Indian government on Friday announced new measures to boost farmers' incomes and cut taxes for the country's growing middle class as it courts voters ahead of general elections later this year, said media reports.

 

Making a big populist push in its final Budget before the general election, Prime Minister Narendra Modi’s government exempted people with an earning of up to Rs 5 lakh from payment of income tax, announced an annual cash dole-out of Rs 6,000 to small farmers and provided a monthly pension of Rs 3,000 to workers in the unorganised sector, reported PTI.

 

Converting what was supposed to be an Interim Budget or a vote on account into an almost full-fledged Budget announcement in the Lok Sabha, Finance Minister Piyush Goyal proposed an array of incentives for both middle-class and farmers, whose disenchantment was said to have cost the BJP dearly in recent assembly elections.

 

Over 3 crore salaried class, pensioners, self-employed and small businesses with total income of up to Rs5 lakh will save Rs10,900 in income tax annually after considering the relief Goyal provided in form of a ‘rebate’. 

 

For those making investments of Rs1.5 lakh in tax saving instruments, the tax-free income would be Rs6.5 lakh, it stated.

 

He also raised standard deduction by Rs10,000 to Rs50,000 which would translate into a saving of Rs2,000 to Rs3,000 in taxes for those with taxable income of Rs7.5 lakh and Rs20 lakh in a year.

 

Also, exemption from deduction of tax at source for interest income earned from deposits in banks and post offices has been increased to Rs40,000 from current Rs10,000. This would help all salaried taxpayers who lost out last year due to the removal of medical reimbursement and transport allowance exemptions.

 

As was widely anticipated, Goyal announced an income support scheme for 12 crore small and marginal farmers by providing Rs6,000 in their bank accounts in three equal installments in a year, which will cost Rs75,000 crore a year to the government, stated the PTI report.

 

A mega pension scheme was introduced to provide a monthly pension of Rs3,000 with a contribution of Rs100 per month for workers in the unorganised sector after 60 years of age.

 

Taking a dig at the Congress chief Rahul Gandhi, Goyal said: "Those sitting in AC rooms cannot understand the plight of the small farmers. Keeping this in mind, we have introduced the Kisan Samman Nidhi scheme. This is a historic decision.” 

 

“A holistic approach has been taken by the Government for the welfare of all sections of citizenry,” he stated.

 

A positive change, which will be a relief to all tax payers, is that the government is working on processing income tax returns and initiating refunds within 24 hours.

 

“Under new system being developed, income tax assessment to be done in 24 hours,” he added. 

 

Prime Minister Modi described the interim budget as "just a trailer" of the complete budget. "From middle class to labourers, from farmers’ growth to the development of businessmen, from manufacturing to MSME sector, from growth of the economy to development of New India, everyone has been taken care of in this interim budget", he said.

 

Indian stock market traders cheered the proposal of the increase the tax slab of the middle class, which boosted consumption stocks.

 

The Bombay Stock Exchange index rose as much as 522 points on Friday, before closing 0.59 per cent higher at 36,469.43. The Nifty 50 index closed 0.58 per cent higher at 10,893.65.

 

Lauding the budget, Union Minister Arun Jaitley said the government's decision to exempt income of up to Rs 5 lakh from tax will benefit the "great Indian Middle Class".

 

"Piyush Goyal has today made a significant announcement wherein income earners earning upto Rs 5 lakhs have been exempted from payment of Income-tax. This effectively strengthens the great Indian Middle Class whose expansion of purchasing power holds the key for India's future," the minister wrote in his Facebook post.

 

The budget marks a high point in the policy directions that the government headed by Prime Minister Narendra Modi has given to the nation, stated Jaitely who is away in New York for medical treatment.

 

Meanwhile Indian businessmen and leading executives in the UAE too have welcomed the new budget proposals and said the emphasis on agriculture and raising the tax limit will boost the economy in the longer run.