In an election year, Narendra Modi has tried to make sure the budget won’t be his government’s last. His finance minister Piyush Goyal’s interim budget 2019-20 delivered for farmers as well as Instragrammers, from the small traders to the unorganised labour.

A 75,000 crore substantial income support scheme for farmers was one of the several key highlights of a budget that covered vast swathes of a country of 130 crore people. There was something in it for everyone.

The salaried aam aadmi, whining for the last five years and forever, got what it wanted. Farmers are in distress and they received a big dole. There is an ambitious pension scheme for unorganized labour, too. Home owners and real estate companies, big job generators, got a handsome handout.

FULL ON FOR FARMERS

The biggest allocation for any new scheme in the budget was for farmers, Goyal having set aside 75,000 crore for the Pradhan Mantri Kisan Samman Nidhi. The distress is in the farm sector is beyond argument now and hence the government had to be mindful of the cries of farmers.

Under this programme, vulnerable landholding farmer families, having cultivable land up to 2 hectares, will be provided direct income support of 6,000 per year. This income support will be transferred directly into the bank accounts of beneficiary farmers, in three equal installments of 2,000 each. This programme, to be shouldered entirely by the central government, will benefit around 12 crore small and marginal farmer families. The scheme is effective December 1, 2018, and the first installment for the period up to March 31, 2019, will be paid during this fiscal year.

BONANZA FOR THE SALARIED

Instagrammers, if you are going to enter the job market soon or have just entered it, this budget is for you. While various calculations will show all kinds of salary earners that will end up paying no income tax, one thing is certain: if you earn up to 500,000, then certainly you don’t have to pay any income tax.

Of course, if you invest any amount up to 1,50,000 in any tax-saving instrument like the Public Provident Fund or an equity linked savings scheme of a mutual fund that comes under Section 80C, then you don’t have to pay any tax on that either.

Tax-saving investments up to 1,50,000 are not taxed and hence no income tax will have to be paid if you earn up to 6,50,000 and invest 150,000 in Section 80C instruments.

Standard deduction has also been raised by 10,000 to 50,000.

One can, of course, avoid income tax on savings beyond 1,50,000. This could be through savings on the premium paid for a mediclaim policy under Section 80D. Up to 25,000 premium is non-taxable on a mediclaim policy bought for yourself, your spouse or children. This can go up to 50,000 premium paid for policy bought for parents.

A further rebate is allowed on investments up to 50,000 in the National Pension Scheme under Section 80CCD(1B). Interest payment up to 200,000 on a housing loan is almost exempted from tax. If you add standard deduction, mediclaim for self, NPS and interest on a housing loan, it all comes to 4,75,000. This means you could be earning 9,75,000 and still not paying any income tax.

GO BUY A SECOND HOUSE

Owning a second house was always a tricky question in these times of job hopping. This was because your second house was always treated as one that you had rented out even if you had not. It was ‘deemed’ to be earning an income for you. The deemed rental income was whatever the prevailing rent in that area was and you had to pay tax on it.

As things stood, a lot of people – and many of them from the so-called ‘middle class’ – never revealed this in their tax returns and hence never paid any tax. Goyal has made your life simpler and guilt-free. You need not pay any tax on the second house, a big relief and sort of a bonanza for people owning two houses. It sure could also reduce litigation in several cases.

EVEN MORE FOR REALTORS

Recognizing a second house as ‘not rented’ is sure to give a boost to housing. Real estate companies will benefit in other ways too. They won’t anymore have to pay tax on notional rent if inventory remains unsold for up to two years.

The real estate sector has been battered badly in the last five to six years due to various reasons, including local factors in places like Noida and Ghaziabad. Demonetisation caused the biggest damage to the sector, once a haven for black money. The government is also looking at it as a sector that has one of the highest potentials for job creation.

UNORGANISED LABOUR

The real estate and the construction sector could also benefit in other ways through Goyal’s sops for unorganised labour. He announced a pension scheme, the ‘Pradhan Mantri Shram-Yogi Maandhan’, that covers unorganized labour earning up to 15,000 per month.

The scheme will provide a pension of 3,000 to unorganized sector workers after the age of 60. An unorganised sector worker joining the scheme at the age of 29 years will have to contribute 100 per month till the age of 60. A worker joining the scheme at 18 years will have to contribute as little as 55 per month. The government will deposit an equal matching share in the pension account of the worker every month.

The government hopes to reach at least 10 crore such workers with this, making it one of the largest pension schemes in the world in the last five years.

Also read: The winners and losers from India’s interim budget

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