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  Analysis of Union Budget 2018- Indirect Taxes    Government is all set to introduce agricultural commodities in the commodity market  of India. It will result in increase in investment for the sector which will directly benefit farmers.    Prices of no. Of commonly used consumer goods will rise sharply due to increase in customs duty of 5-10%.      3-4% increase in the prices of smartphones can be expected; while smart watches and fitness bands may cost 6-7% more due to customs duty hike. TVs may cost 1.5-2% more due to increase in customs duty.    After the budget was presented, prices of all models of iPhone have increased by around Rs. 3,200 in India except for locally produced iPhone SE. Apple imports 90% of its devices from China and other countries.    Imported furniture, mattresses, bedding and lamps will cost more affecting the firms like the world’s largest retailer IKEA; which is scheduled to open its first Indian store i n Hyderabad later this year. Although the Swedish giant has local vendors, majority of its products are imported.    Prices of cosmetics and grooming products may go up by 10-15% and can directly drive inflation.    Toys, watches, automatic bowling alleys, equipment for outdoor sports, footwear, and cigarette lighters may also become costlier.    Due to increase in customs duty on imported cars, car prices are likely to increase by Rs. 1.25 lakhs to Rs. 10 lakhs. Big bikes prices are likely to increase by Rs. 15,000 to Rs. 50,000. Companies impacted due to this are Mercedes Benz, BMW, Audi, Harley, and Triumph.    Bus prices to go up by Rs. 5 lakhs to Rs. 10 lakhs due to increase in custom duty from 20% to 25% on Vehicles having capacity of more than 10 passengers. It will affect companies like Volvo buses, Sania, etc.    Customs duty on imported radial tyres for buses and trucks are increased from 10% to 15%. This move will curb imports of Chinese radial tyres and may encourage more local manufacturing. It will be beneficial for companies like Ceat, Apollo Tyres and JK tyres.    Import duty on Solar tempered glass used to produce solar panels is cut from 5% to nil. This move will result in increase in usage of solar energy.    There is Rs. 500 billion shortfall in GST collections in this fiscal year. The increase in customs duty will be helpful in covering the shortfall and will also promote Make in India.    Although, slowly ‘Make in India’ is turning into ‘Protect in India’ by restricting imports indirectly.    Also, Education cess and higher education cess on imports have been replaced by social welfare charge at the rate of 10%.  Analysis of Union Budget 2018- Digital    Allocation for Digital India Program is doubled to Rs. 3,073 crore in this year. Rs. 10,000 crore has been provided for creation and augmentation of telecom infrastructure.    The government proposes to set up 5 lakh WiFi hotspots in 250,000 gram panchayats which will provide broadband access to 5 crore rural citizens. This will result in strengthening of e-commerce in tier-II, tier-III towns & villages which has larger customer base. Therefore, the growth of e-commerce is projected to be 19.1% higher than the previous year. Although the decision will help but there are many villages in India who still do not have proper electricity supply, for them the above wifi connection will be of no use.    E-tolling on highways will be promoted. Currently there are 400 toll plazas that collect digital payments through FASTags. It saves time and curbs pollution.    To harness the benefit of emerging new technologies, the Department of Telecom (DoT) is supporting the 5G technology creation at IIT, Chennai. This will make India not only the user of 5G technology but also a creator of it.    Government is all set to shift from blackboard to digital board in the field of education. This move will increase the demand of electronic gadgets like Tablets, laptops and smartphones.    Government has declared that the crypto currencies will not be legalised and is to be eliminated from the payment system. On the other hand, use of Block chain technology to trace back the digital transactions will be explored. It is to be noted that the block chain is the technology whereas, crypto currency is the token.    In comparison with US, who has decided to treat crypto as property and has imposed capital gains regulations; Indian crypto currency ecosystem is likely to suffer. Because India has 50 lakhs registered users in 24 exchanges, trading volume of 1500 bitcoins a day amounting to Rs. 100 crore a day. Source: Block chain and crypto currency committee.    Analysis of Union Budget 2018- Business    10% of LTCG has been levied on profits over Rs. 1 lakh on shares and other equity oriented investments. Previously only 15% of tax was applicable on STCL. Even though the LTCG is applied, Security Transaction Tax (STT) is not scrapped.    10% of dividend distribution tax on equity schemes of mutual funds has been introduced. The above 2 will temper the return of high net worth individuals to a great extent and will discourage long term investment in India.    Textile exports from India will be boosted with the 19% increase in the funding for textile sector amounting to Rs. 7,148 crores. This will help in promoting local higher quality of production of apparels and will also increase employment as it is the most labour intensive industry in the country.    Corporate tax has been reduced to 25% from 30% for companies with an annual turnover of up to Rs250 crore. This will benefit the micro, small and medium enterprises but is disappointing to big corporate.    In comparison with other countries like USA, China and UK having corporate taxes like: USA: 21% China: 29% UK: 19% There will be tremendous consequences such as diversion of investment of large domestic and foreign entities to other countries resulting in hampering of overall economic environment of India. It will also result in increase in unemployment in the country.      The education cess is proposed to increase from current 3% to 4% in the budget. The additional 1 percent cess will help the government raise Rs 11,000 crore but Taxpayers in the top slab of above Rs. 10 lakh income with 30 percent tax rate will have to shell out Rs 2,625 more in income tax on account of health and education cess.      The government has increased the allocation from Rs. 6,481.46 crore to Rs. 6,552.61 crore to boost the MSME sector. Credit allocation for individual schemes such as MUDRA has gone up by 59%. This will result into employment generation and technology upgradation prima facie. But the government has gone off budget in this case and has forced the banks indirectly to provide credit facilities and there is no actual spending by the government itself. Another aspect to be taken into consideration is the payment of interest on the credit facilities taken up by the MSME and other schemes.    All these initiatives are expected to increase the disposable income in the hands of farmers and rural population and therefore boost rural consumption leading to strengthening of the rural economy.     The government proposes to revamp the system of sanctioning of the loans to MSMEs using Fintech. It will help in granting the loans quickly.    At the same time, E-lenders face the challenge of lack of reliable data about small firms.To curb that, the E-lenders can be connected to GST network which can provide reliable information for the processing of loan.    On one hand government is encouraging start-ups with ‘ start-up India ’ scheme but the data shows that many of the start-ups are closing down after 2-3 years. The chart shows that the no. of companies closing is on the rise. It indicates that the government is formulating schemes but they are not able to implement them effectively. Suggestions:    Changes in GST reforms should have been done w.r.t clarity in tax rates to further ease out the challenges of pricing and classification.    Instead of having more no. Of schemes for development and growth, the government should focus on the effective implementation of the schemes already present especially with respect to MSMEs.    Reduced corporate tax rate should be applicable to not only MSMes but also to the companies having turnover of more than 250 crores because it is the companies with larger turnover who has the potential to invest more and grow their business resulting in creating more no. Of jobs.
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