 "Interim budget 2019")
The interim Budget builds upon the groundwork for strong and inclusive growth, which has been initiated with several structural reforms such as Insolvency and Bankruptcy Code, Real Estate (Regulation and Development) Act, direct benefit transfer and the goods and services tax (GST). The macroeconomic parameters have also significantly improved in the last few years and at 7.2 per cent GDP growth, India continues to be the fastest growing economy.
The government has touched many lives through multiple social sector schemes in previous years. This year, too, significant measures have been announced for the farm sector, unorganised sector and the middle class — groups who have been most impacted in the past one to two years and needed policy impetus. The Pradhan Mantri Shram-Yogi Maandhan — to provide an assured monthly pension of Rs 3,000 from the age of 60 years to 100 million workers in the unorganised sector — is truly commendable. Combined with Ayushman Bharat, the proposal can uplift the lives of many deprived sections, though details of the scheme will shed more light on likely impact.
The tax-GDP ratio has improved from 9.9 in 2014-15 to 11.9 in 2018-19, arising from an increase in direct tax collections through determined efforts. Revised Estimates for direct tax collections (Rs 12 trillion) show an improvement of Rs 50,000 crore against budgeted numbers. GST collections have been lower than expected but should improve with greater compliance.
The rebate for individual taxpayers with taxable income up to Rs 5 lakh will reduce the burden on middle income taxpayers. Enhancement of standard deduction by Rs 10,000 pre annum would provide additional relief. However, unlike marginal relief provided in the case of surcharge, there is no relief for this rebate to avoid the additional tax liability becoming higher than the additional income.
A positive proposal is the increased TDS threshold for interest earned on bank/post office deposits from Rs 10,000 to Rs 40,000 and for a deduction of tax on rent from Rs 1.8 lakh to Rs 2.4 lakh. Tax exemption to notional rent on a second self-occupied house and one-time benefit of capital gains rollover to investment in two residential houses for a taxpayer having capital gains up to Rs 2 crore are welcome. The realty sector, too, would cheer the extension of exemption on notional rent on unsold inventories from one to two years, although they were demanding complete exemption.
The biggest impact of leveraging technology for reforms implementation is in taxation. If the government is able to bring anonymous and expeditious e-assessments and minimise interface with taxpayers, it could be the next big game-changer after GST.
