In many ways the union budget 2019-20 presented by the finance minister Piyush Goyal on behalf of the Indian government on 1st February 2019 could be called an interim budget that is unprecedented in the truest sense of the word. It has in way deviated from what was done earlier on in this regard and there is no need for India to wait for tax reforms. The FM (finance ministry) has offered a lot of relief to the middle class people when it comes to the direct taxes. At the same time it has attempted to deal with the issues being faced by farmers and rural economy in general.
This budget has moved away from conventions and provided middle class and salaried tax payers reforms that they had been waiting for long.
Tax benefits for the middle class
The middle class taxpayer cannot complain about this budget because it has filled their pockets with a number of perks. The most discussed among them is the tax rebate of INR 12,500 that has been offered to people whose taxable income is INR 500,000 or lower than that. This is one change that benefits the government as well as the taxpayers. It makes sure that a large section of the taxpayers are surprised and pleasantly so.
At the same time it also makes sure that the government does not lose out on too much revenue because of relaxation in taxes.
The middle class tax payers get to enjoy a whole host of other tax perks as well. The standard tax deduction for the salaried individuals has been raised from INR 40,000 to INR 50,000. People in this bracket had wanted better rates for standard tax deduction than what had been announced in 2018. Thus it is expected that they would like it highly as well.
People who prefer saving rather than investing have been benefited greatly by this budget as well. The basic limit for TDS (taxes deducted at source) at banks, cooperative societies, and post offices has been increased to INR 40,000 from INR 10,000. This is something that is expected to address the genuine concern that lot of such tax payers, who prefer savings to investment, have in this regard. The gratuity limit too has been doubled – to INR 2 lakh from INR 1 lakh. This is one decision that should be of great value to the salaried individuals as well.
Tax reforms with dual intentions
There are some tax reforms that would help the government achieve two goals with one shot. They would help the taxpayers and at the same time help improve the real estate sector. It needs to be noted in this context that this sector is not doing too well as such. This also means that the real estate sector gets the attention that it had wanted for such a long time. It is expected that the amendments made in this regard would help provide the sector some much needed fillip. However, the same cannot be said of the industrial and corporate sector that has to wait for the final budget to come out so that it can get some benefits as well.