This is the first ever budget by a Finance Minister who is Chartered Accountant and who has tried to keep it balanced. It is an interim pre-election budget for FY 2019-20. Focusing on upliftment of Rural India and farmers, urban middle-class people and targeting housing / real estate sectors.
The Finance Minister has beautifully managed the fiscal deficit at a low 3.4% of the GDP despite a big increase in expenditure on farmers by ₹ 75,000 crore and on other schemes and tax incentives.
The highlight of the budget includes “Pradhan Mantri Kisan Samman Nidhri” (PM-KISAN) under which a farmer owning up to 2 hectares of land, will receive direct income support up to ₹ 6,000 per year from Govt. of India, payable in 3 equal instatements. The first installment as per Finance Minister would be released before March 31, 2019. ₹ 75,000 crore has been allotted for this FY 2019-20.
Another highlight is the “Pradhan Mantri Shram-Yogi Maandhan” a mega pension yojna for the unorganised sector workers with monthly income up to ₹ 15,000, who shall get assured pension of ₹ 3,000 per month, after retirement from the age of 60 years ownwards, on a monthly contribution of just ₹ 55 to ₹ 100 per month by each of them and equal contribution from the Government.
Entertainment industry has been given a great relief by the Scheme of single window clearance, as this industry is major employment generator.
On the Direct Tax, the budget has provided full rebate from tax if the total income per year is up to ₹ 5 lakhs, but every person availing this benefit still needs to file the return of income. The Government does not wish to reduce its tax base.
For the salaried class, the benefit of standard deduction from total income u/s. 16(ia) of the IT Act, has been increased to ₹ 50,000 from ₹ 40,000. Under the head capital gains, sec. 54 of the IT Act, a person can avail the benefit of exemption from taxation, by investing the sale proceeds of one residential house into the purchase / construction of 2 residential houses instead of one residential house., subject to the limit of capital gains derived up to ₹ 2 crore and further, this benefit can be availed only once in a lifetime.
To ease out the growing needs of urban families and difficulty of the middle class maintaining families at two places because of job, children’s education, parent’s stay etc., a person can now opt to choose 2 self-occupied residential house properties as against one to get the income tax exemption on notional rent u/s. 23(4) of IT Act.
Giving relief to the real estate sector, the FM has granted the non-applicability of income tax on notional rent on unsold inventory of building up to 2 years from 1 year from the end of the year in which completion of certificate is obtained.
The thresholding limit to make TDS on interest on bank / post office deposits has been raised to ₹ 40,000 as against ₹ 10,000 u/s. 194A and thresholding limit is raised to ₹ 2,40,000 as against ₹ 1,80,000 on payment of rent u/s. 194-I.
There is a substantial increase in the IT tax base and in order to maintain the transparency, the FM has proposed to eliminate the human interface between the tax official and tax payer by introducing all verifications and scrutiny assessments only electronically, through anonymous set of arrangements, manned by tax experts and officials
Overall the budget promises to uplift the rural economy and to wipe out the tears of the urban lower and middle class and at the same time containing the overall fiscal deficit, thus the Finance Minister has done a perfect balancing act which is commendable
In this issue we are covering certain important topics in direct and indirect taxes written by eminent authors, which will be of interest to the readers.
CA. H. N. Motiwalla