Budget 2018: Most companies to pay 25% corporate tax
Finance minister Arun Jaitley on Thursday cut corporate tax to 25% from 30% for companies with annual turnover up to Rs 250 crore. The lower rate will be applicable to 99% of the firms filing tax returns and is estimated to set the government revenue back by Rs 7,000 crore. The lower corporate tax is expected to leave businesses with investable surplus and create more jobs. With this, there are now 7,000 firms with a headline corporate tax rate of 30%, including the large capital-intensive firms that are able to reduce the actual tax outflow with assorted investment-linked deductions and exemptions.
Budget 2018: Modi govt nudges firms to hire more
All new employees, across sectors earning less than Rs 15,000 per month, will benefit from the government’s plan to bear the employers’ entire contribution towards employees’ provident fund (EPF) of 12%. Moreover, the government also intends to extend the fixed-term employment scheme, already a feature in the labour-intensive garment and leather industries, to all sectors. Both measures are expected to encourage companies to hire more. The government will make the contribution to the EPFO for first three years and has allocated an amount of Rs 1,652 crore, which is more than three times the actual spend under the job-incentivizing Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) in 2017-18.
Budget 2018: It’s all about politics, politics, politics
In the end, politics defined the economics of the Union Budget 2018. It was undoubtedly a ‘Big Spend’ budget of Rs24.42 trillion with unambiguous political contours and yet contained sufficient flourishes that continue to nudge India towards a market economy and a rules-based regime—walking the fine line between populism and development, as it were, to address popular aspirations.
Budget 2018: Airport infrastructure set to get wings
The Union Budget 2018 has focused on expansion of airport infrastructure as well as growth of airlines. Constrained airport capacity is the biggest challenge to air traffic growth in the country that is projected to cross the 150-million mark in FY19. The first phase of airport modernization is over, with Mumbai, Delhi, Hyderabad and Bangalore airports having been privatized. However, the second phase of airport capacity expansion is stuck, due to poor planning, and land acquisition and licensing issues.
Budget 2018 impact on Banking and Finance
The 10% hike in agriculture credit to Rs 11 lakh crore and the proposal to hike the minimum support prices of all crops at 1.5X of production costs augur well for rural incomes and spending. This should benefit banks through improved credit offtake as well as an improvement in asset quality in the agriculture segment. The proposal to allow RRBs to raise market capital would enable these institutions to support credit flow to the rural sector. The proposals to review the refinancing norms for NBFCs under MUDRA and receivable discounting by PSBs would improve credit supply to MSMEs and support the credit growth of banks and NBFCs.
India launches world’s biggest healthcare program
In what could benefit over 10 crore vulnerable and under-privileged families, the Finance Minister Arun Jaitley on Thursday unveiled a new National Health Protection Scheme under which a health coverage of upto Rs 5 lakh per family will offered for secondary and tertiary care hospitalization. “This will be the world’s largest government funded health care programme,” Prime Minister Narendra Modi said in his address soon after the Budget speech.