Budget Focuses On Farmers And Poor
The Union Budget 2018-19 has a slew of announcements for the agriculture and rural sectors , but expectations of salaried individuals have not been met
Amidst high expectations from various sections of society , the Finance Minister presented his last full-fledged Budget before the next Lok Sabha elections . Be it the common man or the high net worth individuals , senior citizens or the women , everyone was hoping for something . But the government paid attention to the farmers and the poor . There are several proposals for the farmers and the poor in this budget , which are expected to look after this section of the society well . Although the salaried class seems to be left with raised eyebrows , as nothing went into their pocket , the government believes they indeed did something for the salaried class in the past during its current term and farmers and the poor are the priority at this moment . Senior citizen category of tax payers is likely to cheer as there are several proposals benefitting them , which they have been expecting for a long time . In this article , we try to explain the impact of key proposals on individual tax payers .
Salaried class
No change in personal tax rates : There is no change in tax slabs and tax rates . There were expectations to
FY 2017-18 ( AY 2018-19 )
Transport & Med Allowance
Move to introduce standard deduction is to extend the benefit to 2.5 crore pensioners as it will put more money in their pockets
FY 2018-19 ( AY 2019-20 )
Standard Deduction
increase the basic exemption limit , particularly after the Economic Survey indicated an addition of 1.89 million new tax filers post demonetisation and an addition of 3.4 million new tax payers since the introduction of Goods and Services Tax ( GST ). The FM has proposed to replace the existing three per cent education cess by a new four per cent ‘ Health and Education Cess ’. The move will help to collect a little more and at the same time , categorising it under Health and Education Cess will help to provide funds for the welfare measures as announced in this Budget for health and education . It may be noted that cess collected under a particular category can only be spent for the purpose for which it was collected .
Reintroduction of standard deduction : Reintroduction of standard deduction of `40,000 was expected to bring smiles on the faces of salaried taxpayers , but they soon realised that the tax benefit will be greatly nullified due to withdrawal of tax benefit in relation to transport allowance of `1,600 per month and medical reimbursement of `15,000 per annum . Perhaps the move to introduce
Tax Calculation For A Salaried Employee Under 60 years Of Age
Gross Salary
FY 2017-18 ( AY 2018-19 )
Tax Liability
FY 2018-19 ( AY 2019-20 )
Tax Liability
Impact
Saving / ( Loss )
5,00,000 34,200 40,000 11,114 10,920 194 10,00,000 34,200 40,000 1,08,830 1,08,680 150 25,00,000 34,200 40,000 5,68,807 5,72,520 ( 3,713 ) 75,00,000 34,200 40,000 23,25,188 23,45,772 ( 20,584 )
1,20,00,000 34,200 40,000 40,29,953 40,66,998 ( 37,045 )
Table A * All figures in ` Source : Kuldip Kumar
40
Outlook Money February 2018 www . outlookmoney . com