The annual budget announcement is a fairly hyped event, the ones preceding a national election are even more so. Just like this year’s Interim Budget presented by Piyush Goyal for the Modi government. The media was abuzz with a whole range of expectations, predictions and hopes from the people, and now that it’s behind us – people are converging in on the post-announcement analysis to get an accurate sense of what the government has in store for us. How much of our wishlist did the 2019 budget check? What did it leave behind? Let’s take a closer look
#1 – On Taxes
There were expectations of this year’s budget being a tax-friendly one, with some hoping for an increase in the taxable slabs, benefits to pensioners and housing loans. The government delivered on this front, albeit with some modifications. With an increase in the income tax rebate, people earning up to ₹ 5 lakhs per annum are now exempt from paying income tax.
With the benefits available under Section 80C, those earning up to ₹ 6.5 lakhs too can benefit from paying no tax, provided they invest in any of the options available under the section. This move is likely to benefit near 30 million taxpayers. However, with this benefit applying only to those earning up to Rs 5 lakh and not more, some of the middle class may feel justifiably let down.
Piyush Goal also offered some relief to home-owners by abolishing tax on the notion rent of a second home.
#2 – On Farmers
Farmers have consistently remained the focus of a majority of our budgets, and rightly so, given the proportion of our population engaged in the agricultural sector. The 2019 Budget was expected to be no different, and in fact was said to include a direct transfer benefit scheme for the farmers, increase government rural spending, food subsidies and more.
On this front, the budget delivered well – it offered a new scheme for the farmer class in the form of the Pradhan Mantri Kisan Samman Nidhi Yojna, a Rs 750 billion support program for small farmers (those owning up to 2 hectares of farmland). These farmers (estimated to number about 120 million) will receive ₹6,000 annually in three installments, directly to their bank accounts. The government also hiked the Minimum Support Price on all 22 crops by 50%.
#3 – On Real Estate
This year’s budget was expected to bring some relief to the real estate sector, with even indirect announcements like income tax relaxation expected to spur spending from consumers. There were hopes of sops on GST, and clarity on the industry status for the real estate sector. The budget delivered on some of these via a number of announcements – such as the removal of tax on rental income up to Rs 2.4 lakhs, and a 100% tax exemption on profits by real estate developers on affordable housing for a year. Relief on capital gains tax for a second house (up to Rs 2 crores) is also likely to give the sector a valuable boost.
#4 – On Startups
Many entrepreneurs and startups held high expectations from 2019 Budget – hoping for clarity on the notorious Angel Tax issue, easier access to credit for MSMEs, and more. But while calling India’s startup ecosystem the “second largest in the world”, Piyush Goyal did not address these issues, failing to deliver solutions to what have been key issues for the industry. Some announcements however – such as the 2% concession on interest for SME loans up to 1 crore, and small businesses (with turnover less than 5 crore) being allowed to file quarterly GST returns) – have been welcomed by the sector.
#4 – On The Automotive Industry
There was no major direct announcement for the automotive industry, although it is likely to benefit from the increasing spending consumers may engage in after their tax benefits. While a policy on electric vehicles was expected, it was conspicuously missing from the 2019 Budget.
With the farmers direct transfer benefit scheme also announced, many fintech startups see themselves being actively involved in the process and the demands it will generate.
The income tax relief announcement was the highlight of this year’s budget and grabbed the lion’s share of attention, and rightly so – given its potential for impact on many other sectors and industries dependent on consumer spending. But the 2019 Budget had benefits for many others on offer as well, and farmers and the real estate industry in particular may well be pleased with the outcomes.