With just 2 months to go for LokSabha 2019 elections, The Union Government had tabled the Interim Budget for the Financial 2019 – 2020. The newly elected Government would present the full budget in the month of July. The proposals that were announced while reading out the budget are going to benefit nearly 57 crore people. This interim budget reaches out to all the section of the society – farmers, poor, middle-class and labours.
Interim Union Budget: Key Announcements
- Farmers: Farmers owning land of up to 2 hectares would receive a sum of ₹ 6,000 as financial assistance. The amount would be transferred in 3 instalments – ₹ 2,000 in every 4 months. Various estimates suggest that there are 12 crore families who earn their livelihood through agricultural activities.
Agriculture plays a vital role in the Indian economy. Over 70% of households depend on agriculture as their principal source of Income. This sector generates the highest amount of employment in India.
This move comes at a time when loan waiver for farmers has become a burning issue. Here, the Union Government went a step forward and introduced a long term financial assistance program for the farmers. The scheme is known as PM – KISAN (Pradhan Mantri – Kisan Samman Nidhi) Yojana. The scheme shall be effective from September 1, 2018.
- Labours: People who are working in the unorganised sector and are above the age of 60 years are entitled to receive a monthly pension of ₹ 3,000. Anyone working in the unorganised sector and are aged between 18 to 40 years, having a monthly income of less than ₹ 15,000 are eligible for the scheme. This scheme shall be known as Pradhan Mantri Shram Yogi Maandhan yojana. Here, eligible applicants will have to pay a premium amount at regular intervals and the Government will also deposit the equal amount of money in the account of the policyholder. This scheme would benefit around 40 – 42 crore people.
- Middle Class: Full income tax rebate on an annual income of up to ₹ 5,00,000. This announcement is going to benefit nearly 3 crore taxpayers.
These 3 announcements are going to benefit around 55 – 57 crore people. Some estimates also suggest that the numbers could go up to 62 crores.
Interim Union Budget: No Change in Income Tax Slabs
Perhaps, this is the most misunderstood part of the budget. I would like to clarify that there is no change in the existing Income Tax slabs. They remain as it is. As per existing rules, those whose annual income varies between ₹ 2.5lakhs to ₹ 5lakhs are now eligible to receive a rebate of ₹ 12,500 (Presently, ₹ 2,500). So, you are effectively paying ZERO taxes for an annual income of up to ₹ 5lakhs.
Additionally, you can invest up to ₹ 1.5lakhs and can claim it under deductions. Standard deduction limit has been raised to ₹ 50,000. Home loan interest benefit of up to ₹ 2lakhs. Deductions under contribution towards NPS has been raised to ₹ 50,000. You can claim up to ₹ 75,000 deduction towards medical insurance premium. The TDS threshold for interests earned on bank and post office deposits has been raised to ₹ 40,000 from the current ₹ 10,000.
But, if your income exceeds ₹5lakhs even by ₹ 1 then, you’ll be charged as per existing slabs and you’ll not be eligible for the rebate.
Other key announcements:
- Capital gain benefit for up to 2 houses.
- Highest ever allocation for the Defence budget – ₹ 3lakhs+ crores. Additional funds, if required.
- 1 lakh digital villages to be set up in the next 5 years.
- Within 2 years, Tax assessments will be done electronically.