With an array of tax sops for the middle-class and salaried people including zero tax liability for the ones who earn up to Rs 5 lakh, Finance Minister Piyush Goyal presented the interim budget on Friday in the Lok Sabha.
Instead of going for an impractical loan waiver as the Congress government has been doing in its poll manifestos, the minister, who has taken charge of the Finance Ministry in the wake of Arun Jaitely recuperating from his ailment, announced an annual income support of Rs 6,000 for small farmers as part of mega plan to enable farmers have better support from government.
He also announced contributory pension for labourers in the demonetisation-hit unorganised sector.
Goyal, while delivering about 100-minute speech, also announced raising the Standard Deduction for the salaried class and pensioners from Rs 40,000 to Rs 50,000. He proposed exemption from tax on notional rent on second self-occupied home.
It was aimed at enabling families maintain homes at two different locations due to jobs.
For middle-income group, Goyal had a big relief. He raised the rebate under Section 87A of the Income Tax Act from Rs 2,500 to Rs 12,500 – the equivalent of 5 percent tax on Rs 2.5 lakh to Rs 5 lakh category.
He also raised the eligibility criterion for claiming the rebate to Rs 5 lakh from Rs 3.5 lakh earlier. It means the tax liability of those with net taxable income up to Rs 5 lakh will be nil.
The Budget came out with a direct income support of Rs 6,000 per annum for small farmers with land-holding size up to two hectares. It is to be transferred into their bank accounts.
He also acknowledged there have been reduced returns for farmers due to falling food prices in the international market and declining inflation.
The finance minister, for the demonetisation-hit unorganised sector, announced a contributory pension scheme providing for Rs 3,000 per month on attaining 60 year. It is supposed to benefit 10 crore workers in the unorganised sector.
The ones entering the scheme at 18 years will be required to pay just Rs 55 as a monthly premium while those who turn 29 years will have to pay Rs 100 monthly till they turn 60 years of age. The exact amount will be borne by the Government as match share to contribute in the pension account of workers.
For senior citizens and pensioners, the finance minister also raised the threshold for TDS on interest received on bank deposits from Rs 10,000 to Rs 40,000, and TDS on rent from Rs 180,000 to Rs 240,000.
Taken along with Standard Deduction and other sops like interest paid on home loans, education loans, contribution to National Pension Scheme, medical insurance premium and medical expenses on senior citizens, the effective exemption would go up further.
The budget also increased defence allocation. The minister said it will be surpassing Rs 3 lakh crore for the first time in 2019-20. “If necessary, additional funds would be provided for securing our borders and to maintain preparedness of the highest order.”
The finance minister revised the fiscal deficit target for 2019-20 at 3.4 per cent of the GDP, up by 0.1 per cent targeted this year.
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“We would have maintained fiscal deficit at 3.3 percent for 2018-19 and taken further steps to consolidate fiscal deficit in 2019-20. However, considering the need for income support to farmers, we have provided Rs 20,000 crore in the revised estimate of the current fiscal and Rs 75,000 crore in the budget estimates of 2019-20.
The Interim Budget pegged the total expenditure for 2019-20 at Rs 27,84,200 crore, up from Rs 24,57,235 crore in the revised estimates of the current fiscal, which is a rise of approximately 13.3 percent.