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2 Feb 2018

Union Budget 2018: No Joy for the Middle-Class & Share investors.


      Union Budget 2018: No Joy for the Middle-Class
The Middle Class was expecting more from the Union Budget 2018, largely as it was the last full budget of the present ruling dispensation. However, there is disappointment among the Aam Aadmi as expectations have been belied.
Nothing at all for the middle class
You save only Rs 177 by way of taxes every year. What individuals have got is only a standard deduction of Rs 40,000, which may actually work to Rs 5,800 only, after you consider the reimbursements for travel and medical expenses which are going to be done away with.

However, with the education cess increasing by 1 per cent, you might not save. In fact, those in the 30 per cent tax bracket would end-up paying more by way of taxes for Financial Year 2018-19. Those in the 10 per cent tax bracket will gain only Rs 177 . It is really coughing up more tax, depending on your taxable income.
Stock market investors to become poorer
If you thought you would be a part of the market boom, your gains are likely to be capped by Long Term Capital Gains tax that has been levied on shares. So, if you make sizeable profits of Rs 1 lakh and more, be prepared to pay 10 per cent as long capital gains tax, after one year. There was no such tax on capital gains and the same will be on profits after Jan 31, 2018.
If you are an equity mutual fund investor be prepared for lower returns, as the mutual fund would have to pay 10 per cent tax on distributed income. Begin lowering your expectations from stock market investments henceforth.

Not great for women....
Women joining work for the first time will need to contribute only 8 per cent instead of 12 per cent  for the first three years. The proposed move will enhance their take-home pay. Further, for new employees coming under the ambit of EPFO would be provided 12 percent contribution from the government.
One does not understand the logic in introducing lower EPF contribution for women, if the whole idea of EPF is to build a corpus.
No reimbursements on medical and transport
There would be no reimbursements on medical allowance and transport allowance. Transport allowance totalled Rs 19,200 per year, while medical reimbursements against bills totalled Rs 15,000 each year. So, together they totalled Rs 34,200, against, which now a standard deduction is offered of Rs 40,000. Barely no tax savings at all.
Much was expected from the present government's last Union Budget for the Middle Class. However, sometimes we need to understand budgetary predicaments, especially when the fiscal deficit is rising.

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