Special
Urban India ’ s Gift to Bharat By MALINI BHUPTA
The Union Budget for 2018-19 was a much anticipated event because the salaried class was expecting the government to give away tax sops . But instead of putting more money in the hands of urban Indians , Budget 2019 is all set to pinch their pockets in ways more than one . Be prepared to shell out more for not just diamonds but even food , consumer goods , mobile phones , personal care products and perfumes . Not surprising then that urban India has not taken kindly to these measures . Hours after the Budget speech was over , a WhatsApp message started doing rounds on the standard deduction of `40,000 replacing existing reimbursements , a measure that would put an extra `150 in the hands of a salaried person with an income of `10 lakh ( See Table on Page 40 ). The message to middle income households is that there is another India the government needs to take care of , which is not an unfair ask . While there is no doubt that social equity should be the focus of any government , the current Budget has several measures which will result in higher cost of living for most Indians . Outlook Money ’ s Budget package will tell you how the Budget will impact your finances and investments .
Given that this is a pre-election year , the government has had to do a fine balancing act between rural and urban India ’ s expectations So for starters , there is no change in personal income tax slabs . But if you are in the highest income bracket , then you have to pay a higher education and health cess .
Budget 2019 will also inflate household budgets , thanks to the expected increase in prices of food products . With minimum support prices of the Kharif crop pegged at 1.5 times of production cost , there is a likelihood that prices of food products will also increase , resulting in a spike in consumer price index ( CPI ). Experts anticipate agricultural products to become expensive by 47 per cent . Cereals , pulses and edible oils make up 15.6 per cent of the CPI basket and if prices of these products go up by nearly 50 per cent in the next fiscal , it will also impact the homemaker ’ s budget . Higher customs duty on perfumes , silk fabrics , tyres , footwear , sports goods , mobile phones and television parts will also lead to higher prices .
But the worst blow has come in the form of long-term capital gains tax , which has made a comeback after 13 years . Gains from equity investments over `1,00,000 will now be taxed at 10 per cent . And mutual fund investments will also come with a 10 per cent distribution tax ( Refer to Page 45 for details ).
On the upside , the government has taken measures to ease the pain of senior citizens . For senior citizens , exemption of interest income on bank deposits has been raised to `50,000 , which has come as a big relief as interest rates have been steadily declining .
While there is no doubt that Budget 2019 is inflationary for most part , perhaps the government ’ s hope is that the sacrifice is not too much to ask when one sees the benefit it seeks to pass on to the lesser privileged households .
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Outlook Money February 2018 www . outlookmoney . com