Union finance minister Nirmala Sitharaman on Friday presented the first Budget of Modi government 2.0 breaking. While becoming the second woman in the history of Independent India to present the Union Budget in the Parliament, Sitharaman also ended decades long practice of carrying a brief and showing it off just before entering the House. Sitharaman’s Budget was wrapped in a red cloth and she called it ‘Bahi khata’, which according to CEA symbolised the end of slavery culture.
Reeling under inflation, the middle class was expecting some major relief in the Budget. However, this did not happen. The Income Tax rebate announced in the Interim Budget by Piyush Goyal before the General Elections was left untouched and income upto rs five lakh continue to remain tax-free. Gold and petrol prices are set to surge with an increase in duty. The import duty on gold and other precious metals was 10 per cent and Nirmala Sitharaman has increased it to 12.5 per cent, hike by 2.5 per cent, which would certainly make gold jewellery costlier and burning a bigger hole in the pocket of buyer this wedding season.
The finance minister also raised special additional excise duty and road cess on petrol and diesel by rs one litre each. She even claimed that lower crude oil prices provided her with an opportunity to review taxes on the sector. The additional tax was imposed at a time when a section of experts was wanted petrol and diesel to be included in GST to curb its soaring prices. In Nagpur petrol is hovering between rs 75 and rs 80 per litre mark at present. The Central and State government already generate good revenue by taxing petrol and diesel.
Basic customs duty was also raised on an array of products including tiles, cashew kernels, vinyl flooring, auto parts, some synthetic rubber, digital and video recorder and CCTV camera, which means all these products would become costlier.
PAN, Aadhaar interchangeable
In a move which could be termed as a major step towards economic reform, Nirmala Sitharaman proposed to make Aadhaar and PAN interchangeable for the purpose of filing Income Tax return.
Some relief to taxpayers
In some relief to taxpayers, Nirmala Sitharaman has provided for an additional deduction of rs 1.5 lakh on interest paid on loans borrowed upto March 2020 on purchase of a house upto rs 45 lakh. To boost use of electric vehicles, an additional income tax deduction of rs 1.5 lakh on interest paid on loans taken to purchase electric vehicles was proposed.
More tax on super rich
Government has imposed additional taxes on super-rich with the peak tax rate at around 42.7 per cent, which is even higher than the USA (40 per cent). TDS of two per cent would be deducted on cash withdrawal exceeding rs one crore in a year from a bank account. Sitharaman also announced a surcharge of on individuals having taxable income of rs two crore and above (till rs five crore). For those having annual income more than rs five crore, government has raised their effective tax rate.
Efforts have been made in the Budget to boost growth and development of country. Sops were also announced for the industries. Corporate tax on companies with turnover of upto rs 400 crore has been reduced by five per cent. Now, such companies would be taxed 25 per cent instead of 30 per cent. So far, lower tax slab benefit was restricted to companies with turnover of less than rs 250 crore. FM claimed that 99.3 pc of corporate would get covered under this announcement.
FDI and cashless
The FM has announced various measures to boost FDI. She announced 100 pc FDI in insurance intermediaries and ease in FDI norms of various other sectors including retail market, animation, aviation and media. To encourage cash-less and online transactions, government has decided not to charge any fee on payments upto rs 50 crore using online platforms like BHIM UPI, Aadhaar Pay, NEFT, RTGS. No merchant discount costs would be imposed on customers or merchants too. The RBI and banks would bear its cost.
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