Interim budget 2019: Piyush Goyal said individuals with income up to Rs 5 lakh are fully exempt of paying income tax.
A pre-poll Budget which was expected to have a please-all package has lived up to expectations. After offering big sops to farmers and the poor, Interim Finance Minister Piyush Goyal impressed the middle class by offering a huge tax relief.
Goyal announced today in his Interim Budget 2019 speech that there would be no tax till Rs 5 lakh income for individuals taxpayers.
Farmers and the middle class were seen to be the two communities that the government was expected to please in the Budget.
The middle class is traditionally see as a big constituency of the BJP. Clearly, it expected to get some relief in the form of tax cuts. A recent ET online survey on Budget expectations revealed that middle-class expectations took precedence over relief to the agricultural sector.
The Modi government was expected to offer a big bonanza to the farm sector to counter the loan waivers announced by the Congress governments in some states. But the ET Budget survey revealed the middle class wanted a bigger relief. In answer to the question, ‘Which section should get priority in the next full budget?’, 56 per cent said it should be the middle class while 28 per cent preferred farmers and the poor and 11 per cent business and industry.
The salaried and individual class had high hopes for higher income tax exemption limit to be given in this Budget.
Currently, income up to Rs 2.5 lakh is exempt from personal income tax. Income between Rs 2.5-5 lakh attracts 5 per cent tax, while that between Rs 5-10 lakh is levied with 20 per cent tax. Income above Rs 10 lakh is taxed at 30 per cent
The higher exemption will support consumer demand as it would increase the purchasing power of individuals.
Industry chamber CII had urged the government to double the income tax exemption threshold to Rs 5 lakh. The industry body had recommended that income below Rs 5 lakh should be exempt while between Rs 5-10 lakh should be taxed at a lower rate of 10 per cent. For those having income between Rs 10-20 lakh, the tax rate should be 20 per cent, and those earn over Rs 20 lakh should be taxed at 25 per cent.
In Budget 2017, Jaitley reduced the tax rate for individual assesses with income between Rs 2.5 lakh and Rs 5 lakh to 5 per cent from the FY 2014-15 rate of 10 per cent. The FY 2014-15 rebate under Section 87A of the Income-tax Act, 1961, was also reduced to Rs 2,500 from Rs 5,000 for those earning between Rs 2.5 lakh and Rs 3.5 lakh. Hence, as a combined effect, the tax burden on those earning up to Rs 3 lakh became nil, and for those in the Rs 3 lakh to Rs 3.5 lakh bracket became Rs 2,500 during FY 2016-17.
Happy savings to you all!
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