Piyush Goyal's Key Tax Announcements And How Dalal Street Took It

In a major relief for the middle class taxpayer, Union Minister Piyush Goyal on Friday announced a full tax rebate to individuals with income up to Rs 5 lakh in a year. "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," Mr Goyal said while delivering his Budget speech in Parliament. The announcement comes in the backdrop of expectations of middle class-focussed tax changes by some experts. Union Minister Arun Jaitley, who is in the US for medical treatment, called the Budget as "pro-growth, fiscally prudent, pro-farmer and pro-poor" and one that gives more purchasing power to the middle class.

Here are 10 things to know:

1. The minister proposed a full tax rebate to individual taxpayers with an annual income of up to Rs 5 lakh. This means that net taxable income - after tax benefits on investments and standard deduction - of Rs 5 lakh will be tax-free.

2. In other words, the government has increased the rebate to Rs 12,500 -- the equivalent of 5 per cent tax on Rs 2.5 lakh to Rs 5 lakh slab -- and the eligibility criterion for claiming the rebate to Rs 5 lakh from Rs 3.5 lakh.

3. He also proposed to raise the standard deduction limit to Rs 50,000, from Rs 40,000.

4. Explaining the rationale behind the tax measures, Mr Goyal said that both tax collections and tax base have shown significant increase. "We have made progress towards achieving a moderate taxation-high compliance regime," he said. "It is, therefore, just and fair that some benefits from the tax reforms must also be passed on to the middle class taxpayers."

5. The stock markets spiked, with the benchmark Sensex index jumping as much as 1.4 per cent - or 521 points - as Mr Goyal delivered his speech in Parliament. However, the Sensex and Nifty ended the session with a gain of about 0.6 per cent each.

6. Analysts say the markets jumped in anticipation of a higher income tax exemption limit.

7. "Nobody has read the fine print... It will take 2-3 days for people to understand the budget. It will be known only then how markets are taking it," said AK Prabhakar, head of research at IDBI Capital.

8. Tax experts welcomed the tax measures, applicable to Assessment Year 2020-21.

9. Unlike previous interim budgets, this budget has lot more to offer specially for the middle class and farmers... This budget being the last budget of the current tenure of Modi government is lucrative and will be welcomed by all sections of society," said Vishal Raheja, DGM, Taxmann.

10. The government also proposed to hike the TDS or tax deducted at source threshold on rent income to Rs 2.4 lakh, from the existing Rs 1.8 lakh. It also announced a hike in the TDS threshold on interest from bank and post office deposits to Rs 40,000 from Rs 10,000.