Finance minister Piyush Goyal announced that India is poised to become a $5 trillion economy in 5 years and aspires to become a $10 trillion economy in the next 8 years. Read on...
Finance Minister Piyush Goyal announced the Interim budget 2019 on 1st February and the highlights suggest that the budget has fairly been made in favor of the farmers, real estate, SMEs, middle-class taxpayers, pensioners, and infrastructure development.
Here are the highlights of the Interim Budget 2019:
o Finance minister Piyush Goyal announced that India is poised to become a $5 trillion economy in 5 years and aspires to become a $10 trillion economy in the next 8 years.
o Small and marginal farmers owning less than 5 acres of land will receive the first installment soon, finance minister Piyush Goyal said in his budget speech. According to Goyal, the scheme will run from 1 December 2018 and towards this, the budget has allocated an additional ₹20,000 crore in the revised estimates for 2018-19.
For 2019-20, the Prime Minister Kisan Samman Nidhi or PM-Kisan scheme received a budgetary allocation of ₹75,000 crore.
Announcing the scheme, finance minister Goyal said the direct income support which farmers will receive in their bank accounts shortly will help them lead a life of dignity and respect.
According to the budget speech, about 120 million farm households will receive income support of ₹2,000, thrice a year.
Apart from the income transfer scheme, the budget also approved doubling the interest subsidy on crop loans, and also raised the interest subvention when farm loans are restructured in times of natural calamity.
o Govt projects to source 25% material from SMEs, 3% from only women-owned SMEs.
o People earning up to 5 lakhs will get a full tax rebate. However, if one invests in specified Government saving schemes then the tax exemption extends to Rs. 6.5 lakhs.
Paresh Parekh, Partner, Leader Consumer & Retail Tax, EY states “Three key buckets of changes proposed in the Interim Budget 2019:
(1) Higher personal disposable income due to a higher tax rebate for up to 5 lacs
(2) Higher rural disposable income because of farmers package, interest subventions etc
(3) real estate and housing sector proposals like no notional tax on the second home, capital gains tax exemption for 2 homes and no notional tax for unsold real estate inventories up to 2 years - all these three buckets of changes are potential game changers for the entire economy and Consumer sector in particular.”
Anuj Puri, Chairman, Ananrock Property, points out the direct and indirect positives for the real estate sector:
o There was a decisive push to the second home market via exemption of notional rent on second self-occupied homes. This could boost the second home market to some extent.
o Unsold Inventory Benefits: The period for taxing unsold inventory has been extended up to two years. This is a welcome move and will benefit the housing sector, as currently there are more than 6.73 lakh unsold units across the top 7 cities.
o Boost to Investors: There will now be no tax on house rents up to Rs. 2.4 lakh from the previous limit of Rs. 1.8 lakh. This can attract more investors to buy second homes for earning rental income.
o Infra push: Infrastructure was given a major push by increasing spending in airports, railways etc. This indirectly benefits the real estate sector, but much depends on actual implementation. There has been a huge gap between allocations and actual disbursements towards projects so far. On a direct positive, it will increase the demand for logistics and warehousing.
Reactions on the Interim Budget 2019:
Jitender Singh, Founder & CEO, MiniDukan states, "It is great news for companies which deal with customers in Tier 4 to 6 towns, that the Government will introduce 1 lakh digital villages in the next 5 years. Digitization of rural areas has increasingly become a necessity, as a large section of our consumers is based there.
In addition, the GST provisions given where SMEs earning less than 5 crores will have to file GST only once in 3 months is sure to relieve some of the load faced in recent years. The greatest benefit for us will be the reduction of taxes on salaried individuals which will result in greater buying power, which is exactly what we have been hoping to achieve. This Budget is sure to provide a great boost to the overall performance of SMEs".
Puneet Gulati, CEO, Barista says, "Increased in personal tax limit will see higher disposable income and with the ever-expanding food sector and a delivery module in place, we see a higher share of wallet coming to F&B sector. Happy to see relief for farmers and labourers, all in all, a positive step to strengthen the purchasing power, which was much needed. Complete digitalization of tax assessment is a welcome step. Interim Union Budget 2019 promises to be pro-growth and ushers a new era of transparency."
Rishu Gandhi, Founder & Head Brand Strategy, Mother Sparsh -
"The budget seems to be more empowering one for the masses which can have more relief on the tax front thus have more money to spend or save. Given more disposable income, the basic human tendency to spend more on lifestyle and comfort will allow young parents to spend more towards their childcare needs as they will be more empowered to spend more towards their loved ones, which will be beneficial for brands catering in this segment. Similarly, 2% interest subvention will be a big relief for startups looking to create in such a competitive environment."