Moneycontrol
Last Updated : Feb 01, 2019 07:07 PM IST | Source: Moneycontrol.com

Govt move to hike income tax rebate, incentive for farmers to bode well for autos

The direct transfer scheme for the farmers means more money in the rural economy, implying greater push for two-wheelers and tractor OEMs

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Automobile original equipment manufacturers (OEMs) are likely to witness boost in demand based on the government’s decision to rise tax rebate limit to Rs 5 lakh as well as hike in the standard deduction limit.

The decision will increase income in the hands of consumers, which will push demand for auto OEMs, said EA Sundaram, CIO – Equities, DHFL Pramerica MF in a statement.

The direct transfer scheme for the farmers means more money in the rural economy, implying greater push for two-wheelers and tractor OEMs.

Finance Minister Piyush Goyal promised to put more money in the hands of the salaried and middle class by offering a full tax rebate for those with an annual income of up to Rs 5 lakh. For those whose income exceeding Rs 5 lakh, the existing rates and slabs will apply.

"The Finance Minister has done a brilliant job by not touching corporate taxes and giving relief to middle class tax payers in the election year. We expect the purchasing power of individuals to increase as direct cash to farmers, pension for unorganised workers and tax breaks for the middle class will increase the net cash in the hands of the consumers. Sectors such as FMCG and consumer durables would be the first beneficiaries," Abhishek Bansal, Chairman, ABans Group of Companies said in a statement.

Goyal also raised the "standard deduction" – a flat amount on which taxes are not paid—to Rs 50,000 from Rs 40,000 annually. He also raised the tax exemption on bank deposit interests to Rs 40,000 from Rs 10,000 currently.

Between all the juggling and with some nifty tweaking, Goyal offered farmers — battling falling prices barely enough to cover costs — something to cheer about.

Goyal also announced Pradhan Kisaan Samman Nidhi that will enable farmers to receive Rs 6,000 a year directly into their bank accounts. About 120 million farmers owing up to two hectares of land will be eligible scheme.

 
First Published on Feb 1, 2019 07:07 pm
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