The countdown has started. In few days, the government will present the budget 2018. I know, most of you have interest on highlights of the budget. But the biggest concern would be the income tax. Will budget 2018-19 give you some relief from the tax burden? I expect so, as this budget would be a populist budget. Do you this would be the last full budget of the Modi government therefore it would try to appease every class. Let us learn the about the highlights of budget 2019 preparation.
When Will Come Budget Of 2018-19
Like the previous year, the government would present the union and rail budget together on February 1. Earlier it was expected that the government would present budget in November or December.
It would have synced the calendar year and the financial year. If it would have happened, the new budget proposals get implemented from the January 1. But because of the political and financial compulsions, the government has deferred this proposal. The main reasons for this delay are Demonetization and GST.
GST affected Early Budget Plan
The biggest reason for sticking on the financial year system is the GST. As it was implemented in July 2017. The Country still could not adjust to the new indirect tax system. The government was forced to change the deadline for GST return several time. Even It has also changed the GST slab of many goods. During this GST trouble, The government can’t give another shock.
Fall in business Activities Also Affected Plan
The economy slowed down due to the demonetization and GST. The GDP growth rate come down to lowest in three years. The employment situation also worsened. Hence, the opposition is targeting the central government. In this scenario, the government can’t take risk of another disruption.
What May Be Highlights of Budget 2018
People eagerly wait to know the budget highlights because it can give a good news of tax relief. Besides this, it also tells about the products which would be cheaper or costlier. But this year, you should not expect much of the news. As you may know that GST has superseded the indirect taxation. The government has already fixed the slab of GST before the budget. Hence, You would not see the list of cheaper and costlier products. Let us see the expected highlights of the budget.
Income tax and corporate tax may be lower
As I have told that this would be the last full budget before the 2019 Loksabha election. So, the government can take some populist steps. Among these steps, the government can also reduce the tax burden. The government can give relief in income tax and corporate tax both. There may be some concession in customs duty of the petroleum products as well.
I know you want to know whether there is any change in income tax slab rate. So your expectation is right. In the budget 2018, the government can increase the tax-free income limit to 3 lakhs. It is fixed at 2.5 lakhs since many years. However, the government has given some relief in the form of reduced income tax slab rate. Do you remember the tax rate of budget 2017? If not, let us do a quick recap of income tax slab rate.
Income Tax Slab Rate 2017-18
In the previous budget, the government has halved the income tax rate of the first taxable slab. The tax rate for the income of 2.5 lakhs to 5 lakhs had been reduced to 5%. Earlier, it was 10%. The tax rate for income of above 5 lakhs was still at 20%. For the income of above 10 lakhs, the income tax slab rate was 30%.
|Income Tax Slab 2017-18 (Below 60 Years Age)|
|Annual Taxable Income||Tax Rate|
|less than 2.5 lakhs||Nil|
|2.5 lakhs to 5 lakhs||5%|
|Above 10 lakhs||30%|
|Surcharge and Educational Cess
The government has also lowered the threshold for the surcharge. After budget 2017, you have to pay the surcharge if your income exceeds ₹50 lakhs.
Note 1: For senior citizens (Age- 60-80) the tax-free income limit is 3 lakhs. On the income above this limit, the tax rate is normal 5%. 20% and 30%.
Note 2: For Super senior citizens (Age above 80), the tax-free income limit is ₹5 lakhs. The income above this is taxed at the rate of 20% and 30%.
The surcharge and education cess are same as the common people.
Focus Will be on infra-rural sector
The government is going to focus on infrastructure and rural sector. This is anticipated as farmers are in distress and rural population is Going away from the ruling BJP. The finance minister Arun Jaitely also reiterated the same thing in a leadership summit. He said that government is going to spend more on the rural economy. Therefore, we can expect big announcements for agriculture and rural infrastructure.
Budget speech will be short
After the GST, the union government does not decide the indirect tax rates except the customs duty. The GST council fixes the GST rates on most of the products. Thus, there would not be the mention of excise duty in the budget. Now, it has become part of the GST.
In the budget 2018, There would be the only mention of customs duty. Thus the budget speech part-2 would be very short. The government gives indirect tax proposals in this part.
Union Budget 2018-2019: Timeline
29 Jan 2018: The First Phase of budget session of parliament would start with the President speech in the joint session. Economic Survey would be presented on same day.
1 Feb 2018: Budget Presentation. FM Speech in Loksabha.
2 Feb -9 Feb 2018: General Discussion on Budget
10 Feb – 4 March 2018: Parliament in Recess. Standing Committee would consider budget proposals
5 Mar – 6 April 2018: Second Phase of Budget session. Detailed discussion on budget proposals.
31 March 2018: Finance bill would be passed
1 April 2018: Finance bill Would be implemented