The budget announcements come a day after the government refused to extend the deadline for the implementation of the revised foreign direct investment in e-commerce guidelines.
More money in the hands of rural and middle class is going to drive consumption in the country said e-commerce companies welcoming the government's move to offer tax rebates to the salaried class.
Finance Minister Piyush Goyal on Friday offered a full tax rebate for those with an annual income of up to Rs 5 lakh from Rs 2.5 lakh. This implies that individuals with an annual income of less than Rs 5 lakh will not have to pay any taxes.
He also raised the "standard deduction" – a flat amount on which taxes are not paid—to Rs 50,000 from Rs 40,000 annually.
"More money in the hands of rural and middle class is good for driving consumption in the country And hence good for economic growth. More and more local MSME (medium, small and micro enterprises) manufacturers and sellers can cater to this increased demand from rural, tier 2-3 towns," said Kalyan Krishnamurthy, chief executive officer (CEO) Flipkart Group.
According to Kunal Bahl, CEO of Snapdeal, tax exemption for the middle class will materially increase their disposable income and will thus increase consumption, both through online and offline retail.
"Additionally, the continued push towards creating digital and physical infrastructure will spur inclusive growth for the country," he said.
In the interim budget, Goyal also raised the income tax exemption on bank deposit interest to Rs 40,000 from Rs 10,000 currently.
He also emphasised the government's commitment towards strengthening micro, small and medium enterprise (MSMEs) sectors by underlining the recently introduced credit disbursal scheme such as sanctioning of loans up to Rs 1 crore in 59 minutes.
"The interim budget has taken into consideration the aspiration of India's middle class. We are particularly glad that finance minister has addressed some of the concerns that will benefit the MSME sector. The 2% interest subvention for MSMEs for an incremental loan of Rs. 1 crore is welcome, along with the 3% threshold for MSME women entrepreneurs in public procurement, which will certainly encourage women entrepreneurship even at the grass root level," said Sanjay Sethi, CEO of ShopClues.
The budget announcements come a day after the government refused to extend the deadline for the implementation of the revised foreign direct investment in e-commerce guidelines. The move garnered criticism from US-based Amazon, and Flipkart which was acquired by global retail giant Walmart.
