Interim Budget 2019 – A Happy Appeasement for All? By Avani Mishra - February 4, 2019 Last Updated at: Oct 23, 2019 9529 Interim Budget 2019 - Is it a happy appeasement for all The Modi government presented its final budget for its tenure on 1st February, with Finance Minister Piyush Goyal announcing several plans that have triggered an immediate reaction from political opponents. While many debate that this was an ‘account for vote’ rather than a ‘vote for account’- a terminology used to indicate a budget presented in the Election year to prevent a fiscal shutdown and provide funds for smooth functioning of the economy till a new government is formed, the Interim Budget 2019 did spring some happy surprises for everyone. Regardless of the political undertones involved, here is what the budget seems to present, largely for salaried classes, taxpayers pensioners, house-property owners, and capital market dealers: No tax for those that earn up to 5 lakhs (or 6.5 lakhs with specified investments) The government data for the last few years have shown a marked increase in personal tax collections, mainly from salaried employees. Thus, a natural reaction for the government was to introduce a relief for a significant portion of taxpayers, those that earn less than 5 lacs, a move that is likely to benefit more than half (53%) of the total taxpayers. This also includes small businessmen, traders, pensioners, and new workforce. For those earning more than 5 lakhs but up to 6.5 lakhs, the tax liability would be nil, if full use of the 1.5 lakh rupees exemption through targeted investments under Section 80C is made. While the slab rates have remained unchanged, the zero tax liability is derived from a section on rebates, where the rebate or reduction for the amount of the tax payable has been pumped up to reach the tax otherwise payable on an income of 5 lakhs. TDS relaxations In order to grant exemptions to those who prefer to save in the form of fixed-deposits rather than invest, the Budget also contained a provision to increase the Tax Deduction at Source (TDS) threshold on interest earned on bank or post office deposits by three times, to ₹40,000 from the current ₹10,000. In addition, the TDS threshold for deduction of tax on rental income has also been proposed to be increased to ₹2.4 lakh from the current ₹1.8 lakh. The standard deduction in tax liability, which can be claimed irrespective of investment or salary has been increased to ₹50,000. Get Your Business Registered Demolishing additional House-Property tax As per the current laws, if the taxpayer owns more than one house property for personal use, the rest of the properties are considered as deemed let out and thus, an income tax is levied on a notional rental value of the other houses. It has been proposed in the current budget to extend the exemption limit to two house properties, as middle-class families may struggle to maintain two houses at different locations due to requirements such as transferable jobs, children’s education etc. One country, one tax Taking the spirit of GST in unifying the country forward, the government has also reduced the number of stamp duty requirements. Now, based on the domicile of the buyer, if multiple capital markets instruments are being purchased, stamp duty amendments will tax just one transfer which will be shared by multiple state governments, thereby ironing the creases of transaction and compliance costs associated. Switching over to an online filing regime Direct tax collections increased to almost ₹12 lakh crore in the current financial year, from ₹6.38 lac crore in 2013-14. With almost an 80 percent increase in the tax base of the country, the government also displayed its ambitions of switching over to an automated online return filing regime, where the entire process is electronically managed by tax officials and experts. Better quality of government expenditure, stabilization of the GST regime and reductions in prices of goods exchanged inter-state, all promise to keep inflation levels low. While there is sluggish growth in the global economy, it is important to ensure tax cuts and additional income to farmers, to keep up the demand in India and aid in its upward growth trajectory.