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    • 5 key takeaways from Interim Budget 2019-20

      Publish date: February 01, 2019

      By: Sandhya Kannan, Head – Content

      The acting Finance Minister Piyush Goyal presented the interim budget for FY2019-20 at the Parliament on 1 February 2019. With the general elections only a few months away, the finance ministry presented only an interim budget instead of a full-fledged one. But despite the limited scope, the budget included a major tax rebate for the middle class and a financial boost to the farming sector. This had large sections of the economy cheering. Here are the major highlights of the interim budget.

1)   Income tax relief for the middle class

The acting finance minister Piyush Goyal announced that individual tax payers with annual income up to Rs. 5 lakh would receive full tax rebate. This means they would not be required to pay any income tax. In addition, individuals with gross income of up to Rs. 6.5 lakh would not need to pay any income tax whatsoever if they make investments in provident funds, equities and insurance under Section 80C of the Income Tax Act.

This provides a tax benefit of Rs. 18,500 crore to an estimated 3 crore middle class taxpayers in the country. This has brought huge cheer from salary earners, self employed people, small business owners, traders, senior citizens and pensioners who come under this category.

Also read: Things to know about interim budgets

2)   Financial boost for farmers

The budget includes a special package of Rs. 6,000 per annum for farmers with less than 2 hectares of land under the PM Kisan Samman Nidhi. The income would be transferred directly to the bank accounts of beneficiary farmers in three equal instalments of Rs. 2,000 each. This program would provide financial assistance to roughly 12 crore vulnerable farmer families in the country.

Also read: 5 things to know about farm loan waiver

3)   Increase in consumption

One of the biggest takeaways from the interim budget is the increase in cash in the hands of people. Tax rebates for the middle class in addition to an increase in standard deduction from Rs. 40,000 to Rs, 50,000 for all salaried individuals means that people can afford to spend more during the year.

The government also announced a mega pension scheme called the PM Shramyogi Maan Dhan Yojana for workers in the organised sector who earn a monthly income of less than Rs. 15,000. Under this scheme people over the age of 60 years will earn Rs. 3,000 per month. More money in the hands of the people means an increase in spending and a greater consumption in both rural and urban areas.

4)   Fiscal deficit targets

Finance Minister proposed to revise the fiscal deficit target of 3.1% upward to 3.4% of GDP for FY2019-20. Fiscal deficit is a measure of the amount of money the government borrows during a year to meet its spending requirements. Lower than expected collections from Goods and Services Tax (GST) and slow progress in disinvestment earnings in addition to allocation of funds for populist schemes are considered to be the biggest reasons for the government to miss its fiscal deficit targets in FY2018-19.

Also read: 4 ways Budget 2018-19 affected economy according to RBI

5)   SME push

The Micro, Small and Medium Enterprises (MSME) sector provides employment to crores of people and plays a significant role in the economic growth of the country. And in order to strengthen this sector, the budget has stipulated that 25% of sourcing for government projects would be from the MSME sector. Out of this, at least 3% would be sourced from women-owned SMEs.

    • Interim Budget 2019: Here are the highlights   Read more

    • Full Budget speech text   Read more

  • Rs. 75,000 crore

    In addition to assured income support of Rs. 6,000 per year for farmers, the budget also proposed Rs. 75,000 crore on farm support. This funding by the government could propel rural consumption in a big way. So, companies involved in the production of tractors, hybrid seeds, two-wheelers and consumer durables are likely to see positive growth in the coming few months. Shares of consumer durable companies like Godrej, Bajaj, Blue Star and Whirlpool saw a huge rally during the day post the budget announcement.

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