On the 79th Independence Day, Prime Minister Narendra Modi made many important economic and tax-related announcements from the ramparts of the Red Fort.
One of the major announcements was the ‘Pradhan Mantri Vikasit Bharat Rozgar Yojana’ (PM Viksit Bharat Rozgar Yojana), under which the government will directly give Rs 15,000 to the youth getting a job in the private sector for the first time.
Also, the PM promised to bring next generation GST reforms on Diwali, which is expected to provide great relief to common consumers, small industries and MSMEs.
Rs 15,000 incentive for those getting their first job
The employment-linked incentive (ELI) scheme was approved by the Union Cabinet, the Ministry of Labour & Employment last month said.
The government said that the PM Viksit Bharat Rozgar Yojana (PMVBRY) is aimed at incentivising creation of more than 3.5 crore jobs over two years. Of these, 1.92 crore beneficiaries will be first timers, entering the workforce.
“The name is in alignment with the scheme’s overall objectives towards the Viksit Bharat initiative and reflects the Government’s commitment to generating inclusive and sustainable employment opportunities in the country,” the labour ministry said.
The scheme consists of two parts, with Part A focused on first timers and Part B focused on employers:
Part A: First-time employees will get one month’s EPF salary (maximum Rs 15,000) in two installments.
Eligibility: Salary up to Rs 1 lakh, first installment after 6 months and second installment after completion of 12 months and after completing financial literacy programme.
A part of the incentive amount will be kept in savings account or investment, which employees can withdraw later.
Incentives for employers too
Part B: Employers will get incentive of Rs 3,000 per month per employee for 2 years on new employment creation.
This incentive will be extended to 4 years in the manufacturing sector.
Small establishments will have to recruit at least 2 and large establishments at least 5 new employees.
Promise of big reduction in GST
PM Modi said in his address that next generation GST reforms will be brought on Diwali, which will reduce the tax burden significantly. He also said that the GST Council has been directed to give relief to consumers.
There has been a long-standing demand for a reduction of GST rates from 18% in the insurance sector, especially life and health insurance. It is expected that this time the rates may be reduced, which will make policies cheaper and increase insurance coverage.
Automobile, FMCG, and tourism sectors are also hoping for relief from the upcoming GST Council meetings.
Income tax reforms
The PM also said that his government has made major reforms in the income tax laws, including making income up to Rs 12 lakh tax free in the new tax system. If you add an additional deduction of Rs 75,000, this limit reaches Rs 12.75 lakh.