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Interim Budget 2019: Populist as expected?

Interim Budget 2019: Populist as expected?

Interim Budget 2019: Populist as expected?
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By Ernst Young Feb 2, 2019 9:26:53 AM IST (Updated)

As expected the Interim budget largely focused on the rural and middle class, indirectly benefitting the consumer and real estate sector

Budget 2019 being the last budget of the current Naredra Modi government was touted to be a populist one advocating changes to cater to the expectations of the Indian consumers. As expected the Interim budget largely focused on the rural and middle class, indirectly benefitting the consumer and real estate sector.

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While tax payers expectations of absolute reduction in tax rate were not met, relief was provided for tax payers earning taxable income upto Rs 5 lakh who are now eligible for tax rebate of Rs 12,500. Further the salaried class has been given an additional standard deduction of Rs 10,000.
While the government has promised processing of tax returns and issue of tax refunds within 24 hours, it will be interesting to see whether they can keep up the promise.
Few tax sops for individuals are: They can now invest in two houses and get capital gain exemption of upto Rs 2 crores once in a lifetime. Coupled with capital gains exemption, the government also provided additional benefit for the second house to be treated as self-occupied property (SOP) and hence there is tax saving to the extent of notional rent which was earlier subject to tax, however, interest on housing loan for two SOPs will now be restricted to Rs 2 lakhs. Further, landlords will have some reason to cheer as no tax will be deducted on rental income upto Rs 2.4 lakhs. Further, deposit interest upto Rs 40,000 will not be subject to tax deduction at source.
As a major relief to the small and marginal farmers, addressing the need of the hour and increasing their disposable income, the government has proposed “Pradhan Mantri Kisan Samman Nidhi Yojana” effective 1 December 2018. Under this scheme, the government would be providing direct income support of INR 6,000 per annum to farmers (having cultivable land up to 2 hectares), benefiting around 12 crore farmer families.
Further, 2% interest subvention is proposed for farmers pursuing activities of Animal Husbandry and Fisheries (availing loan through Kisan Credit Card) with 3% additional interest subvention on timely loan repayments. Also, all farmers affected by severe natural calamities will be provided the benefit of interest subvention of 2% and prompt repayment incentive of 3% for the entire period of re-schedulement of their loans.
Delving high on the achievements of the Narendra Modi government during the past 5 year period, the budget speech clearly focused on the masses, giving some sectors reasons to cheer till the new government is elected.
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