AFA BUDGET ANALYSIS
BUDGET FY 2019-20
Budget for 2019-20 has announced on February 1, 2019 by Finance Minister Piyush Goyal.
It aimed at benefiting three major segments of the population — farmers, informal workers and salaried taxpayers — with announcements of an income support scheme for the first, an insurance scheme for the second, and tax exemptions for the third one.
Boost for Farmers:
The centre has announced the annual income scheme for the farmers owning small farmlands with an initial sum of Rs.2000/- to be paid by the end of March.
New schemes has been announced and enforcement is taken into consideration from December 2018.
Information about budget for farmers:
- The new scheme called Pradhan Mantri Kisan Samman Nidhi (PM- KISAN) will benefit more than 12 crore farming families which own cultivable land up to 2 hectares.
- The annual support of Rs.6,000 will be paid directly into beneficiary bank accounts over the course of the year in three instalments of Rs.2,000 each.
- The scheme is applicable with retrospective effect from December 2018 and will be fully funded by the Union government. It has been allocated Rs.20,000 crore in the revised estimates for the current financial year 2018-19, as well as Rs.75,000 crore for the next financial year 2019-20.
- Other measures announced in the Budget include a 2-5% interest subvention for loans taken by farmers hit by natural disasters or for livestock farming and fisheries.
Need of the scheme: The main requirement of this scheme is due to the farmers’ incomes are falling due to a decline in international prices and domestic food inflation, and fragmented landholdings.
Benefits: There is a need for providing structured income support to the poor landholder farmer families in the country for procuring inputs such as seeds, fertilizers, equipment, labour, etc., and to meet other needs. Such support will help them in avoiding indebtedness as well and falling into the clutches of money lenders.
Pension for unorganised labour:
The Centre has allocated Rs. 500 crore for a new pension scheme for workers in the unorganised sector, even while reducing its allocation for an existing pension scheme by Rs. 775 crore.
- The new scheme, to be called the Pradhan Mantri Shram-Yogi Maandhan, will benefit unorganised sector workers who have a monthly income up to Rs. 15,000. It will provide them a monthly pension of Rs. 3,000 from the age of 60.
- Workers will contribute an amount ranging from Rs. 55 to Rs. 100 each month, depending on their age, at the time of joining the scheme, while the government will deposit a matching contribution.
The Centre expects 10 crore workers to get the benefit within the next five years.
- The Budget documents show that an existing pension scheme, which already benefits more than 3 crore poor people who are senior citizens, disabled or widows, has had its allocation slashed.
- The National Social Assistance Programme (NSAP), a pension scheme administered by the Ministry of Rural Development, had originally been allocated Rs. 9,975 crore in the 2018-19 Budget.
- The NSAP featured in last year’s Budget speech- government was implementing a comprehensive social security and protection programme to reach every household of old, widows, orphaned children, divyaang and deprived as per the Socio Economic Caste Census (SECC).
This year, Mr. Goyal made no mention of the NSAP, but reduced next year’s allocation from the current year’s estimates.
- The Centre will form a welfare panel for nomadic, semi-nomadic and de-notified communities, Finance Minister Piyush Goyal announced in Budget speech.
- To start with, a committee will be set up under NITI Aayog to complete the task of identifying de-notified, nomadic and semi-nomadic communities, especially as they move from place to place in search of a livelihood. The committee will follow up on the work of the Renke Commission and the Idate Commission.
A Welfare Development Board will also be set up under the to design and Ministry of Social Justice and Empowerment implement programmes for these hard-to-reach communities, Mr. Goyal said. He said a substantial increase is proposed in the allocation for welfare of the scheduled castes and scheduled tribes.
Boosting realty sector:
- The interim Budget has announced several incentives for homebuyers, owners and real estate developers, designed to give a boost the real estate sector.
- Union Minister Piyush Goyal proposed to exempt the notional rent from a second self-occupied house from tax. Earlier, the second home, even if it was occupied by the owner, was considered to be on rent and tax was levied on this notional rent.
Middle Class favor:
- Keeping in mind about the difficulty of the middle class having to maintain families at two locations on account of their job, children’s education, care of parents, etc.
- Further, the Minister proposed to increase the roll-over of capital gains under Section 54 of the Income Tax Act from investment in one residential house to two for a taxpayer with capital gains up to Rs. 2 crore. This benefit can be availed only once in a lifetime.
Eliminating tax on the notional income of the second self-occupied house and allowing capital gain exemption on investment in a second house were much-needed rationalisations and should rejuvenate interest in real estate..
Benefits: The benefit of roll-over of capital gains has been increased from one house to two houses, up to Rs. 2 crore (once in lifetime), is a tremendous step by the government that will boost sales in both primary and secondary markets. The roll-over of capital gains tax on the sale of houses is expected to benefit people living in big cities such as Mumbai where property prices are very high.
By another proposal, there will now be no tax on house rents up to Rs. 2.4 lakh from the previous limit of Rs. 1.8 lakh, aimed at boosting investment in second homes.
Note: Other budget announcements are not included in this. The above are the important announcements from the Finance Minister for the Financial year (FY) 2019-20.
Source: THE HINDU