- Date : 01/02/2019
- Read: 6 mins
Let's look at the budget announcements and key takeaways that you need to know
In what is the last Budget of the BJP-led government before the country goes into the election, several popular sops have been announced. This is in addition to the tax reliefs as the interim Finance Minister Piyush Goyal pointed out that some of the revenue windfalls the government had during the last fiscal as well as during the four-and-a half-year regime. Let’s look at the key budget declarations from February 1 Union Budget.
At a macro level
- India is on track to be a 5 trillion dollar economy in the next five years and 10 trillion in next eight years.
- Fiscal deficit stands at 3.4 % in the financial year 2018-2019 and the current account deficit stands at 2.5% of the GDP.
- Average inflation stands at 4%, down from the previous government’s 10%. Inflation rate for December 2018 was 2.1%.
- Undisclosed income of about Rs 1.3 lakh crore has been unearthed due to anti-black money measures. 3.38 lakh shell companies have also been de-registered.
- GST collections have been on the rise in spite of rates being continuously reduced. Collections in January 2019 was over Rs 1 lakh crore.
- Direct tax collections have almost doubled in the last five years to Rs 12 lakh crore, while the tax base has increased from Rs 3.79 crore to Rs 6.85 crore.
- Rs 3 lakh crore has been recovered through the Insolvency and Bankruptcy Code.
- Under the Swacch Bharat campaign, 90% of the country has been covered and 5.45 lakh villages are now free from open defecation.
- Medical care has been provided to 50 crore people and Rs 3,000 crore of their money have been saved as a result, under the Ayushman Bharat programme.
- Rs. 7.23 lakh crore worth of loan has been provided under the Mudra Yojana, a majority of which has been to women.
Tax benefits and Allocations
Impact on the taxpayer and business
- Tax rebate for income up to Rs. 5 lakh for individual taxpayers. 3 crore taxpayer are expected to benefit from this step.
- Standard deduction raised by another Rs. 10,000 to Rs. 50,000.
- TDS deduction for home rent limit has been raised from Rs 1.8 lakh to 2.4 lakh
- Interest income from bank accounts and post office up to Rs 40,000 is not taxable
- Gratuity limit increased from Rs 10 lakh to Rs 30 lakh
- Income Tax returns will be processed within 24 hours and refunds will be processed immediately
- Human interaction on assessment, verification and scrutiny of IT returns to be eliminated completely in the next two years using computerised tax system without any officials involved
- Capital gains tax exemptions under Section 54 of the Income Tax Act will now be available up to Rs 2 crore. Besides, capital gains exemption will now be available for two house properties instead of one.
- GST return has been made quarterly from monthly for businesses with less than 5 crore annual turnover, which will benefit 90% of all businesses.
Social Welfare Sops
- Pradhan Mantri Shram Yogi Maandhan Yojana launched and Rs 500 crore allocated, for the unorganised sector workers who have an income of up to Rs 15,000 per month. Under the scheme beneficiaries will be eligible for a pension of Rs 3,000 per month for a contribution of Rs 100 per month post retirement. Up to 10 crore unorganised workers to benefit from this scheme.
- Govt announces Pradhan Mantri Kisan Samman Nidhi scheme for farmers having up to 2 hectare land. As many as 12 crore farmers are likely to get Rs 6,000 per year under the scheme, in three instalments. It will be transferred directly to the farmers' bank accounts.
- 2% interest subvention announced for farm loans of farmers suffering from natural calamities, with a further 3% subvention upon repayment. This scheme comes in place of crop loan rescheduling. Similar 2% subvention given to farmers engaged in animal husbandry and fisheries.
- Pradhan Mantri Ujjwala Yojana, designed to give 8 crore free LPG connections to rural households, of which 6 crore connections have already been given.
- NITI Aayog committee is proposed to be set up to for de-notified nomadic & semi nomadic communities of the country.
- A massive Rs 60,000 crore is being allocated for MNREGA this year. This addresses the increasing unemployment problem to an extent.
- Allocation for Rashtriya Gokul Mission scheme has been increased to Rs 750 crores, largely for protection of cows. With a mission in place, cow vigilantism should ideally be eliminated by institutionalised protection of the popular bovine.
Nation and Infrastructure Allocations
- Defence budget earmarked at an all-time high of Rs 3 lakh crore, with importance on border security.
- Railways have been allocated Rs 64,000 crore for this year. Notably, once completed, Vande Bharat Express will provide world class train experience in India.
- Rs 19,000 crore allocated for construction of rural roads under Gram Sadak Yojana.
- Govt increases allocation for north-eastern states by 21%. Accordingly, it is expected to be increased to Rs 58,166 crore this year.
The Finance Minister also spelt out the various priorities of the government in his Budget speech. He pointed out the importance of a next generation physical and social infrastructure and building of a digital nation that reaches out to all its citizens. He highlighted the importance of rural industrialisation using modern technologies and self-sufficiency in organic food. Importance was also given to building a clean, green and healthy India with clean rivers, oceans and coastlines.
Experts have pointed out that the Finance Minister doesn’t directly address the issue of “45-year high” unemployment in his budget. Another low is that the government missed the fiscal deficit target for 2018-19, as current account deficit stands at 2.5%.
The government announced massive benefits for the rural sector and the working class, unorganised as well as organised. It is also high on social welfare with schemes and allocations for farmers, rural employment, backward regions as well as the middle class and small businesses. As it is with every pre-election Budget, Interim Budget 2019 seems to offer something for everyone.
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