Below are the key tax proposals in the Union Budget 2018 for your information.
A. Long Term Capital Gains Tax:
Announcement:
· Tax Rate: Capital gains over Rs. 1 lakh to be taxed at 10% (no indexation benefit).
· Asset class: On listed equity shares, equity oriented mutual funds and units of a business trust
· Method of Calculation: Any notional gains till Jan 31, 2018 are proposed to be exempted in calculations for long-term capital gains
· Applicability: From April 1, 2018 as per Finance Bill 2018
Investment Implications:
· For redemptions done on Feb 1, 2018 – March 31, 2018: No LTCG Payable
· For redemptions done April 1, 2018 onwards, LTCG payable on the difference in (i) value between Jan 31, 2018 or cost of acquisition, whichever is higher; and (ii) Sell Date
· Example: Assuming a stock bought for Rs 100 on July 1 2017, market rate on Jan 31, 2018 is Rs 150, sold on June 30 for Rs 180, LTCG payable in FY18-19 will be on Rs. 30 (Rs. 180- Rs.150).
· Reduces exposure of section 14A Disallowance
· Tax applicable to FPIs as well (under section 115AD), subject to tax treaty benefits if any
B. Dividend Distribution Tax on Equity Mutual Funds:
Announcement:
· Tax Rate: Dividend Distribution Tax of 10% introduced on Equity oriented Mutual Funds
· Applicability: From April 1, 2018 as per Finance Bill 2018
Investment Implications:
. All dividends received after April 1 2018, to be taxed at 10% (payable by the AMC). Not taxed in the hands of recipient.
. Risk of section 14 A Disallowance continues since this is exempt at the tax payer end
C. Changes to Section 54 EC Capital Gains Bonds:
· Set off under 54EC now only available for long term capital asset being land or building or both
· Lock in Increased for new investments from 3 years to 5 years
· Implications - not allowed for set-off against LTCG from unlisted equity
D. Other Key Points:
. Corporate Tax Rates reduced to 25% for corporates with turnover below Rs 250 crores in FY 2016-17
. Education Cess increased from 3% to 4%
. No mention of Inheritance Tax or changes to Gift Tax
. Fiscal Deficit for FY17-18 restated at 3.5%, For FY 18-19 at 3.3%, commitment to maintain post FY19 deficit at 3%
. Disinvestment target for current Fiscal to be Rs 1 lakh crores, for FY 18-19 to be Rs 80,000 crores.
. New scheme for E-assessment proposed, to eliminate interface between assessing officer and taxpayer.
What the Budget 2018-19 has for the health sector
Boost of insurance sector
National health policy 2017 has envisioned ‘health and wellness centres’ as foundation of India’s health. The creation of 1.5 lakh centres will bring health care closer to the homes of the people. These will provide comprehensive health care including NCDs and maternal and health services. And also provide free essential drugs and diagnostic tests. 1200 crore allocated for this flagship project.
Flagship ‘National health protection scheme’ launched to cover 10 crore poor and vulnerable families meaning 50 crore beneficiaries by providing 5 lakh Rs per family per year for secondary and tertiary care hospitalization. This will be the world’s largest govt. funded national health program.
These two new initiatives under Ayushman Bharat program will build a new India 2022 and ensure or enhance productivity and wellbeing and avert impoverishment. We are progressing towards universal health coverage.
Rs 600 crore allocated to provide nutritional support to all TB patients @ Rs 500/month for the duration of their treatment.
To increase accessibility of quality medical education, 24 new govt medical colleges and hospitals will be set up by upgrading existing district hospitals in the country. This would ensure at least one medical college for every 3 parliamentary constituencies and at least one govt medical college in each state of the country.
To make villages ODF, the govt is launching ‘Galvanising organic bio agro resources dhan – Govardhan’ for the management and conversion of cattle dung and solid waste in farms to compost fertilizer and bio gas and bio CNG.
No change in personal income tax slabs in this budge
Cess in health and education increased from 3% to 4%.
Mediclaim – relief of 50, 000 for senior citizens
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