UNION BUDGET FY 2018-19 -- IMPORTANT POINTS

Central Govt. Budget FY 2018-19

The Central Govt. budget for the financial year 2018- 19 was presented by the Finance Minister in Parliament on February 01, 2018. The salient features are:

Agriculture and Rural Economy

•    Govt. considers agriculture as an enterprise. It proposes to double farmers’ income by 2022 (75th year of independence). Emphasis in budget allocations, is, on generating higher incomes for farmers.

•    As per pre-determined principle, Govt. proposes to keep MSP for the all unannounced crops of kharif at least at 150% of their production cost.

•    If price of the agriculture produce in the market is less than MSP, Govt. proposes to purchase either at MSP or work in a manner to provide MSP for the farmers through some other mechanism.

•    Proposal to develop and upgrade existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs). GrAMs, electronically linked to e-NAM and exempted from regulations of APMCs, will provide facility to make direct sale to consumers and bulk purchasers.

•    An Agri-Market Infrastructure Fund with a corpus of Rs.2000 crore will be set up for developing and upgrading agricultural marketing infrastructure in the 22000 GrAMs and 585 APMCs.

•    For PM Krishi Sampada Yojana (a flagship programme for boosting investment in food processing) allocation is being doubled to Rs.1400 crore in BE 2018-19.

•    Government proposes to launch an ‘‘Operation Greens’’ (for potato, onion and tomato) on the lines of ‘‘Operation Flood’’. It shall promote Farmer Producers Organizations (FPOs) for agri-logistics, processing facilities and professional management. Allocation Rs.500 crore for this purpose made.

•    Proposal to extend KCC facility to fisheries and animal husbandry farmers for working capital needs.

•    Bamboo (‘Green Gold’) grown outside forest areas removed from the definition of trees. Proposal to launch a Re-structured National Bamboo Mission with an outlay of Rs.1290 crore.

•    Government had set up a Long Term Irrigation Fund in NABARD to meet funding requirement of irrigation works. Scope of the Fund would be expanded to cover specified command area development projects.

•    Proposal for setting up a Fisheries and Aquaculture Infrastructure Development Fund for fisheries sector and an Animal Husbandry Infrastructure Development Fund for financing infrastructure requirement of animal

husbandry sector with total Corpus of Rs.10,000 cr.

•    Increase in volume of institutional credit for agriculture sector from Rs.10 lakh crore in 2017-18 to Rs.11 lakh crore for the year 2018-19.

•    Presently, lessee cultivators are not able to avail crop loans. NITI Aayog will evolve a suitable mechanism to enable access of lessee cultivators to credit, without compromising the rights of the land owners.

•    PM Ujjwala Scheme was launched, with a target to provide free LPG connections to 5 cr poor women. Proposal to increase the target to 8 crore poor women.  

•    Govt. had launched PM Saubhagya Yojana for providing electricity to all households. 4 crores poor households are being provided with electricity connection free of charge by spending Rs.16000 crore.

•    Under Swachh Bharat Mission, Govt. has constructed more than 6 crore toilets. Govt. is planning to construct around 2 crore more toilets.

•    Govt. will establish a dedicated Affordable Housing Fund (AHF) in National Housing Bank, funded from priority sector lending shortfall and fully serviced bonds authorized by the Government of India.

Health, Education and Social Protection

•    Government is implementing a comprehensive social security and protection programme. Allocation on National Social Assistance Programme this year has been kept at Rs.9975 crore.

•    Proposal to treat education holistically without segmentation from pre-nursery to Class 12.

•    Govt. proposes to increase digital intensity in education and move gradually from ‘‘black board’’ to ‘‘digital board’’. Technology will be used to upgrade the skills of teachers through digital portal ‘‘DIKSHA’’.

•    To provide the best quality education to the tribal children in their own environment, by 2022, every block with more than 50% ST population and at least 20,000 tribal persons, will have an Ekalavya Model Residential School on par with Navodaya Vidyalayas.

•    To step up investments in research and related infrastructure in premier educational institutions, including health institutions, proposal to launch a major initiative named ‘‘Revitalising Infrastructure and Systems in Education (RISE) by 2022’’ with a total investment of Rs.1,00,000 crore in next four years.

•    Govt. announced two major initiatives as part of ‘‘Ayushman Bharat’’ programme aimed at making path breaking interventions to address health holistically, in primary, secondary and tertiary care system

covering both prevention and health promotion.

•    The National Health Policy, 2017 has envisioned 1.5 lac Health and Wellness Centres as the foundation of India’s health system.

•    Proposal to launch a flagship National Health Protection Scheme to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage upto Rs.5 lakh per family, per year for secondary and tertiary care hospitalization. This will be the world’s largest government funded health care programme.

•    Proposal to make villages, open-defecation-free Galvanizing Organic Bio-Agro Resources Dhan (GOBAR-DHAN) for management and conversion of cattle dung and solid waste in farms to compost, fertilizer, bio-gas and bio-CNG.

•    Government will expand the coverage under PM Jan Dhan Yojana by bringing all 60 crore basic accounts within its fold and undertake measures to provide services of micro insurance and unorganized sector pension schemes through these accounts.

MSMEs and Employment

Govt. has provided Rs.3794 crore to MSME Sector for giving credit  support, capital and interest subsidy and innovations

•     Proposal to onboard public sector banks and corporates on Trade Electronic Receivable Discounting System (TReDS) platform and link this with GSTN. Online loan sanctioning facility for MSMEs will be revamped for prompt decision making by the banks.

•     Target of Rs.3 lakh crore for lending under MUDRA for 2018-19, set.

•     Govt. will contribute 12% of wages of the new employees in the EPF for all the sectors for next 3 years. Also, the facility of fixed term employment will be extended to all sectors.

•     Proposal to amend the Employees Provident Fund and Miscellaneous Provisions Act, 1952 to reduce women employees’ contribution to 8% for first 3 years of their employment (existing 12% or 10%) with no change in employers’ contribution.

Infrastructure and Financial

Sector Development

•     Railways’ Capex for the year 2018-19 pegged at Rs.1,48,528 crore.

A ‘Safety First’ policy, with allocation  of adequate funds under Rashtriya Rail Sanraksha Kosh is cornerstone of Railways’ focus on safety. Other major steps include increasing use of technology like ‘‘Fog Safe’’ and ‘‘Train Protection and Warning System’’.

•    Redevelopment of 600 major railway stations is being taken up by Indian Railway Station Development Co. Ltd. All stations with more than 25000 footfalls will have escalators. All railway stations and trains will be progressively provided with wi-fi. CCTVs will be provided at all stations and trains to enhance security of passengers. Modern train-sets are being designed at Integrated Coach Factory, Perambur. First such train-set will be commissioned during 2018-19.

•    Regional connectivity scheme of UDAN (Ude Desh ka Aam Nagrik) initiated by Govt. last year shall connect 56 unserved airports and 31 unserved helipads across the country. Proposal to expand airport capacity more than 5 times to handle a billion trips a year under a new initiative - NABH Nirman.

•    RBI issued guidelines advising Corporates to access bond market. SEBI will also consider mandating the Corporates, to meet about 25% of their financing needs from the bond market.

•    Corporate bonds rated ‘BBB’ are investment grade. In India, regulators permit bonds with ‘AA’ rating only, as eligible for investment. It is time to move from ‘AA’ to ‘A’ grade ratings. The Govt.and concerned regulators will take necessary action.

•    Bharatnet project has enabled broadband access to over 20 crore rural Indians in about 250000

villages. Govt. proposes to setup 5 lac wi- fi hotspots to provide broadband access to 5 crore rural citizens.

•    Distributed ledger system or the block chain technology allows organization of any chain of records or transactions without the need of intermediaries. The Government will explore use of block chain technology proactively for ushering in digital economy.

Building Institutions and Improving Public Service

Delivery

•    Every enterprise, major or small, needs a unique ID. Government will evolve a Scheme to assign every individual enterprise in India, a unique ID.

•    Capital of the Food Corporation of India will be restructured to enhance equity and to raise long-term debt for meeting its standing working capital requirement.

•    Disinvestment target set at Rs.80,000 cr for 2018-19.

•    Strong Regional Rural Banks to be allowed to raise capital from market to increase their credit to rural economy.

National Housing Bank Act is being amended to transfer its equity from RBI to the Government. Indian Post Offices Act, Provident Fund Act and National Saving Certificate Act are being amalgamated and certain additional people friendly measures are being introduced. To provide RBI an instrument to manage excess liquidity, RBI Act is being amended to institutionalize an Uncollateralized Deposit Facility. Securities and Exchange Board of India, Act 1992, Securities Contracts (Regulation) Act 1956, and Depositories Act 1996, are being amended to streamline adjudication procedures and   to provide for penalties for certain infractions.

•    Govt. will formulate a Gold Policy to develop gold as an asset class. Gold Monetization Scheme will be revamped.

•    The emoluments are proposed to be revised to Rs.5 lakh for the President, Rs.4 lakhs for the Vice President and to Rs.3.5 lakh pm for the Governors.

•    Proposal to refix the salary and allowance of Members of Parliament with effect from April 1, 2018 with automatic revision of every 5 years, indexed to inflation.

Tax incentive for promoting post-harvest activities of agriculture

•    Proposal to allow 100% deduction to companies registered as Farmer Producer Companies and having annual turnover up to Rs.100 crores in respect of their profit derived from post-harvest activities for a period of 5 years from financial year 2018-19.

Incentivising micro, small and medium entrepreneurs

•    In the Union Budget, 2017, reduction of corporate tax rate to 25% for companies whose turnover was less than Rs.50 crore in financial year 2015-16 was approved. Proposal to extend the benefit of this reduced rate of 25% also to companies who have reported turnover up to Rs.250 crore in the financial year 2016-17. This will benefit the entire class of MSMEs which accounts for 99% of companies filing their tax returns.

Relief to senior citizen

•    Exemption of interest income on deposits with banks and post offices to be increased from Rs.10,000/- to Rs.50,000/- and TDS shall not be required to be deducted on such income, under section 194A. This benefit shall be available also for interest from all fixed and recurring deposit schemes.

•    Raising the limit of deduction for health insurance premium and/ or medical expenditure from Rs.30,000/- to Rs.50,000/-, under section 80D. All senior citizens can claim benefit of deduction up to Rs.50,000 p.a. for health insurance premium and/or any general medical expenditure incurred.

•    Raising the limit of deduction for medical expenditure in respect of certain critical illness from, Rs.60,000 in case of senior citizens and from Rs.80,000/- in case of very senior citizens, to Rs.1 lakh u/s 80DDB.

•    Proposal to extend PM Vaya Vandana Yojana up to March, 2020 under which an assured return of 8% is given by Life Insurance Corporation of India. The existing limit on investment of Rs.7.5 lakh per senior citizen under this scheme is also being enhanced to Rs.15 lakh.

Further Measures to control cash economy

•    Currently, the income of trusts and institutions is exempt if they utilise the income as per Income-tax Act. To have audit trail of the expenses, the payments above Rs.10,000 in cash shall be disallowed.

Misc. Issues

•    Govt. proposes to notify a new scheme where the assessment will be done in electronic mode which will almost eliminate person to person contact leading to greater efficiency and transparency.

•    With GST roll, name of Central Board of Excise and Customs [CBEC] to be changed to Central Board of Indirect Taxes and Customs (CBIC).

•    Govt. proposes to amend FRBM Act to set a 3% fiscal deficit target to be achieved by 2020-21.

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Income Tax Rates, Cess and Surcharge

Income	Tax Rate	+ Actual Tax
Up to Rs.2.50 lac	-	-
Above Rs.2.50 lac to Rs.5 lac	5%	5.20%
Above Rs.5 lac to Rs.10 lac	20%	20.80%
Above Rs.10 lac to Rs.50 lac	30%	31.20%
Above Rs.50 lac to Rs.1 cr	30%	34.32%
Above Rs.1 cr	30%	35.88%

Notes: + Actual tax including following cess/surcharge

1.  Rs.2500 tax rebate for income up to Rs.3.50 lac

2.  Health and Education Cess = 4% on tax payable

3.  Surcharge 10% for income above Rs.50 lac to Rs.1 cr

4.  Surcharge 10% for income above Rs.1 cr

Corporate tax rate:

1.  25% for annual turnover upto Rs.250 cr (2016-17)

2.  30% in case of other domestic companies

Surcharge on Corporate Tax:

1.  Income above Rs.1 cr = 7%

2.  Income above Rs.10 cr = 12%

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