Expectations from Union Budget 2018-19

expectations from the Union Budget 2018-19

With the demonetisation effect the tax collected this year has been increased drastically. This leaves many in good terms of expectations from Union Budget 2018-19.

Demonetisation, RERA and GST were really major changes for Indian economical growth in the year 2017. Also, being this an election year, the expectations from Union Budget 2018-19 are no less.

The major expectation is it should be a common man as well as business class friendly one. India has jumped 30 places and 53 places in Ease of Doing Business rankings and Ease of Paying Taxes category respectively as per the rankings released by World Bank. Government would like to improve these rankings in the years to come and further policies and measures are expected to be formulated in this direction.

Major expectations from Union Budget 2018-19,  are  change of slab rate by increasing the exemption limits for the employed and senior citizens. This expectation is based on the previous year changes in the tax slabs. To please the masses and to reduce the gap amongst the poor and rich, limit for deduction under Section 80C and Section 80D might be increased say from 2.5 lakh to 3 lakh rupees per annum as the minimum taxable income.

Tax on Investments have a higher expectation from Union Budget 2018-19.

The repayment of the principal of a loan taken to buy or construct a residential property is eligible for tax deductions under Section 80C. This deduction is also applicable on stamp duty, registration fees and transfer expenses. Tax payers can expect the exemption limit under Section 80C to be hiked by Rs. 1,00,000 to Rs. 2.5 lakh. Right now exemption under Section 80C of the Income Tax Act is Rs. 1.5 lakh.

Expectations are very high as this will be the First Budget after the implementation of Goods and Services Tax (GST). Amendment is also expected in the GST laws to allow input tax credit to the customer provided he has made the payment of invoice along with tax to the supplier. At present, input tax credit is available only if the tax charged in respect of the supply has been actually paid to the Government by the supplier of goods and services.

Expectations are also high from the Finance Minister to change the periodicity of filling of GST returns from monthly to quarterly for all the taxpayers though the payment of tax can be made monthly for taxpayers having a specified aggregate annual turnover. This will lead to simplified compliance mechanism and will boost the confidence of tax payers by reducing the much added compliance burden on the taxpayers.

epectations from the Union Budget 2018-19
Expectations from the Union Budget 2018-19
Expectations from Union Budget 2018-19 w.r.t Affordable Housing :

‘Housing for all by 2022’ is one of the pet projects for the government and it wants to deliver 10 million houses under this program. Out of 10 million, 95% of the houses are to be constructed for Economically Weaker Sections (EWS) and Low Income Groups (LIG). As the affordability of this segment and the house value is low, the impact of slightest upward cost pressure is magnified and becomes a deal breaker. The current GST rate of 18% coupled with 1/3rd abatement for land is adding huge upwards pressure on the overall cost of house. There are expectations for lowering of the GST rates only for affordable housing projects to 12% with 50% abatement for land taking the effective GST rate to 6%. This shall provide a boost to the cause of housing for all by 2022.

Expectations from Union Budget 2018-19 – Tax Saving w.r.t Home Loans
Current Amount Expectation from Union Budget 2018-19
Deduction under 80c 1,50,000 /- 2,50,000/-
Deduction under 80c(Principal Amount) 1,50,000/- 2,50,000/-
Deduction under 24B (Interest Amount) 2,00,000/- 3,00,000/-
Stamp Duty Varies from 3-6% Constant 3% across all the states.
GST rate 12% 6%
Total interest rate (GST + Stamp Duty) 18% 8%

Also reduction of stamp duty which presently ranges from 3 to 6 per cent, varying across different states, as a result of which the consumer pays an additional amount of approximately 18 per cent only in taxes to the government (including GST and stamp duty). The government should look at reducing this cost, rationalising and unifying stamp duty rates across the country.

What are the tax benefits of your home loan?

Under Section 24, you are empowered to claim up to Rs 200000 or the actual amount of repaid interest. However, you can only make the claim when you are in possession of the house.
Under Section 80C, you can claim the principal up to the maximum limit of Rs 150000 across all the investments made under the section 80C. However, you might be needed to show the lender’s statement showing the not only the interest and principal components but also the repayment for the year.

Expectations from Union Budget 2018-19 w.r.t. Direct Taxes
Income Slab Tax Rate
Income up to Rs 5,00,000 No tax
Income from Rs 5,00,000 – Rs 10,00,000 5%
Income from Rs 10,00,000 – 20,00,000 20%
Income more than Rs 20,00,000 30%
Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.

Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore.

Cess: 3% on total of income tax + surcharge.
*Income tax exemption limit for FY 2018-2019 is up to Rs.5,00,000 for individual & HUF other than those covered in Part(II) or (III)
Expectations from Union Budget 2018-19 w.r.t  Direct Taxes.
PART II: Income Tax Slab for Senior Citizens (60 Years Old Or More but Less than 80 Years Old)(Both Men & Women)
Income Slab Tax Rate
Income up to Rs 8,00,000 No tax
Income from Rs 8,00,000 – Rs 10,00,000 5%
Income from Rs 10,00,000 – 20,00,000 20%
Income more than Rs 20,00,000 30%
Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.

Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore.

Cess: 3% on total of income tax + surcharge.
*Income tax exemption limit for FY 2018-2019 is up to Rs.5,00,000 for individual & HUF other than those covered in Part(II) or (III)
Expectations from the Union Budget 2018-19 w.r.t Rural Economy / Farm Loans:

In Finance Minister, Arun Jaitley’s budget speech on 1st February 2017 the finance minister stated that he proposes to present the budget under ten distinct themes and rural population was one of the said themes. Experts believe that budget 2018 will be no different in fact the FM is expected to focus more on rural India and its economy with renewed vigor. Consecutive years of drought and then demonetization have had its impact on the rural economy too, but recent surge in tractor sales may indicate that the worse may be behind us. Tractor manufacturers sold a whopping 363,071 unit in the April – September 2017 period, a 21% increase compared to the same period last year. Over the last couple of years policies such as farm loan waiver and subsidies have become a norm but these sops do not reach the small farmers, may be fiscally unviable and even counterproductive. Experts believe that the FM in his budget 2018 should focus on providing relief to small farmers with very small or negligible land holdings. This can be done by taking steps to ensure agri-GDP growth and rural wage growth.

The budget is a great opportunity to create a level playing field amongst individuals.

The top agenda of the government would be to create a positive feeling for the future among the masses considering this year’s Lok Sabha elections as well as to boost the investor confidence.

Lets hope for an investor friendly budget 2018-19.

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