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Decoding Budget 2019: Hits and Misses for middle class

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New Delhi, July 06: Budget 2019 was widely expected to announce major tax-reliefs for the middle class. Dashing all hopes Modi 2.0 failed to deliver any of the much awaited tax cuts. The taxpaying middle class has been left high and dry once again, with a few token gestures.

No change in personal tax

FM Nirmala Sitharaman reiterated full tax rebate for individuals with net taxable income up to Rs 5 lakh.

Decoding Budget 2019: Hits and Misses for middle class

"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. Only when their annual taxable income exceeds 5 lakh, they are required to pay any income tax," Sitharaman said.

Now interchangeable: You can file Income Tax returns without a PAN card, thanks to Aadhaar

FM has proposed to increase the surcharge on individuals having income between 2-5 crore to 3 per cent, and 7 per cent for those with income exceeding Rs 7 crore. Unfortunately, there were none for individual taxpayers, something which left many quite disappointed.

Middle class sees red over petrol, diesel hike.

Giving jolt to the middle class, the petrol prices shot up by Rs 2.50 per litre, diesel prices hiked up by Rs 2.30 per litre just hours after the union budget was presented.

On Friday, a litre of petrol cost Rs 70.51 in Delhi and Rs 76.15 in Mumbai. Diesel was priced at Rs 64.33 a litre in Delhi and Rs 67.40 per litre in Mumbai.

Also, the finance minister levied Re 1 per tonne customs or import duty on crude oil. India imports more than 220 million tonnes of crude oil; and the new duty will give the government Rs 22 crore additionally.

Gold gets expensive

Sitharaman's budet speech might not be music for the middle-class consumers who buy gold for various reasons. The government has increased customs duty on gold and other precious metals to 12.5 per cent from the existing 10 per cent.

This has come as a piece of bad news for middle-class consumers as they buy gold for both consumption and investment purpose.

Aadhaar PAN interchangeable

Making it convenient for the tax-payers, the government has proposed to make PAN and Aadhaar card interchangeable and allow those who don't have PAN to file Income Tax Returns by quoting their Aadhaar card number. Sitharaman also told the House that more than 120 crore Indians have Aadhaar and so the proposal intends to make the process more convenient for the tax-payers.

Rs 1.5 lakh reduction on affordable house

Continuing with its focus to realise the goal of Housing for All by 2022, the government in Budget 2019 announced major tax benefits that will help stimulate demand for the affordable housing.

Interest deduction up to Rs 3.5 lakh for affordable housing (priced upto Rs 45 lakh) as against Rs 2 lakh earlier will now be available until March 31, 2020.

This will not only help in reducing the EMI burden, it can also help a large pool of working people own their dream house. Allowing ETFs to qualify under Section 80 C is a good move for saving tax as well as giving one more choice to investors.

Nirmala Sitharaman proposes starting exclusive channel for startups

As many as 1.95 crore houses are proposed to be provided to eligible beneficiaries under PMAY-Grameen, while another 19.5 million houses are to be constructed under PMAY-Urban between 2020 to 2022.

One Nation One Card

Digital payments will get cheaper, govt will launch an ATM-like One Nation One Card for pan-India travel and new model rental laws will be unveiled to boost affordable housing. The Centre's ambitious plan allows holders to pay for their bus travel, toll taxes, parking charges, retail shopping and withdraw cash.

EV cars cheaper

While customs duty on some parts used in EV manufacturing has been brought down to nil, the GST rate on electric vehicles will be lowered to 5 per cent from 12 per cent. To boost the use of electric vehicles, an additional income tax deduction of Rs 1.5 lakh on interest paid on loans taken to purchase EVs has been proposed.

TDS hike

TDS was imposed on cash withdrawals but that will not hurt the common man as it is only for high value annual withdrawals. Alternatively, low-cost digital modes of payment such as BHIM UPI, UPI-QR Code, Aadhaar Pay, certain Debit cards, NEFT, RTGS, etc. can be used to promote less cash economy and to avoid charges. Hence, business establishments with annual turnover more than 50 crores should use such low-cost digital modes of payment to their customers and no additional charges or Merchant Discount Rate (MDR) will be imposed either on customers or on merchants.

Support for startups

The Budget has addressed the challenges faced by startup ventures by relaxing or clarifying tax ambiguity surrounding this segment. The big focus on startups in the Budget will encourage people, specially youngsters, to look at this as one of the opportunities to build their future as well as the future of India.

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