Over 3 crore salaried class, pensioners, self-employed and small businesses with total income of up to Rs 5 lakh will save Rs 10,900 in income tax annually after considering the relief Goyal provided in form of a ‘rebate’.
For those making investments of Rs 1.5 lakh in tax saving instruments, the tax-free income would be Rs 6.5 lakh. The rebate will cost the government Rs 18,500 crore in revenue.
Standard deduction deduction raised by Rs 10,000 to Rs 50,000 which would translate into a saving of Rs 2,000 to Rs 3,000 in taxes for those with taxable income of Rs 7.5 lakh and Rs 20 lakh in a year.
Exemption from deduction of tax at source for interest income earned from deposits in banks and post offices has been increased to Rs 40,000 from current Rs 10,000
Govt announced an income support scheme for 12 crore small and marginal farmers by providing Rs 6,000 in their bank accounts in three equal installments in a year.
The eligibility for the scheme, called Pradhan Mantri Kisan Samman Nidhi, will be ownership of less than 2 hectares of cultivable land.
A mega pension scheme was introduced to provide a monthly pension of Rs 3,000 with a contribution of Rs 100 per month for workers in the unorganised sector after 60 years of age.
The farm income support scheme will result in the government breaching its 3.3 per cent fiscal deficit target from the current year and slipping on 3.1 per cent target for the next. Fiscal deficit for both the years has been put at 3.4 per cent of the GDP.
For anyone earning more than Rs 5 lakh annually will continue to pay taxes at the prevailing rates – no tax on first Rs 2.5 lakh, 5 per cent on income between Rs 2.5 and 5 lakh, 20 per cent on income between Rs 5 lakh and Rs 10 lakh and 30 per cent on earnings of over Rs 10 lakh.