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For those who do not have in depth knowledge of economics, which makes up a large section of the Indian youth, the Union Budget speech is not easily decipherable. While matters of macroeconomics are not those that we concern ourselves with, we are all part of it. A better understanding of the changes in the nation’s economics is a necessity in order to remain informed citizens as well as for your savings. From tax reforms to increase in fuel and gold rates, there are a number of reforms that were declared in Budget 2019 that will impact the common people directly.
The presentation of the budget drew a lot of attention since the newly appointed finance minister is the first woman to hold the role. She claimed that the proposed changes are a way for the nation to become an economic ‘superpower’. But according to most of the experts who have covered the budget 2019 on varied media platforms, it still remains on a path of continuity, rather than of change.
Electronic Vehicles Are The Way To Go
Those who love their vehicles are in for some sad times as local taxes are increasing on petrol and diesel by Rs.2 per Litre which is broken down as Special Additional Excise Duty and Infrastructure Cess. There is also an Import Tax of one rupee per tonne being applied on crude oil. While this does come as a major blow to current vehicles owners everywhere, the first time buyers opting for an electronic vehicle may get a better deal. The budget proposes a tax deduction of Rs.1.5 Lakh in the interests for vehicle loans, if they are electronic vehicles. This is a good move on the part of the government to both ensure a cleaner environment and create tax savings for the individual.
All Those Taxing Matters
For the salaried common people, there are no major changes. However, those with income of up to Rs.5 Lakh will not have to pay tax for the financial year 2019-20. But this does not mean waving good bye to filing tax returns. Unless you are earning less than Rs.2.5 Lakh, there is no way to get away scot-free as the zero tax benefit can only be availed by filing the tax returns and the rebate can be claimed. If you fail to do so, there is a late filing fee of Rs.1000.
For those who are earning more handsomely, the tax rates remain the same. But those who earn more than 2Cr, are facing the hurdle of additional surcharge on their tax rates. For those earning between Rs.2 Cr- 5 Cr, the effective tax rates will increase to 39 percent and it will go up to 43 percent for those earning above Rs.5 Cr.
Another major aspect of Union Budget 2019 is the changes that have been made regarding filing of Income Tax Returns. While those who have income below the exemption level was not required to file income returns at all, changes have been made. Those who engage in the following are required to file their returns as well, even if their salary falls in the exemption level:
· Those who take part in aggregate deposits exceeding Rs.1 Crore in a current account maintained with a bank
· Those whose aggregate travel expenditure to a foreign country for himself or others exceeds Rs.2 Lakh
· Those whose electricity consumption exceeds Rs.1 Lakh
Another takeaway from the union budget 2019 was the fact that PAN and Aadhar can be used interchangeably. This means that for purposes of filing your Income Tax Returns, your Aadhar can be used and such person will be allotted a PAN. This means that for other financial purposes where a PAN was required earlier, such as the deposit or withdrawal of cash worth more than Rs.50, 000 from bank accounts can be done using Aadhar.
Homeowners Rejoice!
A major concern for the new Finance Minister is regarding affordable housing and for this purpose, she has proposed a deduction of Rs.1.5 Lakh towards housing loan interest payment on residential properties whose value does not exceed Rs.45 Lakhs. This is only for first time residential property owners. This is in addition to the existing deduction of Rs.2Lakh already available.
Something that can make life easier for many is the change of tax on notional rent. Before the last budget, if anybody owned more than one property in the nation, only one would be tax-free and considered self-occupied. Even if they did not have anybody living there, it would be subject to income tax on notional rent income. But with the current reform, two house properties can be considered as self-occupied. For example, if one is living in Mumbai and their parents are in Delhi, and both the houses are under the name of the same person, they can be now considered self-occupied, while this was not the case earlier.
What About My Gold?
Those who are getting married or like to invest in gold or precious jewelry might be disappointed to know that there is a proposed hike in import duties on them. The duties are being raised to 12.5 percent from 10 percent. Since gold has such a huge significance in India both emotionally and socially, there is also concern that this might lead to a hike in smuggling attempts.
A few other matters of concern are that the defense spending which was already at a level of 1.6 percent of the GDP and is now at an even lower percentage. While ‘Study in India’ plans are being proposed by the Finance Minister to increase international students coming to India for educational purposes, the total federal spending for education is only 3.4 percent, decreasing from 3.47 percent of the last financial year.
As the new budget comes in to action, we are all going to be affected in one way or another. Rather than remaining apathetic about something that could impact our lives in a massive way, we should ensure that we are informed citizens who knows where our money is going to and know what questions to ask and where.
If you would like to read the official union budget report in its entirety, you can find it here.
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