How Does 2017-18 Budget Affect You




The Union Budget, 2017 was presented on February 1st unlike the past when it was presented at the end of February. This time the Railway Budget is merged with the Union Budget.

The finance minister, Arun Jaitley presented the Union Budget.

Impact of Budget on Your Tax

  • The FM said that we are a non-tax compliant country and the burden falls on the honest taxpayers.
  • The tax rate on income between Rs. 2,50,000 and Rs. 5,00,000 has been reduced from 10% to 5%. This means there is a 50% saving in tax for people in this income slab. This reduction will help the people earning a higher salary too. There will be a benefit of Rs. 12,500 for all people across income categories.
  • The time period to revise tax returns has been reduced to 12 months.
  • There will be a surcharge of 10% on income above Rs. 50,00,000 per year.
  • People with taxable income up to Rs. 5,00,000 will have a simplified one page form to file returns.
  • There will not be a scrutiny on first time tax payers. So those who have been evading tax can comply to taxation rules without fear.

Impact of Budget on Your Spending

  • An individual cannot have a transaction above Rs. 3,00,000 in cash.
  • The FM has proposed to reduce basic customs duty on LNG from 5% to 2.5% in 2017-18 which may be beneficial to customers.
  • Service charge on e-payments to IRCTC has been abolished
  • Duty on POS machines and iris readers has been removed. We can expect to have more opportunities to use digital payments.
  • AadharPay will be launched as a new way to spend digitally for people who do not have mobile phones or debit cards.
  • 6,000 each will be transferred to the bank accounts of pregnant women who undergo institutional delivery and vaccinate their children under the Maternity Benefit Scheme.
  • Excise duty on cigarettes has been increased.

Impact of Budget on Your Earnings

  • A new metro rail policy will be announced. It might lead to growth in jobs.
  • Agricultural credit will be increased which means farmers have an opportunity to earn more.
  • The allocation for Prime Minister’s Employment Generation Program and Credit Support Schemes has been increased by thrice the amount.
  • There have been sops given to SMEs and MSMEs and plans to have many virtual courses. This can increase the potential for job opportunities.

Impact of Budget on Your Investments

  • Long-term Holding period for real estate (land and building) will be considered as 2 years instead of 3 for capital gains tax purposes. The base year indexation shifted from April 1, 1981 to April 1, 2001.
  • ETFs of Public Sector Enterprises are to be used for divestment. Investors can expect more tranches coming in the fiscal year.
  • Many public sector organizations will get listed in the stock market. IRCTC, IRCON and IRFC are expected to be listed this year.

Other Major Announcements

  • Affordable housing has been given infrastructure status. This means developers and housing finance companies get a boost.
  • Income tax for firms that have Rs. 50 crore or less as turnover will be reduced.
  • Political parties can receive cash donations of only Rs. 2000. They can receive cheques and digital payments. People willing to donate can do so by buying election donor bonds. These bonds will be redeemable.
  • There is a proposal to do away with the Foreign Investment Promotion Board (FIPB). This will help liberalise the Foreign Direct Investment (FDI) policy.
  • A Rail safety fund will be created over a period of 5 years. It is expected to have a corpus of Rs 100,000 crore.
  • Railway lines up to 3,500 kms will be commissioned in 2017-18. At least 25 stations are expected to be eligible for station redevelopment.
  • Tax rate on Medium and Small Enterprises that have Rs. 50 crore or less as turnover is reduced to 25%.
  • The policy on tax concessions for start-ups incorporated after 31 March 2016 can avail of a three-year tax holiday in the first seven years of their existence.
  • There is a proposal of a fund of Rs 10,000 crore to recapitalise banks who are facing pressure from NPAs and fall in deposits.

This post is written by Vidya.

Do write in comment section if you have any questions on the budget.

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{ 8 comments… add one }
  • wrunda February 1, 2017, 5:33 PM

    I have query regarding NPS
    for last ,there was extra tax benefit on RS 50,000 investment
    what about this year?

    • Sanjay Sinha February 6, 2017, 5:31 PM

      Dear Wrunda,

      It is same as last year. No change.

  • shrikant February 2, 2017, 10:17 AM

    Dear Hemant,
    Is there is any change in tax on dividends of individuals?
    At present any equity or M F dividend is tax free in the hands of
    shareholder/unit holder . Is there any change? what about
    10% surcharge and to whom to it applicable? pl clarify.

    Thanks

    Shrikant

    • Sanjay Sinha February 6, 2017, 5:35 PM

      Dear Shrikant,

      1.Dividend is still tax free in the hands of share holder.
      2. A person who is earning more than 50 lakh in a year will have to pay 10% surcharge.

  • Harish February 2, 2017, 5:54 PM

    How will senior citizens be benefited by the new budget. Previously their zero tax income was 50000 more than others. Now as the zero tax exemption for others is 300000, what is the new exemption limit for senior citizens? Thank you.

    • Sanjay Sinha February 14, 2017, 5:34 PM

      Dear Harish,

      There is no change in exemption limit for senior citizens.

  • Aloke Roy February 9, 2017, 3:41 PM

    It is said that “There will be a benefit of Rs. 12,500 for all people across income categories”. Is it true for Super Senior Citizen earning more than Rs 5 say Rs 6 lakhs?

  • sanju February 25, 2017, 10:08 PM

    can you please write an article on impact on job creation and stock market by union budget?

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