NEW DELHI: Making a big populist push in its final budget before elections, the Narendra Modi government on Friday exempted people with an earning of up to Rs 5 lakh from payment of income tax, announced an annual cash dole-out of Rs 6,000 to small farmers and provided a monthly pension of Rs 3,000 to workers in the unorganised sector.
Converting what was supposed to be an interim Budget or a vote-on-account into an almost full-fledged Budget announcement in the Lok Sabha, Finance Minister Piyush Goyal proposed an array of incentives for both the middle-class and farmers, whose disenchantment was said to have cost the BJP dearly in recent assembly elections.
Over 3 crore salaried class, pensioners, self-employed and small businesses with total income of up to Rs 5 lakh will have to pay nil tax now against their current liability of Rs 13,000 (including health and education cess) in view of the relief Goyal provided in form of a ‘rebate’. Individuals with gross income up to Rs 6.5 lakh will not need to pay any tax now, if they make tax saving investments of Rs 1.5 lakh under Section 80C of the Income Tax Act.
The income support scheme for 12 crore small and marginal farmers will cost Rs 75,000 crore a year to the government. The eligibility for the scheme, called Pradhan Mantri Kisan Samman Nidhi, will be ownership of less than two hectares of cultivable land. Though the finance minister said the scheme will be implemented from the current fiscal year, where it will cost Rs 20,000 crore, it wasn’t clear how the beneficiaries would be identified.
A mega pension scheme was introduced to provide a monthly pension of Rs 3,000 with a contribution of Rs 100 per month for workers in the unorganised sector after 60 years of age.
While Prime Minister Narendra Modi said the interim budget was merely a “trailer” of what will guide India towards prosperity after the Lok Sabha polls, Congress president Rahul Gandhi said that the government was giving Rs 17 a day to farmers after “destroying” their lives in last five years. Former finance minister P Chidambaram termed the union budget as an “account for votes” and not a “vote on account”.
While defence allocation has been raised by 7 per cent to over Rs 3 lakh crore, subsidy bill has gone up to Rs 2.97 lakh crore from Rs 2.66 lakh crore. Target for revenue from disinvestment of government stake in PSUs has been raised to Rs 90,000 crore from Rs 80,000 crore and dividend from the RBI and other banks has been pegged at Rs 82,900 crore.
The relief in income tax for the middle class came in form of a rebate. A rebate is different from a general exemption which would have meant income up to Rs 5 lakh for all would have been exempt from taxes and taxes would have to be paid only on income in excess of that. Anyone earning more than Rs 5 lakh annually will continue to pay taxes at the prevailing rates — no tax on first Rs 2.5 lakh, 5 per cent on income between Rs 2.5 and 5 lakh, 20 per cent on income between Rs 5 lakh and Rs 10 lakh and 30 per cent on earnings of over Rs 10 lakh. (PTI)
TALKING POINTS
TAX
Full rebate up to Rs 5 lakh annual income after all deductions
Standard deduction increased from Rs 40,000 to Rs 50,000
Exemption on tax on second self-occupied house
Ceiling limit of TDS u/s 194A increased from Rs 10,000 to Rs 40,000 for women
Ceiling limit of TDS u/s 194I increased from Rs 180,000 to Rs 240,000
Capital tax Benefit u/s 54 increased from investment in one residential house to two residential houses
Minimum 14 per cent revenue of GST to states by central government
Recommendations to GST Council for reducing GST rates for home buyers
OTHER AREAS
Rs 6,000 per annum to be given to every farmer having up to 2 hectare land. Applicable from September 2018. Amount will be transferred in 3 installments
2 per cent interest subvention for farmers pursuing animal husbandry.
2 per cent interest subvention for farmers affected by natural calamities and additional 3% interest subvention for timely payment.
Free gratuity limit increased to Rs 20 lakh from Rs 10 lakh
Bonus applicable for workers earning Rs 21,000 monthly
26 weeks of maternity leave to empower women
