Union Budget 2019: Middle class India will find its expenses rising after Nirmala Sitharaman's Budget
Here's how taxpayers will feel the pinch of Nirmala Sitharaman's Budget 2019.
Presenting her maiden Budget in Parliament, Finance Minister Nirmala Sitharaman announced that the Union Budget 2019 aims 'mazboot desh ke liye mazboot nagrik'.
The Budget speech that ran well over 70 minutes, however, steered away from giving specific numbers for any scheme or sector.
It also left some wondering about how mazboot the nagrik can be, given certain announcements, or the lack thereof.
In terms of taxation, which announcement was eagerly awaited by the salaried/professional middle class, the government refrained from giving any relief to the common citizen.
Sitharaman kept the income tax slab rates unchanged — but announced a slew of new income tax proposals that could impact many taxpayers. The FM said, "Let me recall and reiterate this Government's effort over the past five years to alleviate the tax burden on small and medium income earners. This includes self-employed as well as small traders, salary earners, and senior citizens taxed only when their annual taxable income exceeds 5 lakh."
Living up to the promise made by Piyush Goyal in the Interim Budget, Sitharaman proposed full tax rebate for individuals with a net taxable income up to Rs 5 lakh.
There was no annoucement for those earning more, however.
But Sitharaman also attempted to widen tax collections by proposing to increase the surcharge on 'super-rich' individuals having income between two and five crore to 3% and 7% for those with an income exceeding seven crore.
Increasing excise duty and road cess by Rs 1 each a litre on petrol and diesel says @nsitharaman. Import duty on gold to go up from 10% to 12.5% #Budget2019 @DeccanHerald
— Sitaraman Shankar (@shankarsview) July 5, 2019
In its first Budget in 2014, the Modi government had increased income tax exemption limit by Rs 50,000 — that is, from Rs 2 lakh to Rs 2.5 lakh in the case of individual taxpayers, below the age of 60 years. For senior citizens, the limit was raised from Rs 2.5 lakh to Rs 3 lakh. These moves had caused a certain feel-good factor, missing now.
Perhaps, as a compensatory measure, to simplify tax administration itself, Sitharaman has proposed interchangeability of PAN and Aadhaar cards while filing returns. "Those who don't have PAN can file ITR by simply quoting Aadhaar number," Sitharaman noted.
Don't have a PAN card? No worries, you can now file your Income Tax returns using your #Aadhaar number#Budget2019 introduces many measures for you to pay tax more easily➡️https://t.co/xjexmVNmdQ#BudgetForNewIndia pic.twitter.com/UGltgHjMah
— PIB India (@PIB_India) July 5, 2019
Importantly though, while the middle class failed to get any tax relief, it is staring at the prospect of an increase in its spending with Sitharaman proposing a hike of Rs 1 in the customs duty on fuel.
When petrol and diesel prices rise, it leads to a rise in inflation as prices of all essential commodities rise, pushed by a higher cost of transport. So, while producers may benefit from the higher costs of items, consumers and the middle class will continue to have to work within a relatively tight budget of their own.