New Delhi: Brushing aside all conventions with an eye on the coming elections, Finance Minister Piyush Goyal on Friday showered tax sops for the middle class and salaried taxpayers including zero tax liability for those with income is up to Rs 5 lakh and announced an annual income support of Rs 6,000 for small farmers and contributory pension for labourers in the demonetization-hit unorganized sector.
Filling in for an ailing Arun Jaitley, in his 100-minute speech, Goyal also announced raising the Standard Deduction for the salaried class and pensioners from Rs 40,000 to Rs 50,000 and proposed exemption from tax on notional rent on second self-occupied home. This would help families maintaining homes at two locations due to their jobs.
In a big relief for the middle-income group, he increased the rebate under Section 87A of the Income Tax Act from Rs 2,500 to Rs 12,500 - the equivalent of 5 per cent tax on Rs 2.5 lakh to Rs 5 lakh slab - and also raised the eligibility criterion for claiming the rebate to Rs 5 lakh from Rs 3.5 lakh earlier. This effectively reduces the tax liability of those with net taxable income up to Rs 5 lakh to nil.
However, tax liability for those with net income above Rs 5 lakh would still start from Rs 2.5 lakh as earlier. The Interim Budget neither changed the existing tax rates or the slabs.
Following BJP's defeat in the Hindi heartland states in December on perceived stress in agriculture and informal sectors, the Budget came out with direct income support of Rs 6,000 per annum for small farmers with land-holding size up to two hectares which would be transferred directly into their bank accounts.
The scheme would be funded entirely by the Central government and would directly benefit 12 crore farmer families, he said to the cheers of the ruling benches.
For the demo-hit unorganised sector, Goyal announced a contributory pension scheme providing for Rs 3,000 per month on attaining 60 years that will benefit ten crore workers in the unorganised sector.
Those who enter the scheme at 18 years will have to pay a monthly premium of Rs 55 while those who register at 29 years will have to pay Rs 100 per month till they reach 60. The government will contribute a matching share in the pension account of workers.
This scheme, he said, will be implemented from the current year and a sum of Rs 500 crore has been allocated, and more will be given if needed.
In a big relief to pensioners and senior citizens, he also raised the threshold for Tax Deduction at Source (TDS) on interest received on bank deposits from Rs 10,000 to Rs 40,000, and TDS on rent from Rs 180,000 to Rs 240,000.
He said while the changes in the tax structure would be made in the regular Budget, people needed certainty in their minds at the beginning of the year about what taxes they would have to pay and went on to announce the tax sops in Part B of his speech.
( With agency inputs)