For senior citizens, exemption of interest income on bank deposits was raised to Rs 50,000 from the current Rs 10,000, he said, adding that tax will not be deducted at source on fixed deposits.
A slew of measures for the agriculture and rural sectors, a new health insurance scheme for the poor and some relief in income tax for the salaried class and senior citizens, were announced by finance minister Arun Jaitley on Thursday in the last full budget before the general elections.
Presenting his fifth straight budget in the Lok Sabha, Jaitley raised the health and education cess, levied on all taxable income, to 4% from current 3% , and introduced a social welfare surcharge of 10% to fund social welfare schemes.
He lowered the corporate tax for small, micro and medium enterprises with turnover of up to Rs 250 crore to 25% from current 30%, while reintroducing the tax on long term capital gains of over Rs 1 lakh made from the sale of shares.
While keeping the income tax rates and slabs unchanged, Jaitley introduced a Rs 40,000 Standard Deduction for salaried employees and pensioners in lieu of transport and medical expenses.
For senior citizens, exemption of interest income on bank deposits was raised to Rs 50,000 from the current Rs 10,000, he said, adding that tax will not be deducted at source on fixed deposits.
Also, exemption on medical expenses on critical illness has been raised to Rs 1 lakh, he said in his 110 minute speech.
Jaitley said a 10% tax long on capital gains exceeding Rs 1 lakh made from the sale of shares has been introduced but those made till Janaury 31 would be grandfathered.
A 10% tax on distributed income by equity oriented mutual funds has also been proposed in the budget.
With excise duty and service tax being subsumed in the Goods and Services Tax (GST), Jaitley made changes only in customs duty -- raising them in case of mobile phones and lowering for raw cashew.
Stating that the focus of the government in the coming fiscal would be agriculture and rural India, the finance minister announced that all Kharif crop would be paid a minimum support price (MSP) that is 50% more than the cost of production.
He announced that credit to agriculture would be raised to Rs 11 lakh crore in the coming fiscal from Rs 10 lakh crore.
Kisan credit card will be extended to fisheries and animal husbandary farmers while Rs 2,000 crore provided for development of agri market.
In a bid to provide universal healthcare, he announced a 'National Health Protection scheme' to provide health cover of upto Rs 5 lakh to each of the 10 crore poor family per year.
But to fund these, he let go on the fiscal consolidation roadmap. As a result, fiscal deficit for current fiscal will widen to 3.5% of the GDP as against 3.2% previously targeted, and to 3.3% in FY'19 as opposed to 3 per cent previously targeted.
Fiscal deficit in 2016-17 was 3.5 per cent of the GDP.
"We have worked sincerely without thinking about the political cost," he said.
Jaitley also announced 100% tax deduction for farm producer firms with Rs 100 crore turnover. The standard deducation allowed will benefit 2.5 crore people.
The target for providing free LPG connection to poor has been raised to 8 crore from 5 crore and 4 crore poor households will be provided free electricity connections.
President's emoluments have been raised to Rs 5 lakh per month and that of Vice President to Rs 4 lakh and Governors to Rs 3.5 lakh a month.
For members of parliament, he announced a new law that would allow for automatic revision in their emoluments every five years based on inflation.
He said the focus will be on agri sector, infrastructure and education sector as he promised to provide education holistically without segmentation from pre-nursery to Class-12 and move from black board to digital board.
The emphasis would be on generating higher income for farmers. Our government wants to help farmers produce more and realise higher prices, Jaitley said.
Stating that crop production is at record high, Jaitley said the government is committed to giving 50% more than cost of crop production to farmers.
He said when the NDA government took over, India was considered one of the fragile five economies of the world and the Modi-led Government have reversed it.
"India is today fastest growing economy... India is today a $2.5 trillion economy and will become fifth largest economy in the world from the present seventh largest," he said, projecting exports growth at 15 per cent.
In the second half (October-March) the growth is expected to be 7.2-7.5% and firmly on path to achieve 8 per cent growth.
Stating that air pollution in Delhi NCR is a cause for concern, he said the Centre will implement special scheme to support state Governments of Haryana, Punjab, UP and Delhi NCT to address it and subsidise machinery for management of crop residue.
The Budget announced allocation of Rs 600 crore towards nutritional support of tuberculosis patients and setting up of 24 new medical colleges and hospitals by upgrading district level ones.
The Government is slowly but steadily progressing towards universal health coverage and total budget for health, education and social security has been increased to Rs 1.38 lakh crore for 2018-19 from Rs 1.22 lakh crore in current fiscal.
Stating that Rs 4.6 lakh crore has been sanctioned under MUDRA Scheme, he said government will soon announce scheme to address the issue of Non-Performing Assets in MSME sector.
Mass formalisation of MSME sector is happening after demonetisation and GST and the target for loan disbursement under Mudra scheme has been set at Rs 3 lakh crore for next fiscal.
Employees PF Act will be amended to reduce contribution of women to 8% from 12% for first three years, with no change in employer's contribution, Jaitley said.
The Government will contribute 12% of wages of new employees in EPF for all sectors for the next 3 years, he said.
He said Rs 50 lakh crore is needed for infrastructure building and Government will allocate Rs 7,140 crore for textiles sector in next year
National Highways exceeding 9,000-km will be completed in 2018-19 and allocation of over Rs 1.48 lakh crore has been planned for railways.
Regional air connectivity scheme shall connect 56 unserved airports and 31 unserved helipads and Government will expand capacity of airports by five times to cate to one billion trips a year.
(PTI)