Post-budget 2018 Reaction By Thomson Reuters, South Asia

Aniruddha Chatterjee, Head- Buy-side business, Thomson Reuters, South Asia, said, The Union budget 2018 reinforces Government’s intention to improve the rural economy by boosting credit and investment in the farming sector. Since the measures taken are mostly structural in nature, right implementation will eventually grow the rural economy and benefit both real economy as well as the Street.

The return of Long Term Capital Gain Tax (LCGT), which was not entirely unexpected, but may not be seen as a welcome move particularly by the high-value investors. There is a fear that this might vitiate the investment environment in the short term.

Vinay Sethi, Head-Market Development, Tax & Accounting, Thomson Reuters, South Asia, said, “Being the last full fledged Budget by the current Government before the next General Elections, Union Budget 2018 did not deliver big bang reforms that many were anticipating. The Government, however, did roll out some promising programs which will support long term welfare and development. One of the key highlights of this budget is the launch of the flagship National Health Protection Scheme to cover 10 crore poor and vulnerable families and provide them up to INR 5 lakh per family per year in secondary and tertiary care institutions. While this is a welcome development, the Government will have to plan the implementation well as it may cripple the existing limited medical infrastructure in the country. For this initiative to thrive, it is imperative for the Government to rapidly augment high quality medical facilities in the country.

Two positive developments that will bolster the health of direct taxes in the long term are reducing corporate tax rate to 25% for companies with turnover upto Rs. 250 cr and rolling out of E-assessments across country. This would build on the FM’s promise to make taxes simpler and easier to comply with, and tax processes to be automated and technology driven.

The Budget however, is a dampener for the much expected relief to the salaried class as the standard deduction of 40, 000 has been given by taking away the existing benefits on medical and transport. The benefit to senior citizen by exempting interest income up to INR  50,000 is a well thought of initiative.

The introduction of Long term capital gain of 10%  on stock market transactions will also create significant impact in the long term.