The Union Budget 2018 and me..

On 1st February 2018, Finance Minister presented the General Budget in the Parliament and I, like any other salaried middle class was glued to the television just to listen to the point of my interest, that is, how much tax relief will be given to me this time. The announcement of tax rebate never came. Like all the salaried middle class, I got very angry and vowed not to vote for this government ever again. Slowly, but surely, my anger subsided and then I decided to look for any valid reason due to which they decided this. I had made up the mind to punish them in next elections if I could find that a grave Injustice had been done to me and hence, I did R&D on my own so that I don’t follow the herd mentality and make an informed choice. Since this information is very important, therefore I am sharing this with all of you here. 

1. My home loan interest rate at the end of 2013 was between 9.5 to 11.25%. It has come down to under 8.5% now. (Keeping SBI as Reference) Even a difference of 2% Rate in a loan of 30 lakhs gives you savings of 45000 Annually, as per SBI Home loan calculator. Is that not for middle class? 

2. Average Consumer Price Index (CPI) was 10.92% in 2013 while it is 2.49% right now. JUST IMAGINE, what would have been the prices of the goods of common usage if such a high CPI rate was still there. 

3. Fiscal Deficit was 4.1% in 2013 while it has been targeted to be 3.3% for 2018 (Through this budget only). If we don’t reign in the fiscal deficit, it will lead to manipulation of capital structures, interest rates, will lead to decrease of net exports and will result in even higher taxes and higher inflation. So, dear friends, the budget is also aimed at keeping the inflation in check (Such are the strange ways of Economics)

4. One thing which I can’t understand is the fuel prices. Petrol Price was INR 78.46 in Mumbai in 2013 while it is now 80.94. Same is the case with Diesel as it was INR 60.8 in 2013 and now it is INR 68.25. 

5. Let us now come to the moot point, that is, the Tax rebate for Salaried middle class. Big decisions like these can never be viewed in Silo. We also need to find out a pattern and if there is any rationale behind it. Most of us were expecting at least a tax slab raise to INR 3 lakh per annum from INR 2.5 Lakh per annum which means a saving of INR 2500 per annum as it in any case fetches a tax of 5% only to the Government or INR 208 per month. Is it such a big amount that our world will turn upside down? Remember, it is just INR 2500 savings for us but for the government, it is an extra spend of INR 2500 x 6.3 Crore = 15750 Crore. Is it a small amount? So, just for the sake of savings of 208 per month, Government would have to bear the brunt of 15750 Crore extra and remember, this would have been further added into fiscal deficit as explained above which in any case would come back to haunt you in the form of higher taxes and inflation. 

6. Now, comes the most important point. Go through it and then decide your voting preference. From 2009 to 2014, the tax rebate ceiling was increased from 1.6 lakhs to 2 lakhs per annum. From 2014 till date, the ceiling has been increased from 2 lakh to 2.5 lakh. For senior citizens, it has been increased to 3 lakh and for very senior citizens, it has been increased to 5 lakh. Home loan deduction limit has been hiked to 2 Lakh. Also, don’t forget that from 2.5 lakh to 5 lakh income, you are now required to pay 5% tax instead of the earlier 10% and also, the standard deduction of INR 40000 has also come into picture now. Stent prices were reduced to 35000 from 1.5 lakhs and knee replacement cost dropped down to 45000 from 1.5 lakhs. Insurance of 2 lakh Rs at Annual Premium of Rs 333 is also given by this Government. Are these not for middle class?  This government is the one which has actually given the most to the salaried middle class and we are planning to remove the same government to bring one which in any case will keep taking taxes from us and will keep filling its pockets instead of using the tax money properly?

So, in a nutshell, this government has already given a lot to middle class honest tax payers like me. I am already saving around 45000 Rs annually with drop in home loan interest rate and still I am unhappy that an annual tax saving of Rs 2500 has not been given to me. Is it justified? Yes, they might be charging more as far as Fuel Prices are concerned but I still know, that all my tax money, whether it is in the form of Direct tax, or Indirect Tax, is not going into the pockets of Corrupt Politicians of the previous regime. Just because I got angry because I was expecting tax Rebate because this was the last full budget of the Government before general elections and hence, I was EXPECTING some doles for me, doesn’t mean that I will again throw my country into the same quagmire of corruption & red tapism that my country has been suffering since 1947. It was the media and our own psyche that built up that expectation and not the government. They never gave any official indications or statements.