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This is not a populist budget. It's a practical budget
What does Budget 2021 mean for ordinary Indian? To answer this - we must look at the tax policy. Experts predicted an additional COVID cess to level the government's revenue loss. The salaried class was hoping for a tax cut. In the end, the government did neither. This is not a populist budget. It's a practical budget.
For citizens all over the world. A budget boils down to one thing, Taxes
How much of your income do you owe the state. In India, analysts were expecting the finance minister to tinker with the Income Tax slabs. But Nirmala Sitharaman resisted the impulse. There were no announcements on the direct tax front much to the disappointment of India's salaried class. A tax cut would have put more money in their pocket.
But with all the uncertainty around, some would argue it was the right decision.
Another negative market expectation -- was the COVID cess.
A progressive surcharge on the Income Tax. It would have meant more money for the government but additional burden on the people. Ultimately - the government decided against it. So for most of India's working class. There wasn't much in the budget. No bitter pill. But no extra relief either. Unless you're past 75 years of age and on your pension in which case - you're now exempt from filing income tax returns.
The bank that pays you the pension will automatically deduct the tax. No COVID surcharge, no new direct taxes.
But there is one change to India's tax regime. An agricultural cess.
It will be levied on everyday items like petrol and alcoholic beverages. But customers won't feel the pinch. Because the additional charge will be offset by a drop in other levies like excise duty.
For instance, an Agri-infra cess of Rs 2.5 has been imposed on petrol. At the same time, the excise duty on it has been slashed by the same amount.
So in effect, the consumer is paying the same. But the payments will go towards infrastructural development targetting agriculture. At an hour and 40 minutes, Nirmala Sitharaman's speech was among the shortest in recent history. One reason is how brief the section on taxation was. The government focussed on improving tax compliance rather than tweaking the policy. It's a conservative approach. But a safe one in the middle of a global crisis.