BUDGET REINVENTS MEANING OF INTERIM WITH TAX & FARM SOPS ... INTERIM=DAYLIGHT BRIBERY

JAYANTA ROY CHOWDHURY AND R. SURYAMURTHY, TT, 02 Feb 2019, New Delhi: The Narendra Modi government on Friday broke with over 70 years of parliamentary convention and used an "interim" budget to sharpen its sickles in an attempt to harvest votes in the general election.

The budget offered a tax break to 30 million middleclass taxpayers, cobbled a Rs 75,000-crore cash handout for 120 million small and marginal farmers and announced a repackaged pension scheme for unorganised workers.

Individuals with a taxable income up to Rs 5 lakh a year will no longer have to pay taxes. The additional tax deductions mean that salaried taxpayers with an income up to Rs 9.75 lakh may tumble out of the tax net. (See report below) Stand-in finance minister Piyush Goyal offered a direct cash support of Rs 6,000 a year -- to be paid in three instalments -- to small farmers with a landholding of up to 2 hectares in an effort to quell the growing farmer unrest over depressed rural incomes. The government will fork out Rs 20,000 crore this financial year for the programme, called Pradhan Mantri Kisan Samman Nidhi. The cost in a full year will be Rs 75,000 crore. Goyal announced a monthly pension of Rs 3,000 for unorganised workers aged above 60 that will cover migrant labour and household help. Under the contributory pension scheme, workers with a monthly income of less than Rs 15,000 will have to contribute a small amount till they turn 60. The government has set aside Rs 500 crore for the scheme this year.

The salaried class has got some relief with the increase in the standard deduction. The threshold for tax deduction at source on the interest from fixed deposits with banks and post office deposits has been raised from Rs 10,000 to Rs 40,000.

People with second homes will no longer have to pay tax on a notional rental income.

The benefit of the rollover of capital gains under Section 54 of the Income Tax Act will be increased from investment in one residential house to two residential houses for a taxpayer having capital gains up to Rs 2 crore. The benefit can be availed only once in a lifetime.

No previous administration has ever loaded an interim budget with tax and cash lollies, exercising the restraint in deference to a convention and preferring instead to articulate intentions and outline the programmes they would impl- ement if voted back into office. The Modi government thumbed its nose at tradition and decided to put out a document that could turn a postelection budget into a tiresome, prosaic ritual if it storms back to power.

Minister Arun Jaitley, who gave up the finance portfolio temporarily for treatment in New York, said precedents existed. Although some indirect taxes had been changed in earlier instances, few could recall revisions in direct taxes such as the income tax in interim budgets. Jaitley rejected the "artificial distinction" between direct and indirect taxes. (See Page 4) Mere crumbs The cash handout to farmers drew sharp criticism from opponents of the BJP and farmers who felt crumbs were being thrown their way.

Congress president Rahul Gandhi tweeted: "Five years of your incompetence and arrogance has destroyed the lives of our farmers. Giving them Rs 17 a day is an insult to everything they stand and work for." "The historic Rs 6,000 a year for a family of five translates into Rs 3.30 per day. This is even lower than MNREGA or old-age pension scheme," tweeted Yogendra Yadav.

WHO BENEFITS : Income-tax exemption limit remains Rs 2.5 lakh Rebate raised from Rs 2,500 to Rs 12,500 Standard deduction up from Rs 40,000 to Rs 50,000 TDS exemption for interest earned from deposits in banks and post offices raised from Rs 10,000 to Rs 40,000 Rs 6,000 annual dole for small farmers (those owning less than 2 hectares of cultivable land) Rs 3,000 monthly pension for unorganised-sector workers above 60 years against a monthly contribution (if the worker joins the scheme at 29, she will have to contribute Rs 100 a month till she is 60). 2% interest subvention for farmers pursuing animal husbandry and fisheries or hit by natural calamities 3% interest subvention for farmers who repay loans on time No tax on notional rent income on purchase of second house.