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Thumbs up to Interim Budget; Govt provided stimulus for growth: Mahesh Patil

Thumbs up to Interim Budget; Govt provided stimulus for growth: Mahesh Patil

With just a couple of months before the elections, the government had no choice but to deliver a populist Budget that aims to please the farmers and the middle class, two of its biggest constituencies.

The middle class, which makes up the core vote bank for Modi's Bharatiya Janata Party (BJP), was given tax rebates that the government estimates will benefit 30 million people. The Mega Pension Yojana, under which Rs 3,000 per month will given to unorganised sector employees, is a mammoth undertaking.

One the one hand, the farm sector.

"Our government is committed to reach the most deprived citizens of this country..." This was introduced previous year after being abolished in the Finance Act 2005. Together, these schemes could act as a social security cover for the most vulnerable sections of India's population.

Union Finance Minister Piyush Goyal, in his Budget 2019 speech on Friday announced several tax benefits for the salaried and middle class.

Goyal, who stood in for his ailing colleague Arun Jaitley, said that the cash handouts would cost the government Rs 75,000 crore annually. "The projections of direct tax collections is a base case scenario that may vary if there are structural changes like in tax rates or slabs or any of the provisions in the Income Tax Act, 1961", the document observed.

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Highlighting the schemes introduced by the Modi government during its current regime, Jaitley said this government is aiming to provide roof to every citizen by 2022, construction of 91 per cent rural roads have been completed, around 99 per cent rural population has access to sanitation facilities, electricity has reached nearly every village, and everyone has switched over the cooking methods through Ujjawala scheme.

What if someone with taxable income of Rs 6 lakh does not invest? Rs 60,000 crore has also been set aside for MGNREGA, the rural employment scheme, with Piyush Goyal adding that the allocation can be increased further.

People having an income of Rs 10 lakh can avail the full tax rebate by bringing down the taxable income to Rs 5 lakh after accounting for a standard deduction of '50,000 and specified investments of Rs 4.5 lakh. So, he will not pay taxes for first 2.5 lakh, then 5% tax will be levied on Rs 2.5 lakh to Rs 5 lakh which will be Rs 12,500.

As per the proposal, those who earn more than Rs 5 lakh per annum and less than Rs 10 lakh will have to pay Rs 12,500 plus 20% of the amount by which income exceeds Rs 5 lakh. The standard deduction limit has also been increased to Rs 50,000. The opposition has called it an election budget. "Higher disposable income, farmers' package and housing proposals are potential game changers for the entire economy", he said.

However, there has been no increase in the threshold limit of Rs 2.5 lakh.