[Union Minister for Finance and Corporate Affairs Arun Jaitley departs from North Block to Rashtrapati Bhavan and Parliament House, along with the Minister of State for Finance and Shipping P. Radhakrishnan, Minister of State for Finance Shiv Pratap Shukla and the senior officials to present the General Budget 2018-19, in New Delhi on February 01, 2018.]
New Delhi: Union Finance Arun Jaitley on Thursday presented in Parliament the general Budget for the year 2018-19 - his last full budget before the general election in 2019.
Owing to rampant anger among the farmers against the Modi government, Jaitley's budget had the imprint of being a rural sector budget, targeted at dissipating the mounting pressure on the Narendra Modi government to address the discontent over falling farm incomes.
Simultaneously, giving a relief to salaried class, Jaitley proposed a standard deduction of Rs 40,000 in lieu of transport allowance and medical reimbursement entailing a revenue sacrifice of Rs 8,000 crore.
The minister, however, did not propose any change in the tax slabs or rates for individual taxpayers.
"In order to provide relief to salaried taxpayers, I propose to allow a standard deduction of Rs 40,000/- in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses," Jaitley said while presenting the Budget 2018-19 in Parliament today.
The standard deduction, which is provided to salary earners, was discontinued from the assessment year 2006-07.
The finance minister said the government had made many positive changes in the personal income-tax rate applicable to individuals in the last three years.
"Therefore, I do not propose to make any further change in the structure of the income tax rates for individuals," he said.
Jaitley also noted that there is a general perception in the society that individual business persons have better income as compared to salaried class.
However, income tax data analysis suggests that major portion of personal income-tax collection comes from the salaried class, he observed.
According to Jaitley, for assessment year 2016-17, 1.89 crore salaried individuals have filed their returns and have paid total tax of Rs 1.44 lakh crore which works out to average tax payment of Rs 76,306/individual salaried taxpayer.
As against this, he said that 1.88 crore individual business taxpayers including professionals, who filed their returns for the same assessment year paid total tax of Rs 48,000 crore which works out to an average tax payment of Rs 25,753/individual business taxpayer.
Jaitley said apart from reducing paper work and compliance, this will help middle class employees even more in terms of reduction in their tax liability.
"The revenue cost of this decision is approximately Rs 8,000 crores," he said.
The total number of salaried employees and pensioners who will benefit from this decision is around 2.5 crores.
In his budget speech, Jaitley also appreciated the role played by the armed forces in meeting challenges on the country's borders as well as in managing the internal security environment, both in Jammu and Kashmir and the North East.
Jaitley said a lot of emphasis had been laid on modernising and enhancing the operational capability of the defence forces in the last three-and-half years.
"The government will take measures to develop two defence industrial production corridors in the country," he said.
Jaitley said the government would also bring out an industry-friendly "defence production policy 2018" to promote domestic production by the public sector, private sector and MSMEs.
He said a number of initiatives had been taken to develop and nurture India's intrinsic defence production capability to make the nation self-reliant on its defence needs.
The minister said private investment in defence production had been opened up, including liberalising foreign direct investment.
Prime Minister Narendra Modi termed the Union Budget for 2018-19 "development-friendly" and said it will strengthen the vision of a 'new India'.
Congratulating Finance Minister Arun Jaitley and his team, Modi said farmers, Dalits and tribal communities will gain from the budget.
The budget, he emphasised, will create new opportunities for rural India.
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