Budget 2019: Take income tax rebate hike with a pinch of salt, say Analysts

Amid the widespread excitement over the move to double the income tax exemption limit to Rs 5 lakh, experts have opined that the budget announcement must be taken with a "teaspoon of salt" as it has no benefit to those earning above that. "The announcement on hiking the exemption of individual taxpayer's annual income to Rs 5 lakh has to be taken with a teaspoon of salt," India Ratings said in a note hours after the budget presentation Friday.

It can be noted that there was jeering in the House immediately after announced the announcement with a majority of the lawmakers chanting Prime Minister Narendra Modi's name and welcoming what was taken as a doubling of the tax exemption cap. The proposal will benefit 3 crore taxpayers and the government will have to forego revenue to the tune of over Rs 18,000 crore.

India Ratings' peer Crisil Ratings said the "tax sops by themselves are not significant" and that the "feel good factor" generated by it will increase the consumption of low value goods and durables. Karvy Stock Broking said the move is a "rebate offered for those with a taxable income of Rs 5 lakh or below, which can reduce tax liability to zero."

Meanwhile, India Ratings said the interim budget is "more than just a vote-on-account" and the sops to the middle-class is the surprise element.