Budget 2018 leaves investors and salaried class fuming

The Union Budget 2018-19 has left the salaried class and investors fuming as there is hardly anything in the budget that would meet the expectations of these sections of the society. On the one hand, the long term capital gains tax on equity has raised the heckles of the stock market investors, on the other hand, the salaried class is sore as budget gives them with one hand and takes away with the other when it comes to tax rebate.

While reintroducing standard deduction of Rs 40,000 as tax rebate from the salary, the budget has discontinued the rebate of Rs 19,200 on transport allowance and Rs 15,000 on medical reimbursement which were hitherto available for the salaried people. This means that effectively the amount available for tax rebate would be just Rs 5,800 in a year!

Moreover, the education cess of 3% has been replaced by a higher health and education cess of 4% on services. For the stock market investors too, the budget has been disappointing as they would have to shell out tax at the rate of 10% on long term capital gains exceeding Rs 1 lakh in a year made on equity investments.

It looks like the Modi government had decided to majorly address the concerns of the senior citizens, farmers and economically weak sections and provide relief to these sections only in this budget. The increase in deduction limit for health insurance premium or medical expenditure for senior citizens from Rs 30,000 to Rs 50,000, the increase in medical expenditure incurred on specified critical illness to Rs 100,000 for all category of senior citizens and the increase in the limit of deduction on interest income earned from Rs 10,000 to Rs 50,000 would certainly benefit senior citizens quite a lot.

As for the farmers, the acceptance of the formula suggested by the Swaminathan Commission for fixing the minimum support price (MSP) of agriculture produce at 50% above the cost of production would come as a great relief. The government should implement this proposal in right earnest and provide relief to the distressed agriculture sector and one only hopes that this does not turn out to be yet another poll gimmick (chunavi jumla) by the Modi government.

The announcement of the launch of National Health Protection Scheme to provide health insurance cover of up to Rs 5 lakh per family per year for secondary and tertiary care hospitalisation would benefit 10 crore poor in the country. This is a welcome step which would take care of the medical needs of the poor and the underprivileged sections of the society.