Did you know?
Indira Gandhi assumed the designation of the Finance Minister of India during 1970-71 as additional charge while she was the Prime Minister of India.
So, Nirmala Sitharaman may not be the first female finance minister of India but is definitely the first full-time finance minister of India.
The Union Budget 2019-20 was not just the first time a full-time female finance minister presented the budget, it is also Modi 2.0’s first budget and had the world wait with bated breath. The budget was not overwhelming but was definitely prudent. Given the increasing income disparity and India’s tepid economics, the government clearly indicated its intent to revive the economy through prudent capital allocation and income redistribution – or in simple words, revive the most troubled yet essential factions of the economy along with extending economic support to the low earning groups while drawing in financial support from the high earners.
While the budget, by nature, is comprehensive and has several assertions and announcements, we’ve tried to make life simple by listing and explaining the top 5 announcements that should matter the most to you.
Impact: Anyone with a yearly taxable income (net of deductions) of INR 5 lakh will not be liable to pay any tax. However, filing the ITR continues to remain mandatory for the group.
Economic Inference: This move is expected to leave more disposable income in the hands of lower/middle income groups to spur consumption and standard of living.
Impact: For anyone availing a home loan of up to INR 45 Lakh till March 2020 can avail an additional deduction of interest paid up to INR 1.5 Lakh over and above the existing threshold of INR 2 Lakh in interest payment allowed under section 24 – effective deductible home loan interest goes up to INR 3.5 Lakh per annum
Economic Inference: This can be seen as a step to revive the slumping real estate demand and a push on the lines of the government’s focus on affordable housing for all.
Impact: An NPS subscriber can now avail 60% of the final corpus on retirement on a tax-free basis (this was earlier 40%) while central government employees are allowed to claim a tax-relief on tier-2 NPS investments (voluntary; not matched by employer)
Economic Inference: Enticing citizens to invest in the National Pension System can accentuate India’s capital market participation level hence making more funds available for healthy economic growth while offering the opportunity to build a comfortable retirement corpus and financially secure old age.
Impact: An additional cess of INR 1 per liter on petrol and diesel and a hike on custom duties on gold from 10% to 12.5% can make these commodities expensive
Economic Inference: This move can be expected to support the government’s revenues while effectively insulating the low/middle-income groups.
Impact: Union Budget 2019 has increased the surcharge for those with an annual income of INR 2 Cr. – INR 5 Cr. by 3%. Additionally, taxpayers with income of Rs. 5 crores and above will have their tax rate revised upward by 7%.
Economic Inference: The action is expected to support government expenditure and investments while shifting the burden from the financially weaker section to the affluent.
In all, the budget has been no short of a Robinhood budget were a wealth transfer from the rich to not-so-rich, but in a fiscally prudent manner.
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