The Interim Budget was presented by the Finance Minister, Mr. Piyush Goyal in Lok Sabha.

Some key Budget highlights are:

  • Expenditure: The government proposes to spend Rs 27,84,200 crore in 2019-20, which is 13.3% above the revised estimate of 2018-19.
  • Receipts:  The receipts (other than net borrowings) are expected to increase by 14.1% to Rs 20,80,201 crore, owing to higher estimated revenue from the goods and services tax and income tax.
  • GDP growth:  The government has assumed a nominal GDP growth rate of 11.5% (i.e., real growth plus inflation) in 2019-20.  The nominal growth estimate for 2018-19 was 11.5%.
  • Deficits:  Revenue deficit and fiscal deficit are targeted at 2.2% and 3.4% of GDP respectively, s same as the revised estimates for 2018-19.  Note that the government is estimated to breach its budgeted target for fiscal deficit (3.3%) in 2018-19 and the medium-term target of 3.1% in 2019-20.
  • Ministry allocations:  Among the 13 highest allocations to ministries, the highest percentage increase is observed in the Ministry of Agriculture and Family Welfare (78.1%), followed by Ministry of Petroleum and Natural Gas (32.1%) and Ministry of Railways (21.1%).

Some changes made to the Finance Bill include:

The Finance Bill amends the Income Tax Act, the Indian Stamp Act, and the Prevention of Money-Laundering Act. 

Income Tax Act, 1961

  • Rates:  The income tax rates remain unchanged.  However, the surcharge on income tax has been raised from 3% to 4%.
  • Deductions:  For salaried individuals, standard tax deduction has been increased from Rs 40,000 to Rs 50,000.  Also, individuals earning an annual income of up to five lakh rupees will not have to pay any tax. 
  • Housing:  Currently, there is no presumptive rent on one self-occupied house.  Interest on housing loan is deductible for one house.  On saleof a house, capital gains deduction is available if the gains are invested in buying a house.  For all these, the limit has been extended to two houses (capital gains benefit limited to two crore rupees). 
  • Tax deducted at source:  Exemption from TDS on rent has been increased from Rs 1.8 lakh to Rs. 2.4 lakh per year.  The threshold for TDS on interest on bank and post office deposits has been increased from Rs 10,000 to Rs 40,000.
  • Incentives for affordable housing:  Last year, tax incentive was provided for building affordable houses if the project was approved by March 2019.  This deadline has been extended to March 2020.
  • Indian Stamp Act, 1899:  Stamp duty on instruments in relation to securities, such as debentures or shares, is payable by the person executing the instrument.  The Act is being amended to state that for transactions on stock exchanges, or transfers by a depository, the stock exchange or depository shall be responsible for collecting this duty on behalf of the state government.  Further, the rate of duty has been changed for some securities.
  • Prevention of Money Laundering Act, 2002:  The Act allows attachment of the property for 90 days during investigation.  This period has been extended to 365 days.  This period will not include any period during which the court has stayed the investigation.

Key Policy Highlights include:

  • Agriculture: PM-KISAN is being launched under which Rs 6,000 per year will be directly transferred to farmers with cultivable land up to 2 hectares.  This will be paid in three instalments.  The scheme starts from December 2018.  Rs 20,000 crore has been allocated in 2018-19 and Rs 75,000 crore in 2019-20. 
  • Last year, the Kisan Credit Card scheme was extended to animal husbandry and fisheries.  The 2% interest subvention and 3% incentive for prompt repayment, which are available to agriculture, are being extended to these two sectors.
  • Farmers affected by natural calamities were provided interest subvention of 2% for one year.  This is being extended to every year of the loan.  In addition, a 3% incentive is being provided for timely repayment of the loan.
  • Labour: The Pradhan Mantri Sham Yogi Maandhan will be launched to provide social security coverage to workers in the unorganisedsector with a monthly income up to Rs 15,000.  A monthly pension of Rs 3,000 will be provided from the age of 60 years.  The monthly contribution of the worker will be matched by the Government. 
  • Entertainment: A single window clearance for shooting films, which was available only to foreigners, will be made available to Indian filmmakers.  Further, the Cinematograph Act will be amended to introduce anti-piracy provisions.

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