India Interim Budget 2019
“NOT Merely an interim budget...”
Mr Piyush Goyal presented his first budget, more a report card-cummanifesto. He may well be presenting future budgets as the country’s Finance Minister, should the current government be back post elections. Much was spoken of transparency and accountability, particularly in the financial sector. The Insolvency and Bankruptcy Code (‘IBC’) was highlighted with much gusto, as were other major policy revamps and infrastructure initiatives. An overview was given of rural upliftment, pension scheme for the less privileged, women empowerment, etc. The theme was “5 years back vs now”. It was a well presented report and, if voters were glued to the TV, certainly impactful. Demonetization and other efforts to rout corruption were there too. Then the scene shifted to 2030 and a sort of 10 point wish list emerged viz. future infrastructure to match the likely trillion dollar economy, digital India, pollution management, clean rivers, getting our astronauts into space by 2022, better food production, a proactive bureaucracy, etc. Sounds good. The challenge which presently sits before us is to give more teeth to IBC and real estate law, as also simplify GST. Exports need bigger thrust to balance the import bill. Credit offtake from banks should be as much worry as recovering NPA’s. Certainly, privatizing banks and some other business should be priority. He closed with a fiscal deficit projection of 3.4 per cent, which is not too bad. But the best came in form of tangible tax sops aimed at the middle class i.e. no tax for those earning less than `5 lacs, dropping notional rent for up to 2 houses and doing away with tax withholding on smaller interest earnings. We are certainly cheering, and if the increasing tax base is encouraging the government to think like this, we may well have lesser tax litigations in the years ahead.
This is a synopsis of the India Interim Budget 2019-20 presented by the Finance Minister on February 1, 2019. The India Fiscal Budget 2019-20 (annual fiscal budget) shall be presented post the general elections, by the newly elected government.
The proposals contained in the Finance Bill are subject to ratification by the Parliament.
- The basic tax slabs for individual and HUF remains unchanged i.e.
- Tax rates on partnership firms and co-operative societies remain unchanged. Surcharge at 12 per cent where income exceeds `10 million.
- Corporate tax rate remains unchanged i.e.
- Health and Education cess at 4 per cent remain unchanged.
- Threshold for Standard deduction enhanced from `40,000 to 50,000.
INCOME FROM HOUSE PROPERTY
- No notional rental income on second self-occupied house and aggregate deduction for interest on borrowed capital capped at `0.2 million.
- Time period of exemption for considering notional rental income on unsold property held as stock in trade enhanced from 1 to 2 years – relief to real estate sector.
- Deduction of Capital gains under section 54 i.e. on re-investing sale proceeds of long term capital asset, investment to be made in one residential unit in India, extended to two residential unit, where capital gain does not exceed `20 million. The option to be exercised once in a lifetime.
REBATES AND DEDUCTIONS
- Deduction of 100 per cent deduction of profits from developing and building approved affordable housing project extended for one more year, i.e. up to April 1, 2020.
- Resident individuals with annual income up to `0.5 million now eligible for higher rebate of up to `12,500.
- Threshold for tax withholding enhanced
î On interest income from banks/co-operative society/ post office from `10,000 to 40,000.
î On rental income from `0.18 to 0.24 million.
COMMERCE AND TRADE FOCUS
- Pradhan Mantri Kisan Samman Nidhi to be launched with an outlay of `750 billion (US$10.55 billion). The scheme to provide direct income support at the rate of `6,000 (US$84.38) per annum to farmers having cultivable land up to 2 hectares.
- Allocation to Rashtriya Gokul Mission increased to `7.5 billion (US$105.47 million) to boost Animal Husbandry. Rashtriya Kamdhenu Aayog announced for enhancing genetic productivity. A new Department of Fisheries to be created to focus attention on development of Fisheries.
- Farmers affected by natural calamities to get 2 per cent interest subvention on loans taken on Kisan Credit Card. An additional 3 per cent interest subvention to be given on timely repayment.
- Pradhan Mantri Shram Yogi Maandhan to be launched for workers in the unorganised sector with monthly income up to
`15,000 (US$210.94). Beneficiaries to get a monthly pension of `3,000 (US$42.19) post retirement.
HEALTH, EDUCATION & SOCIAL PROTECTION
- 10 per cent reservation introduced for the poor in educational institutions and government services.
- For economic and social advancement of Scheduled Castes (‘SCs’) and Scheduled Tribes (‘STs’), the total allocation increased to `768.01 billion (US$10.80 billion) for SCs and
`500.86 billion (US$7.04 billion) for STs.
- `600 billion (US$8.44) allocated towards MGNREGA.
MEDIUM SMALL AND MICRO ENTERPRISES (‘MSME’)
- GST registered units to get an interest rebate of 2 per cent on loans in excess of `10 million (US$140,627.19)
INFRASTRUCTURE AND DEFENCE
- Capital support for Railways proposed at `645.87 billion (US$9.08 billion).
- Budgetary allocation for the North Eastern States proposed to be increased by 21 per cent to `581.66 billion (US$8.18 billion).