New Delhi: Amid the speculations of some big-ticket announcements by the government in Interim Budget 2019, Finance Minister Piyush Goyal on Friday announced tax sops for the middle class and the corporates, along with a relief package to address agrarian distress and the stressed small-scale industry sector.
Asserting that inflation is a hidden and unfair tax on the poor and middle class, Goyal said the government has restrained the “back-breaking” inflation and brought it down to an average of 4.6 per cent.
The government hailed the interim budget as pro-farmer, pro-poor and pro-middle class, and said that it will boost the development in the nation.
Prime Minister Narendra Modi said that the interim budget has taken care of all sections of the society and termed it a “trailer” ahead of the “budget which, after elections, will take India on the path to development”.
“From middle class to labourers, from farmers’ growth to the development of businessmen, from manufacturing to MSME sector, from growth of the economy to development of New India, everyone has been taken care of in this interim budget,” he said.
Terming the budget as pro-poor and pro-farmer, the government took a dig at the Congress for criticising it as “BJP’s election manifesto” and said that “those sitting in AC rooms” cannot understand the plight of farmers.
On the other hand, the Congress termed the interim budget as “BJP’s election manifesto”.
Congress president Rahul Gandhi termed the budget as “Akhiri Jumla Budget” and targeted the government over the announcement of direct cash transfer of Rs 6,000 per year for marginalised farmers.
“Dear NoMo, 5 years of your incompetence and arrogance has destroyed the lives of our farmers. Giving them Rs. 17 a day is an insult to everything they stand and work for. #AakhriJumlaBudget,” he tweeted.
Terming it an “election budget”, former Prime Minister Dr Manmohan Singh said: “In these circumstances of the case, concessions to farmers and concessions to middle class will obviously have implications in the election.”
Full Tax Rebate For Income up to Rs 5 Lakh
The income tax sops announced by the government include a rise in the exemption limit threshold for middle class tax payers – from the current Rs 2.5 lakh to Rs 5 lakh.
“Individual taxpayers having taxable annual income up to Rs 5 lakh will get full tax rebate and therefore will not be required to pay any income tax,” Goyal said.
This means that anyone with net taxable income up to Rs 5 lakh will not be required to pay any taxes. However, anyone with net taxable income above Rs 5 lakh will not be able to avail this tax benefit and only get standard deduction benefit.
If an individual invests in the specified tax saving schemes of the government, the effective tax-free income limit will be Rs 6.5 lakh a year, while it may go further up with additional avenues like NPS, medical insurance and home loan interest payment.
Explaining the rebate in a press conference after presenting the Budget, Finance Minsiter Goel said, “Tax slabs are not raised. It is only a rebate that will benefit people having taxable income up to Rs 5 lakh.”
New Income Tax Slabs — Tax Rate
Income up to Rs 5,00,000* — No tax
Income from Rs 5,00,000 – 10,00,000 – 20% (remains unchanged)
Income more than Rs 10,00,000 – 30% (remains unchanged)
The proposal will benefit 3 crore middle-class tax payers, said Piyush Goyal in his 1 hour 50 minutes-long budget speech.
Goyal further announced an increase in standard tax deduction for salaried employees from the current Rs 40,000 to Rs 50,000.
Also, the TDS threshold on interest on bank and post office deposits has been raised from 10,000 to 40,000 rupees. The TDS threshold on rental income has been raised from 1.8 lakh to 2.4 lakh rupees.
The government also extended benefits under Sec 80(i)BA for one more year, for all housing projects approved till end of 2019-2020.
Goyal also proposed that benefit of rollover of capital tax gains be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains of up to Rs 2 crore. However, it can be exercised once in a lifetime, he added.
Relief Package For Farmers
In its bid to appease the distressed farming sector, the government announced Rs 6,000 per year cash support to small and marginal farmers that will cost the exchequer Rs 75,000 crore annually.
Under the scheme called Pradhan Mantri Kisan Samman Nidhi, Rs 6,000 will be transferred into bank accounts of farmers holding up to 2 hectares of land in three equal instalments.
Announcing the scheme during the Budget speech in Lok Sabha, Goyal said it will benefit 12 crore farmers and will be implemented from this fiscal itself.
He said Rs 20,000 crore have been provided for current fiscal and also announced allocation of Rs 75,000 crore for the next fiscal.
In place of rescheduling of crop loans, all farmers severely affected by severe natural calamities will get 2 per cent interest subvention and additional 3 per cent interest subvention upon timely repayment, said Goyal.
In yet another announcement for the middle-class salaried persons, the government increased the gratuity limit from Rs 10 lakh to Rs 30 lakh.
In a bid to woo the poor and marginalised section, Goyal said that the MNREGA allocation has been set at Rs 60,000 crore to create employment opportunities.
He also announced allocation and schemes for cow protection and increasing their productivity.
Unveiling the mega pension yojna for the unorganised sector workers that will benefit 10 crore people, Goyal said they will get assured monthly pension of Rs 3,000 after reaching the age of 60 years.
Mega Pension Scheme Announced
“We are launching Pradhan Mantri Shram Yogi Mandhan today. The scheme will provide assured monthly pension of Rs 3,000, with contribution of 100 rupees per month, for workers in unorganised sector after 60 years of age,” Goyal said.
Goyal, who is standing in for Arun Jaitley undergoing treatment in the US, informed the House that the government will also provide a matching contribution of Rs 100 for every unorganised worker covered under the scheme.
“The scheme will benefit 10 crore workers in unorganised sector, may become the world’s biggest pension scheme for unorganised sector in five years”.
Govt Misses Fiscal Deficit Target
Deviating from the target, Goyal said that the fiscal deficit for the current fiscal is expected to be slightly higher at 3.4 per cent for the current fiscal. For 2019-20, the government too retains the fiscal deficit at 3.4 per cent of the GDP.
“We would have maintained fiscal deficit at 3.3 per cent for year 2018-19 and taken further steps to consolidate fiscal deficit in year 2019-20. However, considering the need for income support to farmers we have provided Rs 20,000 crore in 2018-19 RE (Revised Estimate) and Rs 75,000 crore in 2019-20 BE (Budget Estimate).
“If we exclude this, the fiscal deficit would have been less than 3.3 per cent for 2018-19 and less than 3.1 per cent for year 2019-20,” Goyal said.
From the high of almost 6 per cent seven years ago, he said, the fiscal deficit has been brought down to 3.4 per cent in 2018-19 RE.
Railways Gets Highest Ever Allocation of Rs 1.58 Lakh Crore
Goyal announced capital expenditure allocation of Rs 1.58 lakh crore for the railways, the highest ever for the national transporter, in an effort to put its flagging revenues back on track.
Goyal said so far, 2018-2019 has been the safest for the Indian Railways and all unmanned level crossings on the broad gauge network have been completely eliminated.
“Capital expenditure programme of railways at all-time high of Rs 1.58 lakh crore in next financial year. Vande Bharat Express, indigenously developed semi-high speed (train), will give Indian passengers world class experience.