New Delhi: Acting Finance Minister Piyush Goyal on Friday went beyond the vote-on-account in a clear poll-oriented budget to extend Income Tax relief to the middle income group and announce direct cash support of Rs 6,000 a year to 12 crore vulnerable farmers having land up to two hectares and a mega pension plan for the unorganised workers.
The vote-on-account is for government expenditure for four months in the new fiscal up to July. It has left the taxes untouched and the unfinished business will be taken up by the new government after the elections. However, Goyal deviated from the convention that key tax proposals should not be presented in the ‘interim’ budget.
He took the plea that “small taxpayers, especially the middle class, the salary earner, pensioners and senior citizens need certainty in their minds at the beginning of the year about their taxes.” In his 100-minute speech, he doubled the income tax exemption from Rs 2.5 lakhs to Rs 5 lakhs, which means no tax up to Rs 6.50 lakh through investments in provident funds, specified savings and insurance.
Click here for Live Updates, latest news and detailed analysis of Union Budget 2019
Also, anyone with net taxable income up to Rs 5 lakh will not be required to pay taxes but people who have net taxable income above Rs 5 lakh will be required to pay taxes on the existing slabs. He also announced an additional deduction of interest on home loan up to Rs 2 lakh, on education loans, medical insurance and medical expenditure on senior citizens.
The announcements came amid five minutes of “Modi, Modi” chant on the ruling benches. While it will cost the exchequer Rs 18,500 crore, Goyal said this income tax relief will benefit an estimated 3 crore middle class tax payers comprising the self-employed, small business, small traders, salary earners, pensioners and senior citizens.] He went on to raise the stan dard deduction to the salaried persons from Rs 40,000 to Rs 50,000 to provide additional tax benefit of Rs 4,700 crore to more than 3 crore salary earners and pensioners.
Yet there were other tax decisions that should have been left for the new government to tweak, but Goyal announced them nonetheless: — TDS on interest earned on bank and post office deposits has been raised from Rs 10,000 to Rs 40,000; –TDS for deduction of tax on rent has been increased from Rs 1.80 lakh to Rs 2.40 lakh; — The tax on notional rent on second self-occupied house has been waived; — The rollover of capital gains has been revised from one residential house to two.
To make more homes available under affordable housing, Section 80-1BA has been extended for housing projects approved till March 31, 2020; and — The exemption from levy of tax on notional rent by the real estate sector on the unsold inventories has been raised from one year to two from the end of the year in which the project is completed. The Opposition protested that the outgoing government can’t tweak the taxes, but it had no ground for objecting to various other announcements laced by Goyal in his first budget speech in absence of Finance Minister Arun Jaitley.
Finance ministry sources said most of the announcements were finalised by Jaitley before going abroad. For the farmers, Goyal announced the Pradhan Mantri Kisan Samman Nidhi to provide “direct income support” of Rs 6,000 per annum to the vulnerable landholding farmer families, having cultivable land up to 2 hectares (nearly 5 acres), to be transferred directly to their bank accounts in three equal instalments of Rs 2,000 each. The programme, to be funded entirely by the Centre, will benefit around 12 crore small and marginal farmers. Made effective from December, the first instalment up to March 31 will be paid during this year itself. It will entail an annual expenditure of Rs 75,000 crore.
“It would not only provide assured supplemental income to the most vulnerable farmer families, but it would also meet their emergency needs before the harvest season to pave the way for them to earn and life a respectable living.” Another major announcement by Goyal was a mega pension scheme for the unorganised sector, which assures a monthly pension of Rs 3,000 from the age of 60, with nominal monthly contribution of Rs 55 if joining at 18 and Rs 100 if joining at the age of 29. It will benefit at least 10 crore workers in the unorganised sector. Like the farmers’ scheme, this will be also implemented from the current financial year itself.
Goyal also announced a panel under the NITI Aayog to identify the de-notified, nomadic and semi-nomadic communities and setting up of a welfare development board in the Social Justice Ministry for their welfare. Two other major announcements were the Rashtriya Kamdhenu Ayog for cow protection and extension of the interest subvention of 2% given under the Kisan credit card scheme to fishermen and additional subvention of 3% interest on timely repayment of loan.