Budget highlights: Govt announces no income tax till Rs 5 lakh, Rs 6,000 income for farmers

Here are the highlights from the FM's speech:

Income Tax reliefs:
* No tax till Rs 5 lakh income for individuals tax payers
* Standard deduction increased to Rs 50,000 from Rs 40,000 for salaried class

Tax exemptions on investments:
* Individuals with gross income up to 6.5 lakh rupees will not need to pay any tax if they make investments in provident funds and prescribed equities
* TDS threshold for home rent increased from Rs 1.8 lakh to 2.4 lakh

* Interest income up to Rs 40,000 in post offices and banks made tax free
* Capital gains tax exemptions under Section 54 to be available up to Rs 2 crore. Capital gains exemption to be available on 2 house properties
* Income tax relief on notional rent from unsold houses extended to 2 years from 1 year

Other tax related reliefs:
* Income Tax returns to be processed within 24 hours and returns will be paid immediately
* Within nearly two years, almost all assessment and verification of IT returns will be done electronically by an anonymised tax system without any intervention by officials

For farmers:
* Rs 6,000 per year assured income support for small and marginal farmers
* Farmers having up to 2 hectare of lands will get Rs 6,000 per year in three equal installment. The scheme will be effective from December 1, 2018.
* Interest subvention for farm loan takers: Farmers affected by natural calamities to get 2% interest subvention and additional 3% interest subvention upon timely repayment
* 2% interest subvention to farmers who pursue animal husbandry, fisheries jobs through Kisaan credit cards
* Kamdhenu scheme for animal husbandary

GST:
* Group of Ministers to suggest ways to reduce GST for house buyers
* Direct tax collections increased from Rs 6.38 lakh crore in 2013-14 to almost Rs 12 lakh crore; The tax base is up from Rs 3.79 crore to 6.85 crore
* Businesses with less than Rs 5 crore annual turnover, comprising over 90% of GST payers, will be allowed to return quarterly returns
* Indian Customs to fully digitised exim transactions and leveraging RFID for logistic. Govt abolishes duties on 36 capital goods
* GST collections in January 2019 has crossed Rs 1 lakh crore

Sops for workers:
* Rs 3,000 per year pension for unorganised sector workers
* New Pradhan Mantri Shram Yogi Maandhan Yojana for unorganised sector workers with income up to Rs 15,000 per month. Beneficiaries will get Rs 3,000 per month pension with a contribution of Rs 100 per month after the retirement. Govt allocates Rs 500 crore for the scheme
Gratuity limit increased for workers

Rural allocations:
* Rs 60,000 crore for MNREGA
* Rs 19,000 allocated for construction of rural roads under Gram Sadak yojana

Defence Budget:
* Govt increases defence budget to over Rs 3 lakh crore. Govt will provide additional funds for Defence, if needed.
* We have disbursed 35,000 crore rupees under #OROP scheme in the last few years

Railways:
*Railway's operating ratio seen 96.2% in FY19 Vs 95% FY20.
*Railway capex for FY20 set at record Rs 1.6 lakh crore
* Today there is not a single unmanned railway crossing on the broad gauge in India.

Fiscal Deficit:
* For FY19, government has revised the fiscal deficit target to 3.4 percent in FY 19. Fiscal deficit for 2019/20 estimated at 3.4 percent of GDP.
* Government's stated commitment earlier was to bring down the fiscal deficit to 3.1 percent of GDP by the end of March 2020, and to 3 percent by March 2021
*Current account deficit at 2.5% of the GDP

* A single window clearance for filmmakers

* Nine priority sectors for govt: To build next-gen infrastructure - physical as well as social; (1) To build a Digital India that reaches every citizen; (2) Clean and Green India; (3) Expanding rural industrialization using modern industrial technologies; (4) Clean Rivers - with safe drinking water to all Indians; (5) Oceans and coastlines; (7) India becoming launchpad of the world; (8) Self-sufficiency in food and improving agricultural productivity with emphasis on organic food; (9) Healthy India; (10) Minimum Government MaximumGovernance, with proactive, responsible and friendly bureaucracy

Social schemes:
*Govt to build 1 lakh digital villages
* For the welfare of farmers and for doubling their income, historic decision was taken to increase MSP by 1.5 times the production cost for all 22 crops
* To ensure cleaner fuel and health assurance, we embarked upon Pradhan Mantri Ujjwala Yojana, a programme to give 8 crore free LPG connections to rural households, 6 crore connections have been given already
* Committee under NITI Aayog to be set up to for denotifed nomadic & semi nomadic communities
* A single window clearance for filmmakers to be made available to filmmakers, anti-camcording provision to also to be introduced to Cinematography Act to fight piracy

State of Economy:
*India is poised to become a $5 trillion economy in next 5 years, $10-trillion economy in the next eight years
* Black money: Committed to eliminating the scourge of black money; anti-black money measures taken have brought an undisclosed income of about 1.30 lakh crore rupees to the fore; 3.38 lakh shell companies were deregistered
*GST has been continuously reduced, resulting in relief of 80,000 crore rupees to consumers; most items of daily use for poor and middle class are now in the 0%-5% tax bracket
*Fiscal deficit seen at 3.4 percent in FY 19 and Current account deficit at 2.5% of the GDP
* We have recovered Rs 3 lakh crore through Insolvency and Bankruptcy Code. Govt expects banks on the central bank's Prompt Corrective Action list to be removed soon.
* Indian GDP: Growth in the last 5 years has been higher than that by any other govt. Spent Rs 2.6 lakh crore in recap of PSU Banks
* Average inflation in UPA government was 10% and we have brought that down that to 4 percent. Inflation in December 2018 was 2.1%. If we had not controlled inflation our families would have been spending 35-40 per cent more on daily use items
* We conducted transparent auctioning of natural resources like coal and oil
* Domestic air traffic doubled in the last 5 years
* Over 90 percent of the country has been covered under sanitation coverage. People have made this a social revolution and i thank the 130 people of the country. More than 5.45 lakh villages have been declared Open Defecation Free
* In the past, false promises were made but we have taken targeted expenditure on all dimensions
* Everybody will get electricity connection in the near future. We have provided 143 crore electricity bulb to the poor
* Ayushman Bharat the world's largest healthcare programme was launched to provide medical care to almost 50 crore people, resulting in 3,000 crore savings by poor families
* Lower costs of Stents & Knee implants have benefitted people. Government has announced 14 new AIIMS since 2014
* Loans worth Rs 7.23 lakh crore have been given under Mudra Yojana
*Monthly mobile data consumption has increased 50x in last 5 years; cost of data & voice calls in India is possible the lowest in the world

He said rules for small and medium-sized businesses and the manufacturing sector could be "tweaked to address issues such as liquidity, credit, capital formation, demand creation, attracting more private investments".

Stung by opposition parties' victories in three state polls in December and needing to call a national election by May, Modi has already exempted many small businesses from paying taxes under a unified goods and services tax (GST).

The government is now considering raising the income level at which people need to pay personal tax, long a demand for the country's influential middle class.

"The pressure to further expand the farmer welfare programme ahead of the 2019 elections is high for PM Modi," said CLSA India.

More than 900 million people will be eligible to cast votes in the world's biggest ever democratic exercise and the pressure to woo them is intense.

Rahul Gandhi, the leader of the main opposition Congress party, is closing in on Modi's lead, according to polls. His promise of a minimum income for the poor has increased pressure on the government to make populist announcements in its budget.

The electoral compulsions mean that major economic reforms, such as tax cuts for bigger companies and plans to bring down the budget deficit, could be put on hold at least until after the election, government sources said.

The higher spending, along with a shortfall in tax collections, will push the fiscal deficit up to the equivalent of 3.5 percent of gross domestic product for the year ending in March, overshooting a previous 3.3 percent target, according to one of the sources with direct knowledge of budget discussions.

That would fit with the expectations of a Reuters poll of economists.

The source said there was a chance that the government could take corrective action in March, with an expectation that the election schedule will be settled by that time and that public focus will shift to campaigning.

"In our view, with the upcoming polls gaining precedence, fiscal consolidation is likely to take a back seat," said Nirmal Bang, a brokerage.