Presenting the Interim Budget earlier today, Finance Minister Piyush Goyal announced a whole host of important measures.
Before getting into the key details, it’s imperative to understand that this is an Interim Budget and not a Standard Budget.
What the Interim Budget does is allow the government to meet its administrative expense until the new Parliament considers and passes the Budget for the upcoming financial year.
When the full Budget is presented, the incoming Parliament will have the necessary authority to change the various estimates framed in the Interim Budget.
Therefore, a special provision is established for ‘Vote on Account,’ by which the government obtains the Lok Sabha’s vote for an amount necessary “to incur expenditure on various items for a part of the year.”
Given below are the highlights from Mr Goyal’s budget speech:
1) Declaring a personal income tax rebate up to Rs 5 lakh per year is probably the biggest news to come out of the Interim Budget. Besides, the government has also proposed raising the standard deduction limit to Rs 50,000 from Rs 40,000 earlier.
Contrary to popular perception, the government did not propose raising the personal income tax exemption limit to Rs 5 lakh per annum from Rs 2.5 lakh.
The finance minister said in the Lok Sabha – “For the present, the existing rates of income tax will continue for FY 2019-20 also. I propose the following changes – Individual taxpayers having annual taxable incomes up to Rs 5 lakh will get a full tax rebate.”
Unlike the exemption on annual income, a tax rebate refers to relief taxpayers receive in the form of a refund on taxes already paid to the government.
“TDS (tax deducted at source) threshold on interest earned on bank/post office deposits is being raised from Rs 10,000 to Rs 40,000. This will benefit small depositors and non-working spouses. Further, the TDS threshold for deduction of tax on rent is proposed to be increased from Rs 1,80,000 to Rs 2,40,000 for providing relief to small taxpayers,” the government announced.
2) Mega pension scheme: The government has assured a pension of Rs 3,000 per month to nearly 10 crore people employed by the informal sector.
While informal workers joining the pension scheme at the age of 18 would have to pay Rs 55 per month to be eligible for it, those aged 29 will have to pay Rs 100.
They will be paid the pension once they reach the age of 60.
3) The government has fixed the minimum support price of all 22 crops at a minimum of 50% more than cost.
For farmers, the government has announced the ‘Pradhan Mantri Kisan Samman Nidhi’ (PM-KISAN), under which farmers with cultivable land under 2 hectares will receive direct income support of Rs 6,000 per year in three equal instalments.
As per the government, 12 crore farmers are likely to benefit from PM-KISAN, for which Rs 75,000 crore has been allocated.
4) The government also increased allocation in the Mahatma Gandhi National Rural Employment Guarantee (MNREGA) program by Rs 5,000 crore to Rs 60,000 crore for the coming financial year.
This scheme, derided by the same government earlier, guarantees 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.
5) Funds allocated to the Northeast region will witness a 21% rise over the previous year for infrastructure development. With the focus on establishing the region as a major hub for commerce, particularly with nations in South East Asia, this is a seemingly important step.
(Edited by Gayatri Mishra)