Five Highlights from the Budget 2018

People look at the budget differently. Politicians give their views based on their party’s stand and market participants try to discuss it based on the Industry they belong to. This causes a lot of information overload for the common man.

Therefore, here are the five aspects of the budget 2018 which could have an impact on your finances in this year:

Corporate Tax Rate:

Finance Minister Arun Jaitley on Thursday proposed to cut the corporate income tax rate to 25 percent for companies with a turnover of upto Rs 250 crore, meeting a key demand of the corporate world that has been seeking lower tax payouts to enable greater investment and jobs creation.

“This will benefit 99 percent of the companies that file taxes”, Jaitley said, “adding that mini, micro, small and medium enterprises will gain the most”.

How it affects you: Therefore, if you are running an enterprise or planning to start one, than it would be a great news for you.

Education Cess:

This came as a bouncer to most of us as the expectation from this budget was more towards a populist budget and of a tax cut. However, on the contrary, FM increased the education cess to 4% from previous 3%.

How it affects you: Therefore, you can expect the tax payable to the government to go higher than the previous years.

LTCG:

This move again surprised most of the analyst including myself as we were expecting either a change of the definition of Long Term to 2 or 3 years else removal of STT if LTCG be introduced again.

However, Jaitley introduced the LTCG of 10 percent if the gains exceed Rs 100,000 without allowing the benefit of indexation. While he also said that “All the gains till the 31st January 2018 will be grandfathered and short-term capital gains remains unchanged at 15 percent”.

How it affects you: Therefore, if you are an investor, now you also have to stipulate the LTCG before calculating your returns on the investment.

Standard Deduction:

Budget 2018 proposes to provide a standard deduction of Rs 40,000 from salary income to employees but also proposes to take away transport allowance, medical reimbursement and other allowances.

Considering the above factors, income exempted from tax after setting off the gain and loss is Rs 5800 only.

However, it would be a big relief for pension people as they were not given the exemptions similar to the salaried employees.

How it affects you: The impact would be neutral in most cases if you are a salaried employee though it’s a good news for you if you are pensioner.

Cryptocurrency:

Arun Jaitley today clearly stated that this government doesn’t consider Bitcoin a legal tender and it will discourage its use. However, he mentioned that the government will look at the utilization of the blockchain technology.

Therefore, we would suggest staying away from investing in cryptocurrency else invest only with the money which you are ready to lose.

How it affects you: The announcement can have negative impacts thus bringing down the prices of cryptocurrency and also your investment if you have invested in the same.