Budget 2019-2020
Speech of
Nirmala Sitharaman
Minister of Finance
July 5, 2019
Budget 2019 Live
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Union Budget 2019 budget analysis: After income tax benefits, FM Piyush Goyal can ask individual taxpayers, how’s the josh
Budget 2019 Expert Opinion on Budget Expectations: Individual taxpayers much more than just a ‘Thank You’ from the Finance Minster in the Union Budget 2019-20 Breath were held before the FM come to Part-B of his Budget Speech and announced relaxation for the individual taxpayers. In Part-B of the speech, the Finance Minister thanked the taxpayers and assured them that the Government has used the tax contribution to serve the poor and create better infrastructure in the country.
This being the current Government’s last budget before the general elections later this year, speculation was rife that tax sops, new schemes and tax changes would be in the offing.
The Government, has indeed, handed over a "goodies bag" to the individual taxpayers in the form of beneficial announcements. As per the Budget announcement, individuals with income up to INR 5 lakhs will not have to pay any income tax. FM mentioned that individuals with gross income up to INR 6.5 lakh will not need to pay any tax if they make investments in provident funds and prescribed equities.
Though a meagre increase, the standard deduction has been pegged up from existing INR 40,000 to INR 50,000. Budget 2018 had introduced a standard deduction of INR 40,000 for the salaried class, in lieu of deductions of INR 15,000 for medical reimbursement and INR 19,200 for transport allowance.
TDS thresholds for interests on post office and bank deposits have been raised from Rs 10,000 to Rs 40,000. This would result in higher interest credits, a part of which was getting locked on account of TDS, to be subsequently claimed as refunds by the taxpayers falling under the exemption thresholds
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Budget 2019-2020 : Part A
PART B
Direct Tax
Mr. Speaker, Sir, due to slew of efforts taken by our Government, the direct tax revenue has significantly increased over the past couple of years. It has increased by over 78% from 6.38 lakh crore in Financial Year 2013-14 to around 11.37 lakh crore in Financial Year 2018-19. It is now growing at double digit rate every year.
Let me recall and reiterate this Government’s effort over the past five years to alleviate the tax burden on small and medium income- earners. This includes self-employed as well as small traders, salary earners, and senior citizens. Only when their annual taxable income exceeds 5 lakh, they are required to pay any income tax. The details of our efforts and achievements on this front during the past few years are given in the Annexure.
IFSC
To promote the International Financial Services Centre(IFSC) in GIFT City, series of measures have already been taken in the past by this Government. With a view to further incentivising the IFSC, I propose to further provide several direct tax incentives to an IFSC including 100 % profit-linked deduction under section 80-LA in any ten-year block within a fifteen-year period, exemption from dividend distribution tax from current and accumulated income to companies and mutual funds, exemptions on capital gain to Category-III AIF and interest payment on loan taken from
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Digital Payments
Mr. Speaker, Sir, our Government has taken a number of initiatives in the recent past for the promotion of digital payments and less cash economy. To promote digital payments further, I propose to take a slew of measures.
To discourage the practice of making business payments in cash, I propose to levy TDS of 2% on cash withdrawal exceeding 1 crore in a year from a bank account. Further, there are low-cost digital modes of payment such as BHIM UPI, UPI-QR Code, Aadhaar Pay, certain Debit cards, NEFT, RTGS etc. which can be used to promote less cash economy. I, therefore, propose that the business establishments with annual turnover more than 50 crore shall offer such low cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants.
RBI and Banks will absorb these costs from the savings that will accrue to them on account of handling less cash as people move to these digital modes of payment. Necessary amendments are being made in the Income Tax Act and the Payments and Settlement Systems Act, 2007 to give effect to these provisions.
I ncentives to National Pension System (NPS) subscribers
In order to give effect to the cabinet decision already taken to incentivise NPS, it is proposed to,-
increase the limit of exemption from current 40% to 60% of payment on final withdrawal from
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NPS
allow deduction for employer’s contribution upto 14% of salary from current 10%, in case of Central Government employee;
allow deduction under section 80C for contribution made to Tier II NPS account by Central Government employees.
Recent Direct Tax Initiatives:
G rowth in direct tax collections and number of taxpayers: Direct tax revenue has increased significantly over the past couple of years due to the efforts taken by the Government.
From Rs. 6.38 lakh crore in FY 2013-14 to around Rs. 11.37 lakh crore in FY 2018-19, the growth in direct tax collections is more than 78%. It is now growing at double digit rates every year. The details of annual direct tax collections over the period 2013-14 to 2018-19 are given in the table below.
Moreover, due to various initiatives and taxpayer outreach programmes undertaken by the Government, the number of taxpayers has also increased by approximately 48% over the period 2013-14 to 2017-18, from 5.71 crore taxpayers to 8.44 crore taxpayers. The details of the number of taxpayers over the period 2013-14 to 2017-18 are given in the table below.
A taxpayer is a person who either has filed a return of income or in whose case tax has been deducted but the person has not filed return of income.
Some of the major direct tax policy initiatives taken by the Government are discussed below.
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B enefits to middle class and senior citizen taxpayers:
With a view to increase savings and promote healthcare among individuals including senior citizens, several measures have been taken by this Government. Some of them are as under:
Deduction limit for savings under section 80C was increased from Rs. 1 lakh to Rs. 1.5 lakh.
The deduction limit for medical insurance was increased from Rs. 15,000 to Rs. 25,000. For senior citizens, the deduction limit was increased from Rs. 20,000 to Rs. 50,000.
Deduction limit for individuals with disability was increased by Rs. 25,000.
Deduction of Rs. 50,000 was provided on interest income from deposits for senior citizens.
Deduction limit for senior citizens for medical expenditure for critical illnesses was increased from Rs. 60,000 to Rs. 1,00,000.
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