Feb 5, 2019

Gyaankosh – Interim Budget 2019-20

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Key Highlights:

 

  • Government to allocate ₹19,000 crore for Pradhan Mantri Gram Sadak Yojana in FY20.
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  • Fiscal Deficit in 2018-19 has been revised to 3.4% of GDP against the target of 3.3% of GDP. Slow progress in disinvestment process and lower than expected GST collection are said to be the main reason for revision in fiscal deficit.
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  • “We controlled double-digit inflation. Inflation is a hidden and unfair tax; from 10.1% during 2009-14, inflation in December 2018 was just 2.1%. We have broken the back of back-breaking inflation,” Goyal said.
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  • ₹750 crore to be allocated for protection of cows under Rashtriya Gokul Yojana.
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  • Gratuity exemption limit tripled to ₹30 lakh from ₹10 lakh.
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  • Unorganized labors to get ₹3000 per month after the age of 60 under Mega Pension Yojana. Informal workers joining the scheme at 18 years will pay ₹55 per month and ₹100 per month, if they join at the age of 29. The scheme will benefit 10 crore workers in unorganized sector.
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  • 8 crore LPG cylinders to be distributed by next year under PM Ujwala Yojana.
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  • Government projects to source 25% material from SMEs, 3% from only women-owned SMEs.
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  • Rural employment guarantee programme gets an additional ₹5,000 crore boost which totals the investment under the programme to ₹55,000 crores. Under rural employment guarantee programme small farmers and agricultural labourers get 100 days of unskilled employment in times of rural distress.
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  • India’s defence sector gets a major boost as investment crosses ₹3 lakh crore mark in FY20 Budget. An extra investment has been made to secure borders and to maintain preparedness of highest order.
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  • Loan worth ₹3 lakh crore have been recovered from big corporate loan defaulters under NDA government.
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  • A budgetary support of ₹64,587 crore has been allocated to Railways for FY20.
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  • ₹75,000 crore has been allocated under Prime Minister Kisan Samman Nidhi scheme for FY20. Under this scheme small and marginal farmer owning less than 5 acres of land will receive instalment as direct income support. In addition to this, the budget also approved doubling the interest subsidy on crop loans and raised the interest subvention when farm loans are restructured in times of natural calamity.
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  • Income Tax Returns (ITR) to be processed within 24 hours and refunds will be issued simultaneously.
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  • ₹1.58 trillion has been allocated for Indian Railways to expand the railway infrastructure in the country.
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  • As per Finance Minister Piyush Goyal, India is poised to become $5 trillion economy in 5 years and aspires to become $10 trillion economy in the next 8 years.
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  • Government also laid out a 10-year roadmap to improve ease of living and make India a pollution free country by leading world in transport and energy storage devices. The government also wants to bring down dependencies on imports for energy needs. A clear roadmap was also envisioned for people travelling in electric cars.
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  • “Urgent action needed to increase hydrocarbon production to decrease imports; change in bidding procedure and exploration procedure being implemented,” Goyal added.
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  • Total expenditure rose by 13% in FY19. Total expenditure is seen at ₹27.84 trillion whereas capital expenditure is seen at ₹3,36,292 crore for FY20.
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  • People with annual income up to ₹5 lakh to get full tax rebate.
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  • People with annual income up to ₹6.5 lakh will be liable for tax rebate if they make tax related investments.
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  • Standard tax deduction limit to be raised from ₹40,000 to ₹50,000 for salaried employees.
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  • No Tax Deduction at Source (TDS) on post office savings up to ₹40,000.
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  • No Tax Deduction at Source (TDS) on rental income raised up to ₹2.4 lakh per year from ₹1.8 lakh per year.
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  • Tax on notional rent on unsold inventory to not be paid for 2 years.
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  • Benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to 2 crore rupees; can be exercised once in a lifetime.
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  • Benefits under Sec 80(i)BA being extended for one more year, for all housing projects approved till end of 2019-2020.
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  • Direct tax collections up from 6.38 lakh crore rupees in 2013-14 to almost 12 lakh crore rupees; tax base up from Rs 3.79 crore to Rs 6.85 crore. 99.54% returns have been accepted without any scrutiny. In January 2019, GST collections has crossed 1 lakh crore rupees.
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  • GST has been continuously reduced, resulting in relief of 80,000 crore rupees to consumers; most items of daily use for poor and middle class are now in the 0%-5% tax bracket.
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  • GST is the undoubtedly the biggest taxation reform implemented since independence; through tax consolidation, India became one common market; inter-state movements became faster through e-way bills, improving Ease of Doing Business.
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  • Within almost two years, almost all assessment and verification of IT returns will be done electronically by an anonymized tax system without any intervention by tax officials.
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  • “Cost of data and voice calls in India is now possibly the lowest in the world; mobile and mobile part manufacturing companies have increased from 2 to 268,” Piyush Goyal said.
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  • Single window clearance for filmmaking to be made available to Indian filmmakers, anti-camcording provision to be introduced to Cinematography Act to combat film privacy.
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  • Allocation for north-eastern region proposed to be increased to Rs 58,166 crore in this year a rise of over 21% from the previous year.
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  • Two per cent interest subvention to farmers pursuing animal husbandry and fisheries.
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  • The 4R approach has been implemented to ensure clean banking -

1. Recognition

2. Resolution

3. Recapitalisation

4. Reforms

 

Analysis of Budget:

 

  • The interim budget was a budget for the salaried, middle-class, pensioners with the middle-class income group expected to reap benefits. For people with total income up to Rs. 5 lakhs there is an assured tax benefit including up to ₹13,000 at this level. Increase in standard deduction by ₹10,000 for salaried taxpayers would ensure additional tax saving of ₹2,080 to 3,120 for tax payers not paying surcharge.
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  • The budget is also clearly farm-focused. Farmers, unorganised sector and MSME – they’re all finding favour, with the agricultural sector getting the biggest support.
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  • The budget has also extended benefits on residential house rental income and sale.
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  • Overall the budget is expected to benefit 12 crore farmers, 3 crore taxpayers and 30 crore laborers.
 

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