Budget 2019: Top Takeaways For Parents
The Union Budget 2019 has made petrol, diesel and gold costlier while electric vehicles have become cheaper. What else does the Budget 2019 have in store for you and your family? Find out here.
By Team ParentCircle • 15 min read
ParentCircle brings to you the live updates and highlights of the Union Budget 2019, and what it means to the Indian parent. Learn how the budget might impact your family's financial decisions in the coming year. Should you finally invest in that dream house? Is it finally affordable to buy an electric vehicle? Will the increased gold prices affect your investment plans? What about savings and travel? Read on to find out what the Union Budget brings to you and your family.
Key Highlights of Union Budget 2019 for Parents
- Affordable housing: An additional deduction of Rs 1.5 lakhs for interest on loan borrowed on housing as against Rs 2 lakhs earlier, to be made available until March 31, 2020. If you have been sitting on the fence about making a decision to buy that dream house, this is the time to act!
- PAN and Aadhaar interchangeable: The budget proposes to make PAN card and Aadhaar interchangeable. This means that if someone does not have a PAN card, but does have a taxable income, they need not fret. They can file their IT returns (ITR) using their Aadhaar card. And going forward, you will be able to use your Aadhaar in place of PAN for financial transactions such as investing in mutual funds, buying gold, vehicles, etc.
- Affordable electric vehicles: The Government has formulated a series of measures to boost the demand for electric cars. After recently moving the GST council to reduce the GST on electric cars from 12 per cent to 5 per cent, the Government has now proposed an additional income tax benefit to the tune of Rs 1.5 lakhs, on the interest on car loans taken for the purchase of electric cars. So, in case the cost factor was holding you back from buying an electric car or scooter, this year is a good year to take that plunge. And the best part about purchasing electric cars, is of course, you doing your bit to reduce air pollution!
- No change in Income Tax: After the Interim Budget proposed to give full tax rebate for individual taxpayers who earn up to Rs 5 lakhs, nothing new was expected from the Union Budget for the personal income tax rates. Hence, income tax slabs continue to remain the same. This means no additional burden for the middle-income salaried class.
- Fuel (petrol and diesel) prices increased: With the increase in special additional excise duty and infrastructure cess each by Re 1, fuel prices will increase. Commute to office and school will cost more. Carpooling never looked more appealing!
- Gold price increased: If buying gold was a means of long-term investment for you and your family, the yellow metal is set to get more expensive this year. The Union Budget has made provision to increase the customs duty on gold and other precious metals from 10 to 12.5 per cent.
- Focus on new-age skills: Keeping an eye on world economies and struggling with a lack of young labour force, the Government is focused on training the youth of India in new-age skills to make them better-equipped to snag high-paying jobs in India and abroad. While presenting the budget, the Finance Minister, Nirmala Seetharaman quoted the ancient saying ‘Kayakave Kailasa’ – work is worship and said under the Pradhan Mantri Kaushal Vikas Yojana, the Government will lay special emphasis on training in areas such as Artificial Intelligence, Virtual Reality and Robotics among other streams. Parents of teenagers and young adults, look out for these programmes.
- Improved rail services: Do you want your children to travel the length and breadth of India by rail but hope for better train services? The coming years will see a major revamp as a new public-private partnership (PPP) is set to hail a new era of Indian Railways. Railway infrastructure needs an investment of Rs 50 lakh crore between 2018 and 2030, and PPP will be used to usher faster development of passenger and freight services.
Improved educational facilities: There is good news all round for the education sector! The Union Budget plans to allocate Rs 400 crore for world-class higher education institutions in FY 2020 and is set to introduce a new education policy with changes proposed for school and higher education. Government set to launch “Study in India” programme to attract foreign students to Indian alma maters. Children interested in research have reason to cheer as well, as the National Research Foundation plans to fund, coordinate and promote research in the country!
AV Senthil, a financial expert shares his opinion on the Union Budget 2019 with ParentCircle. He says, “Nothing is a miss in the Budget 2019 – as we will yield the results of this budget in the long run. Also, there are no negatives for the short term either. Be it the additional deduction of Rs 1.5 lakhs for interest on home loan, the reduced GST rate for the electric vehicles, the proposed 50 lakh crore investment in the Indian Railways – are all a welcome change. Further, the proposed interchangeability of the PAN and Aadhaar will make life easier for families. This move particularly benefits those homemakers who may not have had a PAN card but a secondary income. So now they need not go through the hassle of filling up a form and applying for a PAN, as an Aadhaar would simply do."
"As far as education is concerned, this is a good time for both parents and students. Over the coming years, probably by 2025 or 2030, India is set to have superior educational institutions equipped with world-class infrastructure like that of IIT and IISc. I am also anticipating considerable revamp in terms of higher education, and the Government also plans to promote research facilities. In the near future, the need for Indian students to travel abroad for further studies would diminish." adds Senthil.
Other Highlights of Union Budget 2019
- How do you picture the budget papers before presentation? Nicely packed in a leather briefcase? Wrong, this year’s budget was wrapped in a red silk cloth, referred to as the bahi-khata. A bahi-khata is the Indian system of bookkeeping which consists of handmade paper bound with thread and draped in cloth.
- What could the connect be, between Urdu poet Manzoor Hashmi and the Union Budget 2019? Apparently, the Finance Minister began her budget speech with an Urdu couplet. It lauds the power of positivity and goes like this, “Yakeen ho to koi raasta nikalta hai, hawa ki oat (protection) se chirag jalti hai.”
- A proud moment for all women — Nirmala Sitharaman is the second woman in the history of independent India to present the Union Budget.
- Nirmala Sitharaman's parents, Savitri Sitharaman and Narayanan Sitharaman, were specially invited to the parliament, and they experienced the honour of watching their daughter present the historic budget!
Budget 2019: Important Terms To Know
Bahi-khata: It is a traditional system of book-keeping, where the handmade ledger is binded with thread. It is usually wrapped in red-coloured cotton clothes.
Budget: A detailed statement of the Centre’s revenues and expenditures in a given fiscal year.
Fiscal consolidation: Aimed at reducing Government deficits and debt accumulation.
Revenue deficit: Difference between revenue expenditure and revenue receipt.
Gross Domestic Product (GDP): Refers to the market value of all officially recognised final goods and services produced within a country in a given period.
Direct tax: Income tax, corporate tax and inheritance tax — levied on the income of individuals or organisations.
Income tax: Income of individuals from various sources like salary, investments and interest.
Indirect tax: Taxes paid by consumers when they buy goods and services.
A national interim budget: Refers to the budget of a Government that is going through a transition period.
Vote-on-account: A special provision by which the Government obtains Parliament’s approval for funds sufficient to incur expenditure for a part of the year (till the formation of a new Government) enabling it to incur expenses till a full budget is prepared.
While you just looked at the positives and negatives of Modi 2.0's first budget, scroll below to compare this with what the Interim Budget, presented in February (before the General Elections) had for you.
Interim Budget (February 2019)
This is how interim Budget 2019 will impact your financial decisions in the coming year. Interim Finance Minister (FM) Piyush Goyal managed to surprise us all!
1. To begin with, while there is no change in the prevailing income tax slabs, there is full tax rebate for individual taxpayers who earn up to Rs 5 lakhs. However, with this tax rebate, individuals with gross income up to Rs 6.5 lakhs will not need to pay any tax, provided they make investments in provident funds (PF) and other instruments prescribed under Section 80C.
2. Do you have property that you rent out? Well, the TDS threshold on rental income has been raised from Rs 1.8 to Rs 2.4 lakhs. Also, there will be no tax on notional rent on your second self-occupied house.
3. Here's an opportunity to save more. The TDS limit on post office savings has gone up from Rs 10,000 to Rs 40,000. Standard deduction has also been raised to Rs 50,000 from Rs 40,000.
4. When it comes to paying taxes, the assessment and verification of IT returns will be done electronically.
5. Currently, banks deduct TDS on fixed deposit interests earned over Rs 10,000, in a year. The minister proposes to increase this exemption limit to Rs 40,000. This proposal will benefit senior citizens in your family as they depend on interest income from small savings schemes.
6. The FM announced that tax-free gratuity amount will be increased to Rs 30 lakhs from the current Rs 10 lakhs. This means that employers will be able to pay higher tax-free gratuity to employees who have been with them for five years or more.
7. Planning to purchase a vehicle in the coming financial year? Watch the electric vehicle (EV) segment closely The Government hopes to boost the domestic EV industry by cutting import duty on parts and components. Cheaper electric vehicles could soon be available in the market and, best of all, you will be doing your bit for the environment.
8. This summer, do you want your child to spend time with your grandparents in your hometown? But, does the thought of a long train journey deter you? The Government is proposing a new UDAN scheme to promote low cost flights to Tier-2 and 3 cities. Currently the civil aviation ministry has announced the third leg of the UDAN scheme.
9. Do you love going to multiplexes with your family? If so, get set to see more exotic locales on the silver screen. The Government proposes a single window clearance for film-making so that Indian film-makers find it easier to plan shoots abroad.
10. Lastly, if you are planning to buy a house, more affordable housing will soon be on the market. The Government has recommended that the Goods and Services Tax (GST) council reduces GST rates for home buyers.
What the expert says
According to Satish Kantheti, a Hyderabad-based financial analyst, the following are the hits and misses of Interim Budget 2019:
- Families with a total income of Rs 5 lakhs and less, benefit the most with no tax.
- Families with a total income that stands between Rs 5 and Rs 6.5 lakhs also stand to benefit, if they avail the section 80C income tax deductions of up to Rs 1.5 lakhs that include LIC insurance, fixed deposit, tuition fees and more.
- Families with a total income that stands between Rs 6.5 lakhs and Rs 10 lakhs, benefit from a cost saving of Rs 2,080 per year. And those with income above Rs 10 lakhs, save around Rs 3,120 per year.
- The fiscal deficit has increased and this may affect or reduce the bank interest rates.
- In case the Government changes in between, the benefits may or may not continue.
Also read: How to Spend/Save Money on Your Preschooler
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