Union Budget 2018 was a budget about the Big Picture of the Indian Economy. While the budget did not dwell too much on the nuances of taxes and levies, it focused on the bigger picture like infrastructure, rural spending, fiscal deficit etc. Here are 10 key highlights of the Union Budget 2018…

1. Fiscal deficit has been pegged at 3.5% of GDP for the fiscal year 2017-18, which is nearly 30 basis points higher than the original FRBM estimates. For the next fiscal year 2018-19 also, the fiscal deficit target has been raised from 3% to 3.3%. Considering that the government had already breached 112% of its full year fiscal deficit target by end of November, this still shows an element of fiscal discipline.
2. The total infrastructure spend has been fixed at Rs.5.97 lakh crore for the fiscal year 2018-19 up by 21% from the allocation last year. In terms specific allocation, the government has allocated Rs.148,000 crore to Railways and the balance to roads, ports and inland waterways. The government had completed 9000 KM of roads last year towards its target of expanding the total highways network by 35,000 KM.
3. Rural was the big story in the Union Budget 2018. The government has allocated a massive Rs.14.34 lakh crore towards the Rural Livelihood scheme which entails providing alternate employment opportunities to reduce farm stress. The government has fixed the MSP of Kharif crop at 1.5 times the cost of production, probably the first step towards doubling farm incomes by 2022. In addition, the Budget also envisages providing 4 crore electricity connections and 8 core cooking gas connections in the coming year.
4. To ensure that the farmer gets a better price and reduce farm distress, the budget has also taken the initiative to connect 470 APMCs under the electronic national agricultural market (eNAM). This will not only enable farmers to get a good price for their output but also give them the facility of hedging their price risk through the futures market. Total credit to agriculture has been fixed at Rs.11 lakh crore for the full year.
5. The Budget has set a disinvestment target of Rs.80,000 crore for the full year 2018-19. In the year 2017-18, the budget had set a target of Rs.72,500 crore and is on course to achieve Rs.100,000 crore this year. With over 24 CPSEs slated for a combination of stake sales and strategic sales, the government could exceed the target in this year too. Some of the highlights of the year will be the strategic sale of Air India and the merger of 3 state-owned insurers prior to their listing.
6. The much awaited cut in corporate taxes did not materialize. However, the budget did offer a lower rate of tax at 25% for companies with turnover less than Rs.250 crore. This may benefit companies in the small to semi-mid cap categories.
7. The budget has imposed a special Social Welfare Surcharge of 10% on imports. This is a shift from the previous policy of consistently reducing the duties on imports. The budget has also announced a hike in import duties on a host of items and products ranging from mobile phones, LCD TVs, smart watches, perfumes, footwear are all likely to get more expensive as a result of higher import duties.
8. There are some positives for senior citizens in the Union Budget. The long awaited rationalization of tax on interest on bank deposits has been done and the exempt limit has been increased from Rs.10,000 to Rs.50,000. This will be a big boon for senior citizens. Above all, the TDS will no longer apply till that limit and saves a lot of paper work for account holders and for the bank. Secondly, the limits for medical insurance premium for senior citizens has been increased from Rs.30,000 per annum to Rs.50,000 per annum.
9. There has been no change in the rates of income tax and the slabs have been retained as in the previous year. However, the standard deduction of Rs.40,000 has been introduced irrespective of the income levels. This comes in place of the travel allowance and the annual medical reimbursement, as a result of which of which the net impact may not be too high.
10. The much anticipated tax on LTCG did come in, albeit in a much smaller way than anticipated. Equities and Equity fund holders will now have to pay 10% tax on long term capital gains (held for more than 1 year) if the annual gains exceed Rs.1 lakh. Incidentally, the LTCG was withdrawn in 2004 when the Securities Transaction Tax (STT) was introduced. However, the STT continues so the tax on LTCG actually becomes an additional tax. However, this is unlikely to impact investors in a big way, although the target of Rs.20,000 crore for LTCG tax appears to be a little ambitious.
11. Dividend distribution tax (DDT) on equity mutual funds will be imposed at 10% to put it at par with the 10% tax on equity dividends. But, unlike capital gains, this will hit all investors alike. This will also make a case for investors to prefer growth plans compared to dividend plans due to the negative tax implication. The DDT on equity funds actually amounts to double taxation as the DDT on dividend has already been paid when the company was distributing the dividends in the first place.
12. The budget has clarified that the crypto currencies like Bitcoins will not be considered as legal tender. So HNIs who are looking at Bitcoins as an alternate investment avenue need to rethink again. However, the government is keen to use the underlying Blockchain technology for the maintenance of government records.

In a nutshell, it has been a budget about the big stories and the big themes with the much anticipated rural and welfare undertone. But a good budget overall!