NEW DELHI, Feb 1 - Making a big populist push in its final Budget before elections, the Narendra Modi-government today 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 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.
However, very senior citizens (aged 80 years and above) are not impacted by this change as their total income up to Rs 5 lakh was anyway not subject to tax.
The rebate will cost the government Rs 18,500 crore in revenue.
At a post Budget press conference, Goyal promised to look into giving relief to taxpayers with an income of over Rs 5 lakh in the main Budget to be presented in July.
In the Budget for 2019-20, he also raised standard deduction by Rs 10,000 to Rs 50,000 which will provide a benefit ranging from Rs 2,080 to Rs 3,588 depending on income levels.
Other proposals include increase in the TDS exemption limit from Rs 10,000 to Rs 40,000 for bank interest, on rental income from Rs 1.8 lakh to Rs 2.4 lakh, extending housing income exemption from one to two self-occupied houses, capital gains from sale of house property being allowed to be invested in two properties instead of one and the 10-year window for registration of affordable housing projects for getting tax relief.
As was widely anticipated, Goyal announced an income support scheme for 12 crore small and marginal farmers by providing Rs 6,000 in their bank accounts in three equal installments in a year, which 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 Goyal 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�.
The farm income support scheme will result in the government breaching its 3.3 per cent fiscal deficit target from the current year and slipping on 3.1 per cent target for the next. Fiscal deficit for both the years has been put at 3.4 per cent of the GDP.
Wooing farmers, an interest subvention of 2 per cent to those pursuing animal husbandry and fisheries and to farmers hit by natural calamities was announced in the Budget. An additional 3 per cent interest subvention will be given to farmers for timely repayment of loans.
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.
For 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
Highlights
Following are the key highlights of the interim Budget 2019-20 presented by Finance Minister Piyush Goyal in the Lok Sabha on Friday
� Income up to Rs 5 lakh exempted from income tax
� Standard Deduction raised to Rs 50,000 from Rs 40,000
� Direct tax proposals to provide Rs 23,000 cr relief to 3 cr taxpayers
� Persons with gross income up to Rs 6.50 lakh not required to pay any income tax if they make investments in provident funds, specified savings and insurance
� 12 crore small, marginal farmers to be provided assured yearly income of Rs 6,000 under PM-KISAN scheme
� TDS threshold raised to Rs 40,000 from Rs 10,000 on interest earned on bank/post office deposits
� Tax exempted on notional rent on a second self-occupied house
� TDS threshold for deduction of tax on rent to be increased to Rs 2.40 lakh from Rs 1.80 lakh
� Tax benefits for affordable housing extended till March 31, 2020
� Tax exemption period on notional rent on unsold inventories extended to two years from one year
� Allocated Rs 20,000 crore in 2018-19, Rs 75,000 crore for FY2019-20 for PM-KISAN scheme
� Interest subvention of 2 pc during disaster to be provided to farmers for the entire period of reschedulement of loan
� 2 pc interest subvention to farmers for animal husbandry and fisheries activities; additional 3 pc in case of timely repayment
� Rs 3,000/month pension for 10 cr unorganised sector workers with contribution of Rs 100/55 per month under PM Shram Yogi Maandhan scheme
� Fiscal deficit pegged at 3.4 pc of GDP for 2019-20; target of 3 pc of fiscal deficit to be achieved by 2020-21
� Current Account Deficit pegged at 2.5 pc of GDP for FY20
� Total expenditure to rise by 13 pc to Rs 27.84 lakh cr in FY20
� National Education Mission allocation increased by about 20 pc to Rs 38,572 cr
� Allocation for Integrated Child Development Scheme increased by over 18 pc to Rs 27,584 cr
� Disinvestment target of Rs 80,000 cr in 2018-19 likely to be met; Target for FY20 set at Rs 90,000 cr
� 25 pc additional seats in educational institutions to meet the 10 per cent reservation for the poor
� Defence budget to cross Rs 3,00,000 cr for the first time
� Allocation for Northeast increased by 21 pc to Rs 58,166 cr in FY20
� Railways to get capital support of Rs 64,587 cr in FY20. � PTI
