There is a Three-Tier System of Government in India, The Central (or Union) Government, State Government and Local Government (like Municipal Corporation, Municipal Committee, Zila Parishad, etc.). These Governments prepare their own respective Budgets (called Union Budget, State Budget and Municipal Budget) containing estimates of expected revenue and proposed expenditure.
However the Union Budget of India, also referred to as the Annual financial statement in the Article 112 of the Constitution of India, is the annual budget of the Republic of India. The Government presents it on the first day of February so that it could be materialized before the commencement of new financial year in April.
Till 2016 it was presented on the last working day of February by the Finance Minister of India in Parliament. The budget, which is presented by means of the Finance bill and the Appropriation bill has to be passed by both the Houses before it can come into effect from April 1, the start of India’s financial year.
Click Here to Download Union Budget 2018-19 Highlights (Press Information Bureau)
What are the Implications of Union Budget 2018-19 on the livelihood of the Indian Middle Class?
Major chunk of the middle class are the salaried employees. Their contribution in paying taxes is such that if they cease to pay taxes, the income tax collection would negligible and government might have to abolish Income Tax completely.
The businesses, on the other hand, do not pay taxes even remotely close to that of the salaried employees.
So we might expect that the salaried employees be given some relief and businesses made to pay more.
The corporate tax rates saw a cut from 30% to 25% (for turnover less than 250 cr.) There were no changes in slabs for salaried employees, it’s still 30%. Why? Well, let’s just say salaried employees don’t suck up to their masters. The capitalists are pros at it.
The tax cut to the corporates would result in 7000 cr of revenues foregone.
A standard deduction of 40000 to the salaried employees is now available. The 40000 deduction come at a cost of removing the 25000 medical reimbursement deduction and travelers allowance (approx 3000). The cess was increased from 3% to 4%. Now calculate the “benefit”. Although, people did demand the deduction since it’s abolition in 2005 and the FM has finally heard them.
However, the positive was the health concern, they are now calling it the “Modicare”. The government seeks to insure a health cover of Rs.5 lakh for nearly 50 crore Indians.
The senior citizens can now have a deduction of Rs.50000, although I’m not sure whether a health cover is necessary for that or not. In previous times for super senior citizens (80 years +), the cover of 30000 was available without the necessity of insurance. Also the senior citizens were given 10000 exemption in FDs etc. So, there’s something for SCs of middle class.
Long term capital gain has been made taxable at 10%. Although, this might not effect the middle class as the limit is 1 lakh and that’s not how much the middle class gains from stocks.
Experts call it a budget for the rural population of India with not much for the middle class.