Voters want conflicting things. They want a lot of government expenditure, but they don’t want higher taxes.
— Bruce Rauner
The interim budget 2019 invited quite a euphoria in the parliament as the NDA-led government presented a bouquet of sops to almost every section of the society – the farmers, military, MSMEs, film-makers and yes, the middle-class of India.
The budget was no less than a classic election budget where expenses were read out with compassion and doubts on sources of revenue were brushed under the carpet. But, that’s the beauty of democracy – the larger public of the economy does not understand public economics.
The comprehensive highlights are already doing rounds in the press and social media, but here I would like to present the top five highlights that would probably matter the most – at least from a personal finance perspective.
Interim Budget 2019 Highlight
How does it impact you?
|Increased standard deduction||You can claim an additional INR 10,000 as a deduction from your income|
|Increased income tax rebate||Indians earning up to INR 5 Lakh do not need to pay income tax; utilizing 80C investment limits – INR 6.5 Lakh p.a. becomes non-taxable|
|TDS limit hiked – post-office savings scheme||No TDS till interest earned on post office savings exceed INR 40,000 p.a. (previous INR 10,000)|
|Scope for tax exemption on notional rent expanded||You can now own a second home without paying tax on notional rent|
|Increase in gratuity limit||Gratuity can be earned up to INR 20 Lakh (previous: INR 10 Lakh)|
Most expected an increase in the section 80C limit and/or a roll-back of the LTCG tax on equities introduced in the previous budget. However, expecting the government to cut taxes mostly paid by the rich – especially during the election season was too wishful at best.
While there was no relief specifically for equity investors, the week has seen quite a run-up – especially as it approached the interim budget day.
While the interim budget made the day a tad bit exciting, the announcements should be taken with a pinch of salt. At least till the post-election full budget continues the line of thought.