New Delhi: Finance Minister Nirmala Sitharaman on Saturday slashed income tax for individuals, abolished dividend tax for companies and announced record spending in agriculture and infrastructure sectors to pull the economy out from its worst slowdown in more than a decade.
The cut in income tax rates, which would help save about R 31,000 a year in tax for people with annual income of up to R 17 lakh, was, however, conditioned on current exemptions and deductions, including standard deduction for R 50,000 as well as the waiver earned on payment of up to R 1.5 lakh in tuition fee of children, and contribution towards insurance premium and provident fund, being given up.
u201c We wanted to place money in the hands of people, particularly the middle class and lower- middle classes. We also want to simplify the income tax process and increase compliance,u201d said Sitharaman, while speaking at a press conference on a lower income tax rate.
She raised import duty on a variety of products ranging from tableware and kitchenware to electrical appliances to footwear, furniture, stationery and toys to boost domestic manufacturing, while at the same time provided funds to help farmers set up solar power generation units and coal storages to transport perishables.
Alongside, the limit of insurance cover in case of bank failure on deposits was increased to R 5 lakh from R 1 lakh and a sale of government stake in the countryu2019s largest insurer Life Insurance Corporation ( LIC) announced.
Presenting her second budget in Parliament, Sitharaman said the 2020- 21 Budget was aimed at boosting incomes and enhancing purchasing power, stressing that the economyu2019s fundamentals were strong and inflation was well contained.
For farm and rural sectors, she allocated R 2.83 lakh crore and fixed R 15 lakh crore target for giving agriculture credit.
Another R 1.7 lakh crore spending was planned for transport infrastructure and R 40,740 crore allocation was made for the energy sector.
While many everyday items are set to get cheaper, such as skimmed milk, certain alcoholic beverages, soya fibre, raw sugar, and husbandry- based products, items such as cigarette and tobacco products will become dearer. Excise duty on cigarettes and tobacco products and custom duty on footwear and imported furniture has been increased. Health cess on the import of medical equipment has increased as well.
Custom duty on wall fans has gone up from 7.5 per cent to 20 per cent. Customs duty on tableware/ kitchenware made of porcelain or China ceramic, clay iron, steel, copper has doubled to 20 per cent. Customs duty on import of newsprint, the lightweight coated paper has been reduced to 5 per cent, making it cheaper.
