Thankfully, only one more year to go: Rahul Gandhi on Modi govt's budget

In his last budget before Lok Sabha elections, Finance Minister Arun Jaitley on Thursday unveiled a slew of measures for agriculture as well as the rural sector and announced a new health insurance scheme for the poor.

 Thankfully, only one more year to go: Rahul Gandhi on Modi govt's budget
Pic courtesy: Twiiter/@INCMeghalaya (File photo)

New Delhi: Taking a dig at the Modi government, Congress president Rahul Gandhi said on Thursday that farmers had still not got a fair price and there were no jobs for the youth.

"4 years gone, still promising farmers fair price. 4 years gone, fancy schemes with no matching budgets. 4 years gone, no jobs for our youth. Thankfully, only 1 more year to go," he tweeted.

In his last budget before general elections, Finance Minister Arun Jaitley on Thursday unveiled a slew of measures for agriculture as well as the rural sector and announced a new health insurance scheme for the poor, but provided little relief to the middle class.

With the implementation of the Goods and Services Tax and demonetisation causing distress in the economy, Jaitley announced massive spending on rural and urban infrastructure as also lower tax rates for small and medium enterprises.

While continuing the 10-15 percent surcharge on super- rich, he raised the health and education cess, levied on all taxable income, to 4 percent from 3 percent at present.

Keeping the income tax rates and slabs unchanged, he introduced a Rs 40,000 Standard Deduction for salaried employees and pensioners in lieu of the present exemption in respect of transport and medical expenses.

Presently, no tax is applicable on Rs 19,200 of transport allowance and medical expenditure of up to Rs 15,000. This has now been subsumed into the new Standard Deduction of Rs 40,000 which may mean very little benefit in tax saving considering that health and education cess has gone up.

Senior citizens will get higher exemptions on income from interest on bank and post office deposits, health insurance premium and critical illness expense.

Jaitley, however, made import of a host of products - from cellphone to perfumes and toiletry, from watches to parts of automobiles, sunglasses to truck and bus tyres, footwear to diamonds and edible oils to fruit juices - costly by raising customs duty.

Fourteen years after it was scrapped, he brought back tax on gains made from the sale of shares to offset revenue losses.

Capital gains exceeding Rs 1 lakh from shares held for more than a year will be taxed at 10 percent. Presently, gains from equity investments held for more than 12 months are exempt from tax.

In July 2004, the government had abolished long-term capital gains tax on shares and replaced it with the securities transaction tax (STT) - a same-day tax credit system that continues.

In the 110 minute speech, in which he kept switching from English to Hindi, Jaitley announced plans for agriculture, rural housing, organic farming, animal husbandry and fisheries with a total allocation of Rs 14.34 lakh crore.

Also, credit to agriculture would be raised to Rs 11 lakh crore in the coming fiscal from Rs 10 lakh crore and kisan credit card extended to fisheries and animal husbandry farmers. Rs 2,000 crore will be provided for development of agri market and export of agriculture commodities will be liberalised.

In a bid to provide universal healthcare, he announced a 'National Health Protection scheme', providing a cover of up to Rs 5 lakh per family per year for second and tertiary care hospitalisation to 10 crore poor and vulnerable family (about 50 crore beneficiaries).

This, Jaitley said, will be world's largest health protection scheme. He committed an expenditure of Rs 1.38 lakh crore on health, education and social protection.

But to fund these, he let go of the fiscal consolidation roadmap. As a result, fiscal deficit for the current fiscal will be 3.5 percent of the GDP as against the previous target of 3.2 percent, and 3.3 percent in 2018-19, as opposed to 3 percent set earlier.

Fiscal deficit in 2016-17 was 3.5 percent of the GDP.

Jaitley, who had in 2015 promised to reduce corporate tax from current 30 percent to 25 percent over four years, proposed lower tax rate of 25 percent for companies with turnover of up to Rs 250 crore in 2016-17.

The Union Budget 2018-19 was the last full budget before the general elections next year, when a vote on account would be presented. The next full budget will be presented by the new government.

(With PTI inputs)