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News and Trends / Union Budget 2018-19

How to Maximize Your Earnings from Budget 2018?

How to Maximize Your Earnings from Budget 2018?
Image credit: Shutterstock
Vice - Chairperson, Nasscom Product Council
4 min read
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A budget for a nation doesn't just define its revenues and expenses, financial statements on national defense, infrastructure, research, education and medicare spend. A budget creates a benchmark of living standards for a nation's citizens. While every government is mandated to deliver a budget, a budget navigates three tensions, rural-urban, public-private, local - global.

A Slew of Surprises

India has seen momentous changes on the economic and fiscal front and the budget was surely expected to throw some surprises. Arun Jaitley had a tough time balancing economic virtue and political compulsions when presenting the Budget considering this was the Modi government's last full Budget before general elections next year and equalizing both was essential.

By far the biggest policy initiative has been the sweeping plan to provide health insurance to 100 million households for up to 500,000 rupees per year. For a nation with a per capita income of just $2,400 with most not having any form of health insurance, this proposed measure is a much needed safety net which, the ruling BJP would hope, will decipher into votes.

Standard deduction at INR 40,000 for all salaried employees and pensioners has been re-introduced. But, by doing this, exemption for transport allowance and medical expense reimbursement have been withdrawn, a move being welcomed by pensioners and employees who did not receive either.

Renewed Emphasis on Healthcare

Arun Jaitley paved the path for his amendments towards the senior citizen population. With costs of medical treatments escalating rapidly and senior citizen having to devote relatively more money on their health, in this year's budget, medical cost or medical insurance premium constituted a major segment. Likewise, the deduction for the medical expenses incurred for a senior citizen without a medical insurance cover, has been increased to INR 50,000. This will result in an added tax savings.

The math is simple; power is the capacity to change lives of people. If people do not have or attain the ability to grow and rise from where they already are and contribute to a nation's welfare, how are we working toward nation building? Nation building as a concept is evolutionary, not revolutionary.

Then again, we can't just hold the government liable for not addressing rural distress and their economic needs. Which nation doesn't have disparities? Every nation wants to elevate the poor in order to build a stronger, a better nation. Thus if people in impoverished conditions do nothing to lift themselves up from where they are, despite being provided with a coherent economic framework and infrastructural architecture, no government can pull them out of their misery. Budget, a heavy fiscal word is a mere driver. It's a simple plan of permutation and combination, make more out of less.

More Cash at Hands

Coming back to the article, here are two more provisions that will effectively leave more cash in the hands of senior citizens. A. Senior citizens largely count on the interest they receive from fixed deposits. Arun Jaitley has proposed to insert section 80 TTB to provide an overall deduction up to INR 50,000 for interest earned from banks, post office or credit cooperative banks. This will include all interests from these institutions whether it is on saving bank account or fixed deposit or recurring deposits. B. The finance minister at the same time suggested to enhance the limit for tax deduction at source (TDS) by the payers.

Special focus had also been lent to Mobile and Electronic Component Industry where the Basic Customs Duty (BCD) rates have been increased. BCD on import of cellular mobile phones has been increased from 15% to 20% whilst LCD/LED/OLED panel of television import rate has been increased from 10% to 15%. While the above move may not make the common man, buried under the sheen of low-cost Chinese products, richer immediately, in the long run, it provides a massive incentive to Make in India that has been a non-starter.

The Budget has also promised to raise the minimum support price MSP - the price at which the government undertakes to buy farmers' produce should the market price go below that level - to guarantee farmers a profit of at least 50%. This certainly is very farmer-friendly, a move applauded by the policy battered sector.

The Budget has enormously highlighted a rural thrust - allocation for affordable rural housing, electricity connectivity, special focus on rural infrastructure and special shove on rural employment. Ruling in 19 out of India's 29 states, with this year's budget, the ruling government has made huge attempts to promote creation of more jobs opportunities, incentivize the agriculture sector and give a push to its domestic manufacturing and Make in India initiative across sectors. But, with inflation numbers escalating, oil prices rising, political uncertainty increasing, has the government also squandered away opportunities?

Digital India Gets a Triple Push in the Union Budget 2018-19