Since the Budget has been announced for the financial year 2018-19, there has been various conclusions/comments all over the media, WhatsApp and social media network. This article has been prepared in order to enable each and every reader of this article to assess understand the impact, implication of every announcement made in the budget and rate the budget based on the type of amendments and check out whether that’s what they have heard from those sources.

This article would contain major amendments proposed vide union Budget 2018 along with the impact of the same on Taxpayer/citizen as well as revenue to the govt /remarks & one more column would be for rating of the amendment. You would have to invest 20 minutes in order to gain yourself an understanding of the budget proposal related to taxation.

Ratings would be as follows

  1. NOT AT ALL SATISFIED WITH THE BUDGET PROPOSALS (POOR)
  2. PARTLY SATISFIED WITH THE BUDGET PROPOSALS (AVERAGE)
  3. SATISFIED WITH THE BUDGET PROPOSALS (GOOD)
  4. VERY SATISFIED WITH THE BUDGET PROPOSALS (EXCELLENT)

Only task you need to do is after reading every proposal made by Finance Minister rate the amendment based on the above ratings and then accumulate your total, we would tell you what’s your take on the budget.

Sl No PROPOSAL IN BUDGET IMPACT ON TAXPAYER/CITIZEN IMPACT ON REVENUE/ GOVT YOUR RATING
1 Education cess & Secondary higher Education Cess has been discontinued and new cess namely “Health & Education Cess on Income Tax” has been introduced which would be levied at 4% on (income tax + surcharge) if any. Tax payer would have to pay additional 1% of tax without facility of marginal relief. Govt revenue would increase due to increase in rate and the cess would be used for health & education scheme
2 Every Non-individual entity (i.e. Company/firm/aop/rwa/HUF/BOI/artificial jurisdiction person) if it enters into a transaction of amount aggregating to Rs.2,50,000/-. Then it is required to apply for PAN & the individual who runs the same is also required to apply for PAN. Certain Entities were not applying for PAN earlier now they would have to apply for pan. Govt tax base would increase as there would be increase in tax payers because of the same.
3 Loan or advance given to shareholder holding more than 10% or to any company in which such shareholder holds 20% shares would be considered as dividend paid & Dividend distribution tax has to be paid at the rate of 30% by company. (APPLICABLE ONLY FOR UNLISTED COMPANIES) Earlier loan or advance taken by shareholder was taxable in the hands of shareholder and not company and hence there was no tax collection on this note. Govt Revenue would increase as any loan/advance given would be under the purview of Statutory audit & it would be ensured that DDT is paid on the same.
4 On Sale of equity share on which STT has been paid, equity fund unit or business trust unit which are held for more than 12 months tax would be levied at the rate of 10% if gains exceed 1 Lakh rupees.

• TDS WOULD BE DEDUCTED @ 10%

• NO INDEXATION BENEFIT

• NO CHAPTER VIA DEDUCTION

• OPTION TO TAKE PRICE AS ON 31st JAN AS COST (subject to conditions)

Earlier there was exemption available under Section 10(38), now the exemption has been waived off for the gains exceeding one lakh and they are liable to pay tax. Govt wanted to bring all the investment products at par level due to exemption provided there was comparatively less investment in other financial assets, hence tax was introduced it also increased govt revenue
5 Religious Trusts, Charitable trusts registered under section 10 (23C) & section 11 would have to apply the donation/contribution received trough bank account for any expense greater than 10,000 & TDS Provisions have been made applicable to them., in case of failure to comply the said expense would not be considered as application of income. All the said entities would have to Get their TAN number and amend their standard procedures related to payment & TDS payment & deduction. Earlier since TDS & Cash payment restriction was not applicable to the said entities it was difficult to verify whether the application of money is made or not, now due to this proposal, there would be audit trail based on which checks can be made.
6 Under presumptive Basis, for transporters the deemed tax in case of vehicle of 12MT or more the presumptive tax would be 1000 rupees per ton of vehicle weight per month. Transporters who used to file their Income tax return under presumptive basis would have to classify their vehicles into two categories one being vehicles less than 12 MT and other being more than 12 MT Earlier the rule was any transporter having maximum 10 heavy vehicle goods would be required to pay 7,500 per truck per month per truck, large transporters started taking advantage of it leading to loss of revenue hence now for trucks with more than 12MT would have to pay 1000 rupees per ton per month per truck and others 7,500 per month per truck.
7 Any Premium paid or medical expenditure incurred or preventive health check-up of senior citizen deduction is increased under 80D from Rs. 30,000/- to Rs. 50,000/-

• SELF, SPOUSE & CHILDREN – 25,000/-

• PARENTS (Additional) – 25,000 in case of senior citizen – 50,000 /-

• In case of medical expenditure for those whose health insurance not paid for senior citizen (– Rs. 50,000/-

• Preventive Health check-up – Rs. 5,000/-.

ASSESEE EARLIER USED TO GET MAXIMUM OF Rs. 60,000/- as a benefit now that gets increased to the extent of 1,00,000/-. Government has provided relief to senior citizens and provided more tax exemption/deduction for them.
8 Interest from Fixed Deposits to senior citizens will be allowed as deduction under Section 80TTB. & consequently, TDS on interest on fixed deposit of senior citizen not to be deducted upto Rs. 50,000/-.

Note: If senior citizen claims this benefit then he would not be able to claim benefit of Rs. 10,000/- under 80TTA which is interest on saving bank account.

Senior Citizens have fixed interest income only as a source of living, earlier on which TDS as well as tax used to apply and hence leaving to cash blockage hence this amendment would be helpful for them to get full amount. Government has provided a relief to the senior citizen trough this move.
9 Standard Deduction of Rs. 40,000/- or salary received whichever is less has been provided to salary class. And exemption of Transport allowance (19,200) & medical allowance (15,000) has been withdrawn. Salaried class was expecting higher Standard deduction limit however this limit would help them claim higher transport allowance as there is no specific exemption on the same. Even tough the net extra received by salaried employee is mere 5,800, one has to note that earlier in order to claim 15,000 as medical allowance salaried employees used to submit fake medical bills which would not be continued now after.
10 • Extra Deduction would be allowed to businessmen of 30% of wages paid to new employees employed under Section 80JJAA for 3 consecutive years.

• The employee is required to work for at least 240 days in the year to claim the deduction.

• Minimum days is reduced to 150 for apparels & footwear. Leather industry.

• This year amendment being in case if the employee does not meetup the minimum days criteria still the deduction would be allowed provided he stays employed for minimum period in subsequent years.

Very Appreciable move as in order to claim deduction of additional 30% earlier they had to make sure that employees are hired before 240 days (i.e. On or before 01st August of every financial year on approx.), now they can claim deduction even for employee hired in the month of March provided the condition is satisfied. The Intention of this section was to create job opportunity, however since the minimum employment criteria was seen to be a problem, the government has proposed to amend the same and it has also reduced the minimum period criteria for seasonal industry to 150 Days.

The above proposals are the one which would affect majority of taxpayers however there are various other amendment proposals which were being announced which can be accessed through the following link.

http://www.indiabudget.gov.in/ub2018-19/memo/memo.pdf

In case if you have rated the budget based on revenue collection by government, you can conclude based on the following

If Total score is

  • 1-15 – then the budget was NOT SATISFACTORY ACCORDING TO YOUR VIEW (POOR)
  • 15-25 – PARTLY SATISFIED WITH THE BUDGET (AVERAGE)
  • 25-30 – SATISFIED (GOOD)
  • 30-40 – VERY SATISFIED (EXCELLENT)

I hope the activity was useful in understanding on your own rather than listening to other.

Do send us your ratings & recommendations on improving further and your takes on budget at cayashchopra@gmail.com.

Author Bio

Name: YASH
Qualification: CA in Practice
Company: N/A
Location: Bangalore, Karnataka, IN
Member Since: 24 Jun 2017 | Total Posts: 4

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