The Story of Interim Budget – 2019

 

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Snapshot of India’s development path

The years gone by:

  • With the reforms and positive changes brought about by the current Government, it is truly a golden age for the Indian economy. Ushering in stability in the nation, transformation in all sectors, cleanliness in pecuniary terms by demonetization as well as in literal terms through the Swachha Bharat Abhiyan, the Government has proved its mettle over the past five years of its regime. The initiatives undertaken by the Government have emerged victorious in evolving the mindset of the Indian populace and fostering self-confidence among the country’s people. This has been achieved under a strong leadership and its vision for the better future of India.
  • The rapid growth of the Indian economy has surpassed that achieved ever before, making India the 6th largest economy globally and the 2nd largest hub for start-ups, thereby demonstrating yet again, that there are no limits to what we can achieve other than what we set on ourselves. There has been a humungous improvement in the situation of sanitation. Lowering inflation burdens, reduction in deficit positions, encouraging foreign inflows via Foreign Direct Investments, successful measures to curb corruption, improvements on the rural front, phenomenally increasing mobile-user base – all of these measures have defined a new trajectory for the nation.
  • Infrastructure growth has been boosted and safety measures have also been emphasized upon. The Clean Banking measures have caused a tremendous revamping in the Banking sector leading to streamlining of banking operations giving a positive outlook to the sector growth. Farmers, the pride and backbone of India, have been given an impetus in terms of support pricing thereby boosting the agro-economy of India. Further, the Budget has also catered to the poor and middle classes, as well as the backward classes to ensure that they are not denied of equal opportunities as they too, form a building block of this nation. The healthcare needs of the masses reach. The concept of women empowerment has been turned around and instead, a ‘women led empowerment’ movement is being encouraged to unleash the untapped potential of the superwomen of the country. The tax reforms through the introduction of Goods and Services Tax (GST), which finally saw the light of day has added on to the ‘ease of living’ goal. Considering the difficulties faced by Micro, Small and Medium Enterprises and Traders, they have also been given some relief under the GST regime. Artificial Intelligence has also been given importance and related training programmes for the youth have been designed.

The Government has put forth their vision in the form of a multi-dimensional approach:

  • The bars have been set even higher for the upcoming decade as the Honourable Interim Minister of Finance Mr. Piyush Goyal expressed eloquently in his Budget Speech today. These new heights are very realistically achievable as the outcomes of the past 5 years have clearly proven.
  • The massive wave of digitalization in India has indeed touched the shores of India as a boon also driving the goal of ‘ease of living’ for each citizen. Digitalisation of most governmental interfaces is envisaged to bring in greater transparency and speedy progress of processes. Implementation of e-governance models has been a priority since its importance in the nation’s developmental journey has been well recognized. A momentum to the rural industrial development is poised to generate huge employment opportunities. Conservation of environment has been in the front field in the past few years. Indian waters and coastlines are fully set to transform the Blue Economy and scale up the business scene. Organic farming and supply of food coupled with health assurance and holistic wellness outreach is an emphasized goal for the coming years to ensure a healthy India.
  • This land which boasts of embracing the diversity spanning cultures and regions has indeed succeeded in its endeavours to becoming technologically well-versed on a firm scientific footing. Space research and explorations have reached new levels with the backing of the Government. Team India with the motto of ‘Minimum Government Maximum Governance’ is the final dimension of the envisioned decade ahead for a people-friendly administrative setup.

Tax Incentives

Considering the budget was an interim one, no changes have been proposed in the corporate tax regime and that would be well dealt with by the final Union Budget in 2019 by the newly mandated Government. With  motive of bringing in certainty for the Individual tax payers to to unleash what is in the stores for the middle class backbone of India, the following proposals were tabled:

  • Raise in standard deduction

The limit of standard deduction has been increased from INR 40,000 to INR 50,000. [Section 16]

  • Calculation of notional rent

For a taxpayer owning two or more house properties which are not let out, the taxability of notional rent will be from the third house property onwards and the gross annual value for the first two house properties shall be considered as ‘Nil’. [Section 23]

  • Increase in time limit for computing income from House Property

In case a taxpayer owns land and buildings as ‘stock-in-trade’ and has not let out the same  during the whole or a part of the year; the annual value shall be taken as ‘Nil’ for the first two years (earlier limit – one year) from the end of the financial year in which a completion certificate is received. [Section 23(5)]

  • Housing loan interest deduction:

The limit of INR 2,00,000 pertaining to housing loan interest shall be considered as the ‘aggregate limit’ and would not be available separately for each house property. [Section 24]

  • LTCG exemption in case of investment in two residential houses

-In a case where Long-Term Capital Gain (‘LTCG’) is upto INR 2 crores, a taxpayer can invest the same in maximum two residential houses in India (earlier limit – one residential house) and gain an exemption on LTCG.

-The benefit of ‘maximum two residential houses’ is available to the taxpayer only once.[Section 54]

  • Extension of profit-linked deduction w.r.t. housing projects

Taxpayers carrying on the business of developing and building housing projects have been given an extension of 100% profit deduction for the housing projects that are approved by 31st March 2020. (Earlier date limit – 31st March 2019). [Section 80-IBA]

  • Increase in Income-tax rebate for individuals

Taxpayers having Total Income upto INR 5,00,000 (earlier limit – INR 3,50,000) are eligible to claim a rebate to the extent of INR 12,500 (earlier limit –  INR 2,500). [Section 87A]

  • Rise in thresholds for withholding taxes

-Revised threshold for Tax Deducted at Source (‘TDS’) on interest payments (by banks, co-operative societies having banking business and post offices): INR 40,000 [Section 194A]

-Revised threshold for TDS on rent payments (for use of land/ buildings): INR 2,40,000 [Section 194-I]

  • Change in approving authority under the Angel Tax Regime

In case of issue of shares over and above the fair market value, if such an issue is duly approved by the Central Board of Direct Taxes (Earlier approving authority – Inter-Ministerial Board of Certification), then Section 56(2)(viib) shall not be applicable.

Journey towards the future:

Mr. Goyal displayed immense humility by showcasing the gratitude of the Government towards its people who have stood by the nation’s ideals and made it truly a People’s Movement, for it is only with the undeterred support of its people that a country can grasp the kite-tail of its dreams and fly into the future. Moving in tandem with advancements keeping pace with global developments, while retaining the uniqueness of this varied nation, is a journey we all will partake in.

The New India now sets its eyes on reaching new milestones along with transforming lives of its citizen through consistent development and growth.

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