Finance Minister Nirmala Sitharaman Friday hiked tax on petrol and diesel, raised import duty on gold, levied additional surcharge on super rich and brought a tax on high value cash withdrawals as she presented her maiden Union budget in the Parliament.
She said that the “2019 budget reflects long-term goals. Govt has responded comprehensively to the NBFC issue”.
“The Budget’s aim was to lay out the 5-year target, 10-year vision and various ways in which we can achieve it through measures for rural and urban, youth, among other things,” she said.
“Emphasis in Budget is on overall development of economy, of both rural & urban areas. Emphasis on environment has been laid, with a focus on issues such as conversion of waste to energy. We looked at rural initiatives, all of which will give certain dynamic to the rural areas. We looked at how urban living can be better,” Sitharaman was quoted as saying.
Those with a taxable income of Rs 2 to 5 crore will now pay 39 per cent tax while those with more than Rs 5 crore income would pay 42.47 per cent peak tax.
Furthermore, first-time homebuyers, buying a house not exceeding Rs 45 lakh, would get an additional deduction of Rs 1.5 lakhs towards interest.
The government has allocated Rs 1,12,079.57 crore for defence pensions. Along with the defence budget, the total defence allocation comes to around Rs. 431,010.79 crore and accounts for 15.47 percent of the total Central government expenditure for coming fiscal.
The Indian government expects to earn around Rs 12,000 crore from the hike in surcharge for the high income group. A surcharge will be levied on individuals with taxable income of Rs 2 to 5 crore, and Rs 5 cr and above.
The effective tax rate for these categories will increase by around 3 percentage points and 7 percentage points, respectively.
To spur consumption, she lowered corporate tax on companies with revenue of up to Rs 400 crore to 25 per cent from 30 per cent. The finance chief secretary said that bringing 99.3 percent companies under the lower 25 percent tax net will mean a loss of roughly Rs 4,000 crore.
The excise duty and cess on petrol and diesel were hiked by Rs 2 per litre each and import duty on dozens of items ranging from gold to automobile parts and tobacco products was increased. The customs duty on gold has been increased to 12.5 per cent from 10 per cent.
“The Indian economy will grow to become a $3 trillion economy in the current year (from $2.7 trillion last year). It is now the sixth largest in the world,” she said, adding the target is to take it to $5 trillion in coming years. “This budget is setting out a vision, a target, for every sector of our society.”
However the former finance minister P Chidambaram claimed that the Union Budget was “bereft of any reforms”.
“The most disappointed person must be the chief economic adviser. The only investment-related proposal was to increase the FPI percent. The Modi government treats India as one big state government. Apparently the prime minister believe that only his government can deliver basic public goods and services. It is not good to reduce state government to local administrations,” he said.
Union Minister Piyush Goyal on Budget 2019 said, “It’s a budget for all. It has addressed issues which will make ‘ease of living’ for the poor, the middle class. It has ensured large scale infrastructure development which have made life & living easy for 130 crore Indians, rich or poor.”
Sitharaman was seen holding the budget documents wrapped in a red cloth, the traditional ‘bahi khaata’ way, instead of the leather briefcase that until now her predecessors marched out with.