The interim Finance Minister, Mr. Piyush Goyal presented the Union Interim budget on February 01, 2019. With the general elections to be held in the next few months the interim finance bill will have to stand the test of time and pass through the Final Bill. The Bill aims to balance fiscal discipline with welfare measures for the upcoming assessment year. The main highlight of which is direct cash transfer plan for the farmers who are in distress and a mega pension plan for workers in the unorganized sector. The budget also did not see a change in tax slab rates as the incumbent government usually does not announce major policy changes or taxation proposals in the Interim Budget. Mr. Goyal emphasized to become a 5 trillion dollar economy in the next five years and aspire to become a 10 trillion dollar economy in the next eight years.
He has however brought some significant changes in the tax structure, where the government aims to reduce the tax burden for the middle class citizens. In this regard, standard deduction for salaried persons which was introduced by the current government has been increased from Rs. 40,000 to Rs. 50,000. Income tax assesses with annual income upto Rs. 5 lakh will get the benefit of full tax rebate. TDS threshold on rental income has been raised to Rs. 2.4 lakh and TDS on interest income from deposit in banks and post offices have been raised from Rs.10,000 to Rs.40,000. In terms of capital gains perspective, the benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, however this option can be exercised only once in a lifetime.
The government also announced substantive measures focusing on the farming sector where the below policies were announced/ revised.
- Farmers affected by severe natural calamities, where assistance is provided under National Disaster Relief Fund will be given the benefit of interest subvention of 2% and prompt repayment incentive of 3% for the entire period of reschedulement of their loans.
- Introduction of PM Kisaan Samman Nidhi where farmers will receive Rs. 6000 annually directly into their bank accounts. About 120 million farmers having 2 hectares of land will be eligible for the scheme.
Another point to note is that the Government has given more focus to the defence, where the budget allocation increased to Rs.3,00,000 Crores. Also MNREGA, which provides at least 100 days of unskilled work has received about Rs.60,000 Crores in this year’s allocation.
The fiscal deficit pegged at 3.4% of Gross Domestic Product for the year 2019-20 and the target for 2020-21 was set at 3%. Some of the other highlights in the budget include:
- One lakh digital villages planned in the next five years.
- 25 per cent of sourcing for government projects will be from the MSMEs, of which three per cent will be from women entrepreneurs.
- The 22nd AIIMS to come up in Haryana.
- Decision taken to increase MSP (minimum support price) by 1.5 times the production cost for all 22 crops.
- ESI cover limit increased to Rs. 21,000. Minimum pension also increased to Rs. 1000.
- Single window clearance for filmmaking to be made available to Indian Filmmaker, anti- camcording provision to be introduced to cinematography Act to combat film privacy.
- Fund allocation for the Northeast region increased to 58,166 crore, a 21% rise over last year for infrastructure development.