By Tanvi Jha
The final year for Modi’s Lok Sabha has begun and a new budget has been put in place. The budget session was held between January 21stto February 13thand the Interim Budget is still up for debate. On the 1stof February, the interim finance minister Piyush Goyal presented a populist budget for small and marginal farmers. He also announced the Pradhan Mantri Kisan Samman Nidhi, a scheme promising an annual assured income of ₹6,000 ($84.5) for any farmer who owns up to 2 hectares of farmland. Amidst conflicting claims, Goyal insists that this budget scheme will benefit up to 12.5 lakhs of farmers.
For the tax paying middle class, among other things, the budget seeks to dole out tax rebate on taxable income up to ₹5 lakh per annum. In simple terms, people who earn between ₹ 2.5 to 5 lakh will not have to pay any income tax. The tax slabs for higher incomes remain unchanged: for income above ₹5 to 10 lakhs the tax rate is 20.8%, for ₹10 to 50 lakhs the rate is 31.2%, from₹50 lakhs to ₹1 crore the rate is 34.32% and from ₹1 crore onwards the tax rate is 35.88%.
You won’t have to pay any tax if you have ₹7.5 million tucked away in fixed deposits and no other income because you'll only be earnings ₹450,000 a year assuming an interest rate of 6%. Piyush Goyal, the interim finance minister who presented the budget, also clarified that even people will gross income of up to ₹650,000 may not be required pay any income tax if they make investments in provident funds, specified savings and insurance etc.
Another significant change is the treatment of financial and capital gains from the selling of residential property. At the moment, one would have to invest in sale proceeds in another house within a year in order to escape capital-gains tax. However, one can now split that into two houses and can do so within two years, but only once in a lifetime. This may not guarantee savings in tax, but it allows greater flexibility and more importantly a better plan for the future inheritances for one’s children. Thus, one can sell their house and buy a new one for each of their two children as joint owners with you, which is much more convenient for all of us.
All in all, The Narendra Modi governmenthas gone all out to woo voters across social segments — not just the ones in rural India. The Indian middle class had been watching this budget with a lot of hope for relief.
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