Budget 2018; Introduction of LTCG Tax, Rular Population in Focus

Budget 2018

Budget 2018 Highlights

  • Corporate tax for companies with turnover up to Rs 250 crore cut to 25%.
  • Government levies long-term capital gains tax of 10% for over Rs 1 lakh investment.
  • To set up comprehensive gold policy; to revamp Gold Monetisation Scheme
  • Rs 5 lakh medical insurance cover per year for 10 crore families across the country.
  • 99 smart cities have been selected with an outlay Rs 2.04 lakh crore.

Special for Rular Population

  • 100% tax deduction to companies with revenue of Rs 100 crore registered as farmer producers.
  • Rs 16,730 crore allocated for rural sanitation
  • PMJBY to be expanded to all poor households
  • 8 crore poor families will be given free gas connection under Ujjwala Scheme.
  • Setting up an agricultural market fund with corpus of Rs 2,000 crore. MSP for Kharif crops to be 1.5X of cost of produce.

For this year, Union Budget 2018 was specially made on focusing growth for rular population. Agricultural holds a major share in employment generation not only for Rular areas, but also for population living in urban areas. There are many encouraging steps in Budget for boosting Agricultural and Rular Growth. Senior citizens have also given importance in this Budget.

LTCG Tax at 10 Percent

However, LTCG tax is the main highlight from the budget for all the long-term investors. As chances of this tax was very low, annoucement of LTCG made stock market very volatile for few hours. Nifty and Sensex both saw movement of upto 2 percent intraday. However, closing of market came in Negative.

Maybe, this LTCG could affect the investors sentiment for next few weeks, but it would propably not affect the long-term inflow of cash into Stock market.

After this budget, it is clear that in next one year, we could see some favourable improvement in farmers condition. Not sure about how much this Budget would improve the situation, but yes, Agricultural related stocks now could see some new buying interest for next few weeks. Stocks like Escorts, M&M having major revenue source from Agricultural sector have already seen a good buying today. Aquaculture, Irrigation, Fertilizer, Seeds producers stocks etc also saw a great buying interest today.

Meanwhile, one another sector that was in focus was Insurance Companies. HDFC Life, SBI Life etc also surges with a great momentum today. Different plans and projects of assuring a insurance for a large part of population will have a positive impact on these companies.

Conclusion

Although, Budget 2018 is favourable and encouging for Growth in the rular sector of the nation. And perhaps, companies having major source of revenue from Agricultural and Rular areas would also get benefit. But from investors point of view, no corporate tax cut and introduction of LTCG tax is not favourable.

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