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Budget 2018 – Focus on Social security and health care initiatives

February 5, 2018 11753 Views
Sumit Jain
Manager, Deloitte Haskins and Sells LLP

The focus on employment generation and social security measures in Budget 2018 is heartening.

Some of the proposed reforms in the areas of social security/health care sector is provided below:

Substantial funds have been allocated by the government towards National Social Assistance Programme which will help in providing a comprehensive social security and protection to all section of society.

National Health Protection Scheme has been proposed by the government. Under the scheme, the government would provide coverage up to Rs 5 lakh per family per year for secondary and tertiary care hospitalization. The scheme is expected to cover over 10 crore poor families and has been described as the world's largest government-funded health care programme. Additional funds have been allocated to provide nutritional support to tuberculosis patients. As part of this, TB patients would receive INR 500 per month towards nutritional expenses for the duration of their treatment. To enhance quality medical education and health care accessibility, 24 new Medical Colleges and Hospitals would be set up by the government through upgradation of existing district hospitals.

The existing 3% education cess is being replaced by a "Health and Education Cess" of 4%. The additional funds would enable the government to meet the funding for the health and education initiatives.

Expenses towards insurance and medical expenses relating to senior citizens will now be more tax friendly.

Under the existing law, deduction of INR 30000 is provided in respect of payment made towards annual premium on health insurance policy of senior citizen. It is proposed to increase the deduction for health insurance and treatment relating to senior citizens to INR 50000. Apart from this, deduction under section 80DDB in respect of medical treatment of specified diseases relating to senior and very senior citizens has been enhanced to INR100,000 from the existing limits of INR60,000 and INR80,000 respectively.

As a measure to boost employment generation, currently government contributes to the PF/Pension of new employees for a period of three years where specified conditions are met at the below rates:

  •  12% in case of textile, leather and footwear industries

  •  8.33% for all other sectors.

The government has now proposed that 12% contribution by the government would be applicable to all sectors which would further boost employment generation.

Women employees' contribution for the first three years of employment is proposed to be reduced to 8% as against 12%. This will help to incentivise employment of women in formal sector and increase the take home wages for women employee.

The low-cost market linked National Pension System (NPS) has been eligible for significant tax breaks keeping in mind the objective to create a pensionable society. Under the existing law, an employee contributing to the NPS is allowed an exemption of 40% at the time of withdrawal. However, this exemption is not available to non-employee subscribers. In order to bring a parity between self-employed professional and employees, the government has now proposed to extend this benefit to all assessees.

Overall, in the Budget, government has taken several steps to enhance social security and health care benefits to the population at large which is commendable. Formalising the labour code on social security which is now at draft stage will also be a good follow through to ensure universalization of social security benefits.

Information for the editor for reference purposes only


Saraswathi Kasturirangan is Partner, Deloitte India

Sumit Jain is Manager, Deloitte Haskins and Sells LLP


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