Interim Budget 2019 – what’s good and what’s bad! Let’s find out.
The interim union budget 2019-2020 was announced by Finance Minister Piyush Giyal on Feb 1st in Lok Sabha and it focuses largely on middle class and the rural population of India. This budget does not make major tax changes and the government plans to keep the fiscal deficit to 3.4% of GDP and current account deficit to 2.5% for FY 2019-2020. This budget draws its attention towards rural economy and low-income salaried citizens since union election is just around the corner and majority of our population falls under these categories.
This budget also focuses upon macro-economic plans and to boost sustained economic growth, it tends to expand capital towards enhanced physical infrastructure, better healthcare system, rural industrialization, space programmes, digitalization etc. amongst others.
When we talk about the 2019 union budget, we must know that it is an interim budget and not a full budget. For the uninitiated, an interim budget lasts for 2 months instead of a year and deals with the expenditure side of the Government’s budget. An interim budget is presented by the ruling government if it doesn’t have time to present a full budget due to the upcoming national elections.
Now let’s find out what are the hits and misses!
- If you draw and income of up to Rs. 5 lakh then, you are exempted from income tax
- Over 3 crore tax payers will get relief through Rs.23,000 fund to be proposed through direct tax
- You would be exempted from paying income tax if you earn a gross income of Rs.6.5 lakh and make investments in insurance, provident funds and specified savings
- The PM-Kisan scheme promises to pay an assured yearly amount of Rs.6000 to 12 crore to small and marginal farmers
- The Tax Deducted at Source (TDS) threshold to be raised from Rs.10,000 – Rs. 40,000
- The tax benefits have been extended till 31st March, 2020 for affordable housing
- Rs.75,000 crore to be allocated for the PM-Kisan scheme
- Farmers will get an interest subvention of 2% during disasters
- Workers working in unorganized sector will be eligible to receive a monthly pension of Rs.3000 with a contribution of Rs.100-Rs.55 per month under the PM Shram Yogi Maandhan Scheme
- In order to meet the 10% reservation for the poor, the educational institutions will get 25% additional seats.
- You would be exempted from tax if you are staying in a second self-occupied house on notional rent
- And most importantly, India is going to become a $5 trillion economy in the upcoming 5 years and a $10 trillion economy in the next 8 years!
The interim union budget 2019 has relieved many people from financial burden by providing a tax rebate and extending the standard deduction. However, it has not touched points on GST and any relief to the automotive industry. Now, let’s explore what it missed!
- According to Manas Mehrotra, Chairman, Incubex NestaVera, a co-working space based in Bengaluru – “The government seems to have forgotten the one booming segment of the realty industry — co-working spaces. Some measures could have been taken to bolster this sector, especially in the planned smart cites.”
Henceforth, a major booming segment of professional industry has been missed out in the latest budget proposed by the Financial Minister.
- As per a recent announcement by the government of India, India is the second largest start-up hub in the world. And if we consider this fact, the budget 2019 has totally ignored this area. “Co-working firms were expecting that the Budget this year would curb or altogether eliminate the Angel tax [levied on sums invested in companies by angel or independent investors]. The Angel tax hurts the start-up ecosystem and indirectly the co-working segment. Angel funding is currently considered income and taxed at the full rate of 30%,” says Anuj Puri, chairman of Anarock Property Consultants.
- No special measures are taken to curb GST!
- The new budget of 2019 has majorly missed on job boosting. There were no announcements regarding the same.
- Make in India, an initiative to promote manufacturing in the country, is completely out of focus in the interim budget 2019. This in turn will not bolster the manufacturing activity in the country.
- The automobile industry was expecting a tax realization on two-wheeler’s and cars and auto component to flat 18 percent, which hasn’t appeared in the budget presented.
From the above mentioned hits & misses, we can come to the conclusion that this interim budget acts as a sigh of relief for the urban and middle class population. It’s a good fact to consider, but it would be interesting to check how far it gets implemented in reality as the Union Election is only two months away!