driver of the Indian economy.
Integrate the entire nation by Roads, Railways, Airports, Ports & Inland waterways.
Bharatmala project to connect backward, interior & boarders areas of the country to the extent of 35,000 kilometers.
Smart Cities Mission aims at building 100 Smart Cities with state of-the-art amenities.
Re–development of 600 major Railway Stations and installation of Escalators in all major stations.
Provision of Wi – Fi in all railway stations.

10. Infrastructure
UDAN – providing regional Air connectivity in 56 unserved airports.
Centre of Excellence for training in Robotics, Artificial Intelligence and Big data.
The AMRUT programme focuses on providing water supply to all households in 500 cities.
Development of new National Highways exceeding Kilometers.
To setup 5 lakh wi-fi hotspots to provide broadband access to 5 crore rural citizens.
Connecting 1,00,000 Gram Panchayat through high speed fiber network enabling 20 crores house holds to have broadband facility.

11. MSME & Employment creation
Online loan sanctioning facility for MSMEs will be revamped for prompt decision making by the banks.
Enhancing the lending target under the MUDRA Yojana, which funds the self-employed, to Rs 3 lakh crore for the fiscal.
Support the Start-Up India program by building a very robust alternative investment regime in the country.
Reduction of EPF contribution rate from 12 to 8% for women employees for first 3 years of their employment.
Development of new skill centers in every district.

12. Direct Taxation
Direct Tax collection has increased by 18.7% due to strong anti- evasion measures taken by the Government.
No change in Tax Rates in the new Budget.
Education Cess to be increased from 3% to 4% and would be known as Health & Education cess.
Domestic Companies having Total Turnover (Gross Receipts) up to Rs. 250 Crores in FY to pay tax at 25%.
Assessments to be made e-assessments.
Deemed dividend u/s. 2(22)(e) also now brought under the scope of Dividend Distribution tax u/s. 115-O and taxable at 30% (without grossing up).
It is proposed to impose Social Welfare Surcharge at 10% of the aggregate duties of customs (in place of cess on imported goods).

13. Direct Taxation
Govt. will assign every enterprise in India a unique ID (like Aadhaar).
All entities, including HUF, Firm etc other than Individual, whose financial transaction in a year exceeding Rs.2,50,000/- is required to mandatorily obtain PAN irrespective of the fact, they have income or not.
Long-term Capital Gains on sale of listed securities to be taxed at 10% without indexation if the gain exceeds Rs. 1 Lac ( acquisition & transfer must suffered under STT).
Variation in sale consideration on sale of immovable property to its stamp duty value to the extent of 5% is to be ignored.
Any compensation received or receivable, either revenue or capital in nature on termination or the modification of terms and conditions of any contract relating to its business shall be taxable under the head ‘Profits and Gains of Business and Profession’ (Applicable from Asst. Year ).
Trading in Agricultural Commodity will be treated as normal business transaction and not as speculative business though Commodity Transaction Tax is not applicable on these transactions (under Sec. 43(5) - Applicable from Asst. Year ).

14. Direct Taxation
Payments exceeding Rs. 10,000 in cash made by trusts and institutions shall be disallowed and would be subject to tax.
Penalty u/s 271FA for non-furnishing of statement of financial transaction or reportable account under Section 285 BA(1) has been increased from Rs. 100 to Rs. 500 per day.
As per section 276CC (Prosecution for failure to furnish return), if a person willfully fails to furnish the return of income with in due time (if Tax payable by him is more than Rs.3000/-), he shall be punishable with imprisonment & fine w.e.f. 1st April, 2018.
As per section 276CC, fine and imprisonment is proposed to be leviable to Companies who has not filed return of Income with in due date even if the tax payable by Company does not exceed Rs. 3,000/-.

15. Direct Taxation
No adjustment in relation to addition of income appearing in Form 26AS or Form 16A or Form 16 shall be made in respect of any return furnished on or after the assessment year commencing on the first day of April 2018 while processing the tax returns by CPC.
If any additions must be made, the same should now only be through a scrutiny process.
It is now proposed that the exemption u/s 54EC will be available only for sale of land and building or both and the lock in period is also increased from 3 to 5 years for investments in bonds made after 01/04/2018.
100% tax deduction for first 5yrs to companies registered as farmer producer companies with a turnover of Rs. 100 Crores or above.

16. Direct Taxation
Standard deduction for salaried employees & pensioners up to Rs 40,000/- or the amount of salary received, whichever is less.
Consequently the present exemption in respect of Transport Allowance (except in case of differently able persons) and reimbursement of medical expenses is proposed to be withdrawn.
For senior citizens, interest income on Deposits with Banks and Post offices exempt u/s 80TTB up to Rs. 50,000 from the current limit of Rs. 10,000 and TDS shall not be deducted u/s 194A up to Rs. 50,000/-.
For senior citizens, health insurance premium and/or medical expenditure increased from Rs. 30,000 to Rs. 50,000 under Section 80D.
Deduction for expenditure on Critical Illness increased from Rs.60,000 (or Rs. 80,000 as applicable) to Rs.1,00,000 u/s 80 DDB.

17. Other Announcements
While Mr. Arun Jaitley did not fulfil his promise of a corporate tax rate cut, he has given relaxation to small businesses with a turnover up to Rs. 250 crore.
Govt. will explore ways for using the blockchain technology for digital transactions.
Govt. to take measures to eliminate Crypto Currency & Crypto Assets.
Dis-investment in Public Sector to the tune of Rs. 80,000 crores and Privatization of Air India to be given priority.
Merging of all three public sector Insurance companies into one single entity.
e-governance & e-office for faster movement of goods.

19. CA K.Raghu