Income Tax reliefs:
- No tax for those whose taxable income is less than Rs 5 lakh
- Standard deduction increased to Rs 50,000 from Rs 40,000 for salaried classTax exemptions on investments:
- Individuals with gross income up to 6.5 lakh rupees will not need to pay any tax if they make investments in provident funds and prescribed equities
- TDS threshold for home rent increased from Rs 1.8 lakh to 2.4 lakh
- Interest income up to Rs 40,000 in post offices and banks made tax free
- Capital gains tax exemptions under Section 54 to be available up to Rs 2 crore. Capital gains exemption to be available on 2 house properties.
Other tax related reliefs:
- Income Tax returns to be processed within 24 hours and refunds will be paid immediately
- Within nearly two years, almost all assessment and verification of IT returns will be done electronically by an anonymised tax system without any intervention by officials
- Rs 6,000 per year assured income support for small and marginal farmers
- Farmers having up to 2 hectare of lands will get Rs 6,000 per year in three equal installments. The scheme will be effective from December 1, 2018.
- Interest subvention for farm loan takers: Farmers affected by natural calamities to get 2% interest subvention and additional 3% interest subvention upon timely repayment
- 2% interest subvention to farmers who pursue animal husbandry, fisheries jobs through Kisaan credit cards
- Kamdhenu scheme for animal husbandry
- Group of Ministers to suggest ways to reduce GST for house buyers
- Direct tax collections increased from Rs 6.38 lakh crore in 2013-14 to almost Rs 12 lakh crore; The tax base is up from Rs 3.79 crore to 6.85 crore
- Businesses with less than Rs 5 crore annual turnover, comprising over 90% of GST payers, will be allowed to file quarterly returns
- Indian Customs to fully digitised exim transactions and leverage RFID for logistic. Govt abolishes duties on 36 capital goods
- GST collections in January 2019 has crossed Rs 1 lakh crore
Sops for workers:
- Rs 3,000 per year pension for unorganised sector workers
- New Pradhan Mantri Shram Yogi Maandhan Yojana for unorganised sector workers with income up to Rs 15,000 per month. Beneficiaries will get Rs 3,000 per month pension with a contribution of Rs 100 per month after retirement. Govt allocates Rs 500 crore for the scheme
- Gratuity limit increased for workers to Rs 30 lak
- Rs 60,000 crore for MNREGA
- Rs19,000 allocated for construction of rural roads under Gram Sadak yojana
- Govt increases defence budget to over Rs 3 lakh crore. Govt will provide additional funds for Defence, if needed.
- We have disbursed 35,000 crore rupees under #OROP scheme in the last few years
- Railway’s operating ratio seen 96.2% in FY19 Vs 95% FY20.
- Railway capex for FY20 set at record Rs 1.6 lakh crore
- Today there is not a single unmanned railway crossing on the broad gauge in India.Fiscal Deficit:
- For FY19, government has revised the fiscal deficit target to 3.4 percent in FY 19. Fiscal deficit for 2019/20 estimated at 3.4 percent of GDP.
- Government’s stated commitment earlier was to bring down the fiscal deficit to 3.1 percent of GDP by the end of March 2020, and to 3 percent by March 2021.
- Current account deficit at 2.5% of the GDP
A single window clearance for filmmakers
- A single window clearance will be made available to filmmakers, anti-cam cording provision to also to be introduced in Cinematography Act to fight piracy
Nine priority sectors for government: To build next-gen infrastructure – physical as well as social;
- To build a Digital India that reaches every citizen;
- Clean and Green India;
- Expanding rural industrialization using modern industrial technologies;
- Clean Rivers – with safe drinking water to all Indians;
- Oceans and coastlines;
- India becoming launch pad of the world;
- Self-sufficiency in food and improving agricultural productivity with emphasis on organic food.
- Healthy India;
- Minimum Government Maximum Governance, with proactive, responsible and friendly bureaucracy
- Allocation for North Eastern region proposed to be increased to Rs 58,166 crore in this year a rise of over 21% from the previous year.
Under Pradhan Mantri Kisan Samman Nidhi, 6000 rupees per year for each farmer, in three installments, to be transferred directly to farmers’ bank accounts, for farmers with less than 2 hectares land holding.
- Government to build 1 lakh digital villages
- For the welfare of farmers and for doubling their income, historic decision was taken to increase MSP by 1.5 times the production cost for all 22 crops
- To ensure cleaner fuel and health assurance, we embarked upon Pradhan Mantri Ujjwala Yojana, a programme to give 8 crore free LPG connections to rural households, 6 crore connections have been given already
- Committee under NITI Aayog to be set up for denoted notified nomadic & semi nomadic communities
State of Economy:
- India is poised to become a $5 trillion economy in next 5 years, $10-trillion economy in the next eight years
- Black money:Committed to eliminating the scourge of black money; anti-black money measures taken have brought an undisclosed income of about 1.30 lakh crore rupees to the fore; 3.38 lakh shell companies were deregistered
- GST has been continuously reduced, resulting in relief of 80,000 crore rupees to consumers; rupees to consumers; most items of daily use for poor and middle class are now in the 0%-5% tax bracket
- Fiscal deficit seen at 3.4 percent in FY 19 and Current account deficit at 2.5% of the GDP
- We have recovered Rs 3 lakh crore through Insolvency and Bankruptcy Code. Govt expects banks on the central bank’s Prompt Corrective Action list to be removed soon.
- Indian GDP:Growth in the last 5 years has been higher than that by any other govt. Spent Rs 2.6 lakh crore in recap of PSU Banks
- Average inflation in UPA government was 10% and we have brought that down to 4 percent. Inflation in December 2018 was 2.1%. If we had not controlled inflation our families would have been spending 35-40 per cent more on daily use items
- Transparent auctioning of natural resources like coal and oil
- Domestic air traffic doubled in the last 5 years
- Over 90 percent of the country covered under sanitation coverage. People have made this a social revolution and i thank the 130 crore people of the country. More than 5.45 lakh villages have been declared Open Defecation Free
- In the past, false promises were made but we have taken targeted expenditure on all dimensions
- Everybody will get electricity connection in the near future. We have provided 143 crore electricity bulbs to the poor
- Ayushman Bharat, the world’s largest healthcare programme, was launched to provide medical care to almost 50 crore people, resulting in Rs 3,000 crore savings by poor families
- Lower costs of Stents & Knee implants have benefited people. Government has announced 14 new AIIMS since 2014
- Loans worth Rs 7.23 lakh crore have been given under Mudra Yojana
*Monthly mobile data consumption has increased 50 times in the last 5 years; cost of data and voice calls in India is possibly the lowest in the world.
Tax Saving Guide
The Budget has reduced the tax burden on small taxpayers by giving full tax rebate to those earning up to Rs 5 lakh a year. But even those with higher income can escape the tax net if they claim tax deductions under various sections. “Even persons having a gross income up to Rs 6.5 lakh may not be required to pay any tax if they make investments in specified savings,” Interim Finance Minister Piyush Goyal said in his Budget speech. For instance, someone earning Rs 7 lakh can be tax free if he invests Rs 1.5 lakh under Section 80C and puts Rs 50,000 in the NPS under Section 80CCD(1b).
The rebate enhances the existing benefit under Section 87A. Till now, those earning up to Rs 3.5 lakh a year were eligible for a tax rebate of Rs 2,500. This year’s proposal has hiked this to Rs 12,500 and raised the eligibility to Rs 5 lakh. Though high income earners will not be affected by the rebate, taxpayers in the lower income group will save up to Rs 13,000 in tax from the proposal. An estimated three crore taxpayers will be out of the tax net, costing the exchequer about Rs 18,500 crore in revenue foregone. “Only low-income taxpayers will gain from the rebate. For others, there is very little change,” says Sudhir Kaushik, Co-founder of tax filing portal Taxspanner.com.
- How much tax will you save?
About three crore low income taxpayers will gain from the rebate.
The only benefit for high income earners is the Rs 10,000 hike in the standard deduction to Rs 50,000. This will bring down the annual tax of salaried taxpayers by a negligible Rs 3,000. Experts have welcomed this move because the impact of the standard deduction was curtailed last year by the removal of tax exemption to transport allowance and medical reimbursements. “Increasing the standard deduction to Rs 50,000 will make the benefit more meaningful. The move will benefit 80-90% of salaried taxpayers,” says Archit Gupta, Founder and CEO, Cleartax.com.
Focus on tax planning
The Budget proposals are likely to put greater stress on tax planning. Taxpayers who are very close to the threshold limit will have to ensure that their income does not exceed Rs 5 lakh. Right now, anybody with an annual taxable income of up to Rs 3.5 lakh is eligible for a tax rebate of Rs 2,500 under Section 87A. But that rebate vanishes if the income exceeds Rs 3.5 lakh by even one rupee.
Many taxpayers are also not aware that interest from fixed deposits, bonds and certain small savings schemes is fully taxable. It is added to the income of the taxpayer and taxed at the normal rate. Such taxpayers might skip declaring this income in their return and claim the rebate. But they might be in for a shock if the addition of this interest takes their total income above the Rs 5 lakh threshold and makes them ineligible for the rebate. “Most taxpayers can claim this rebate only at the time of filing their return. Only at the time of filing their tax return will they know exactly how much is their total income and deductions,” says Gupta of Cleartax.com.
Experts say the Budget proposals will encourage taxpayers to save aggressively in tax saving options. For instance, the NPS benefit under Section 80CCD (2) can reduce the taxable income significantly. Under this, up to 10% of the basic pay of the employee put in the NPS by the employer is tax deductible. “Now that 60% of the maturity corpus of NPS is tax free and one can withdraw for emergencies, it makes sense to use the pension scheme for saving tax,” says Kaushik of Taxspanner.com.
It is also believed that the Budget will make tax compliance easier for taxpayers. “The additional rebate and relief from TDS would not only reduce tax burden but would also bring down cost of compliance for tax payers and cost of tax administration and interest outgo on refunds for the Government,” says Kaushik Mukerjee, Partner-Tax & Regulatory Services, PwC. Though the Budget has brought cheer to taxpayers, there is nothing in particular for senior citizens above 60 and the very senior citizens above 80. Last year’s Budget had raised the TDS threshold for senior citizens to Rs 50,000. Also, very senior citizens have a basic exemption limit of Rs 5 lakh. So the proposed rebate will not affect them at all.