The most applauded announcement by the Finance Minister Piyush Goyal was tax exemption for individuals with annual income up to Rs five lakh. With investments, those with an income of Rs. 6.5 lakh will have the same benefits.
The interim budget presented by Finance Minister Piyush Goyal today has emerged as expected. With barely a few months left for the Lok Sabha elections, there was high expectation that the budget, though interim, would be populist and try to woo voters. And the government hasn’t disappointed.
Budget 2019 has gone with guns blazing to woo the electorate – farmers and poor.
While almost nothing has been done for the middle-class, a part of the salaried income group may cheer, for the moment, as the government has announced major sops for them including the proposal to exempt tax on notional rent for unsold housing units for two years.
However, the concerning issue is the relatively high fiscal deficit at 3.4 per cent of the GDP which, in the absence of revenue earning scheme to match the reliefs, is something that many would seek answers to.
First among the populist measures is the Pradhan Mantri Kisan Nidhi Yojana under which the government proposes to give Rs 6000 per year to small farmers in installments of Rs. 2000 each. According to the government’s own estimate, 12-12.5 crore small and marginal farmers would be benefitted from this.
The other measure is the Pradhan Mantri Shram Yogi Maan Dhan pension scheme that is designed to provide an assured monthly pension of Rs 3000 to workers in unorganised sector earning up to Rs 15,000 a month. The scheme will attract matching contribution of Rs 100 per month from government as well as from workers.
Disinvestment has been one of the main revenue-generating activities for the government. Yet, the returns from disinvestment have left one wanting. This year, the government expects to meet its target of Rs 80,000 crore but looking at the past experience, it seems a difficult task.
The most applauded announcement by the Finance Minister was tax exemption for individuals with annual income up to Rs five lakh. With investments, those with an income of Rs. 6.5 lakh will have the same benefits.
However, what will be a relief for the salaried class is an increase in standard deduction from Rs 40,000 to Rs. 50,000. Last year, Arun Jaitley had brought back the standard deduction in lieu of the medical and transport reimbursements of Rs 15,000 and Rs. 19,200 respectively. This year, the government has increased it by Rs. 10,000. This is expected to bring a faint amount of cheer for tax payers.
“This electoral interim budget of the BJP government was placed as a transformational vehicle for overall development. In addition to the agricultural sector, it clearly aimed at targeting the concerned middle-class taxpayers and enhancing their confidence. Providing a full tax rebate to the taxpayers with taxable income up to Rs 500,000 is a master stroke by the government as this will benefit 3 crore tax payers comprising self-employed, small business, salaried class etc. To further pass on the benefit to the salaried class, the limit of standard deduction has been increased from Rs 40,000 to Rs 50,000 to ensure more net-in-hand income for this class,” said Akhil Chandna, Director, Grant Thornton India LLP.
The government also unveiled the development for the next decade and said it would focus on 10 key areas which include setting up of social and physical infrastructure, creating a digital India with one lakh digital villages in the next five years, highway development, food self-sufficiency and health among others.