Here is how the Budget 2019 benefits the Indian middle class
The Narendra Modi goverment has gone all out to woo voters across social segments — not just the ones in rural India. The Indian middle class had been watching this budget with a lot of hope for relief and stand-in finance minister, Piyush Goyal, did not disappoint.
He stated, "Reducing the middle-class tax burden has been a priority of the government."
However, these are proposals have to be approved by the Parliament, and given that this is an interim budget, the opposition may try to stall it.
Here are the big takeaways for the Indian middle class:
1. No tax on income up to ₹500,000. The benefit will be available through rebates. The current limit for zero tax is ₹250,000.
"The benefit will be to only those taxpayers whose total income doesn’t exceed ₹500,000. The moment it exceeds ₹500,000, tax will start from ₹250,0000 at 5% up to ₹500,000 and 20% from ₹500,000 to ₹1 million," according to Ved Jain, former president of the Institute of Chartered Accountants of India.
You won’t have to pay any tax if you have ₹7.5 million tucked away in fixed deposits and no other income because you'll only be earnings ₹450,000 a year assuming an interest rate of 6%.
Piyush Goyal, the interim finance minister who presented the budget, also clarified that even people will gross income of up to ₹650,000 may not be required pay any income tax if they make investments in provident funds, specified savings and insurance etc.
2. No tax deduction at source (TDS) on interest received from banks and post office deposits for up to ₹40,000, increased from ₹10,000.
That means interest accrued from fixed deposits of up to ₹670,000, assuming an interest of 6%, will not be taxed.
3. No TDS on house rent up to ₹240,000 a year, raised from ₹180,000 earlier.
This move gives tax-related relief to individuals who are dependent on rental income.
4. Standard deduction from income increased to ₹50,000 from ₹40,000 a year.
Standard deduction is a fixed amount of deduction, which can be reduced by salaried taxpayers, from their gross salary. The feature was introduced during last year's budget after the Finance Act 2005 was scrapped.
5. If you own two self-occupied properties, there will be no 'notional rent' on both properties.
Currently, there notional rent was applicable on all properties but one, even if they were occupied by the same family. This will benefit families that live apart due to work or other reasons.
6. Exemption from Capital Gain on sale of residential house under Section 54 has been extended to purchase of 2 residential house subject to maximum capital gain of ₹20 million.
This option can be claimed once in a lifetime.
It's not that government left the poor section of the economy out of the conversation. When keeping the reservations that are already in place intact, the governmetn has ensured an additional 10% of reservation for the poor in government jobs and education.
An additional 600 billion has been allocated towards the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) as well.