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Highlights of Union Budget 2018 – 2019

Highlights of Union Budget 2018 - 2019

IMPACT ON TAX REGIME

INCOME TAX

  • No change is proposed in personal income tax rates.
  • Presumptive income schemes are liberalized for small businesses with turnover below Rs. 2 Crore and for professionals with income below Rs. 50 lakh per annum.
  • In order to boost the MSME Sector, the corporate tax has been reduced to 25 per cent for companies with turnover up to Rs. 250 Crore.
  • Standard deduction of Rs. 40,000 is provided for salaried taxpayers for transport, medical reimbursement etc.
  • Co-operative societies are allowed 100% tax deduction.
  • Education cess is increased from 3% to 4%.
  • For ease of understanding and removal of ambiguity, it is provided that e-assessment will be promoted.
  • Long Term Capital Gains Exceeding Rs 1 Lakh Will Be Taxed At 10% Without Indexing.
  • Capital gains arising from the transfer of Long term capital assets invested in the long term specified asset at any time within a period of 6 months shall not be chargeable to tax subject to certain conditions specified in the section 54 EC.
  • Short term capital tax remains at 15%
  • A tax on distributed income at 10%
  • GST revenue will be received only for 11 months that will have an effect on balance sheets.
  • The PAN no. is made mandatory for any entity entering into a financial transaction of Rs. 2.5 lakh or more in a financial year.
  • Deemed Dividend to be subject to DDT of 30% without grossing up.
  • LTCG tax of 10% applied on transfer of equity shares or units of equity oriented mutual funds if such LTCG is in excess of INR 1,00,000.
  • Withholding tax introduced for charitable and religious organisations/trusts on payments made in cash.
  • Compensation relating to termination and modification of business contract or employment was taxable as business income.
  • Definition of “Eligible Business” for startups aligned with DIPP definition.
  • Administrative changes under the Black Money Act to authorize additional officers to levy penalty.
  • 80C Deductions not allowed if returns are not filed within time.
  • Income related to withholding tax to be included in computation filed for the deduction to be applicable.
  • Conversion of stock in trade of immovable assets to be taxed as business income.
  • Transaction of money or property between a wholly owned subsidiary and its holding company will be treated as tax neutral transfers.
  • Bar on carry forward to losses not to apply to the companies undergoing CIRP.

REAL ESTATE SECTOR

Difference between the value of stamp duty purposes and actual value not to be taxed as income in case difference does not exceeds 5 % of sale consideration.

SENIOR CITIZEN

  • Exemption amounting to Rs. 50,000 is provided for medical insurance.
  • Exemption of interest income from Banks FD and post offices is raised to Rs. 50,000 from Rs. 10,000 and it is provided that No TDS is to be deducted on such interest.
  • The limit for investment in interest-bearing LIC schemes is doubled from Rs. 7.5 lakh per senior citizen to Rs. 15 lakh.

GOODS & SERVICES TAX

  • Central Board of Excise and Customs is renamed as Central Board of Indirect Taxes and Customs(CBIC).
  • No changes has been made in GST.

 CUSTOMS

  • In order to increase the speed of justice delivery system, timelines have been introduced in Customs Act.
  • It has been provided that in case of non- adherence to the timelines, it will be considered deemed closure of the matter.
  • Customs Duty on certain products, such as mobile phones and televisions has been increased from 15% to 20%.
  • Social welfare surcharge of 10% is to be levied on imported goods.
  • Import of solar tempered glass for manufacture of solar cells is exempted from customs duty.
  • Scope of Customs Act has been extended to any offence committed there under outside India.
  • Customs duty on crude edible vegetable oils like groundnut oil, safflower seed oil is increased from 12.5% to 30% and for refined edible vegetable oil from 20% to 35%.
  • Time limit for pronouncing Advance ruling has been reduced from 6 months to 3 months.
  • Central Government notifies additional matter on which advance ruling can be sought by an applicant.
  • Customs duty on imitation jewellery is increased from 15% to 20% and doubled on all watches to 20%.
  • Customs duty on sunglasses, cigarette lighter, toys, selected furniture, bus and truck tyres is also increased.

MSME

  • 3,794 Crore are allocated to MSME sector in the form of capital support and interest subsidy.
  • 4.6 Lakh Crore is sanctioned under MUDRA Scheme.
  • Online Loan Sanctioning Facilities to be started for MSME.
  • Use of Fin-tech in Financial Sector to increase the growth of MSME

EMPLOYEE-CENTRIC SCHEMES

  • It is announced that the Government will contribute 12% of the wages of new employees in EPF in all sectors for next 3 years.
  • The contribution of Women to EPF is reduced to 8% for first 3 years.

COMPANIES

  • Government to evolve a scheme for assigning a Unique ID for companies.
  • National Insurance Company, Oriental Insurance Company and United Assurance Company to be merged into one entity and subsequently listed.
  • Relief from liability of Minimum Alternate Tax (MAT) Applicable from: AY 2018-19 onwards. Where a company has filed an application for corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 an Aggregate amount of unabsorbed depreciation and loss brought forward shall be allowed to be reduced from the book profit. The non-deduction of MAT was a barrier to companies seeking insolvency resolution under IBC.

OTHERS

  • National Health Protection scheme is launched which is intended to cover 10 Crore poor and vulnerable families amounting to almost 50 Crore beneficiaries. The beneficiary families will be provided Rs. 5 lakh cover per family annually for treatment.
  • UDAN Scheme to connect 64 unconnected airports and 31 unserved Helipads across the country.
  • Government will take initiatives to explore Block Chains and take steps to eliminate crypto-currency.
  • Government to take additional measures to strengthen environment for venture capitalists and angel investors.
  • A sum of Rs. 500 Crore will be allocated for Operation Green which is to be launched for promoting agricultural products.
  • A restructured bamboo mission is proposed to be launched with funding of Rs. 1200 Crore.

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