The Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman made her maiden Budget Speech today and presented the Union Budget 2019-20 before the Parliament. The key highlights of Union Budget 2019 are as follows:
10-point Vision for the decade
• Building Team India with Jan Bhagidari: Minimum Government Maximum Governance.
• Achieving green Mother Earth and Blue Skies through a pollution-free India.
• Making Digital India reach every sector of the economy.
• Launching Gaganyan, Chandrayan, other Space and Satellite programmes.
• Building physical and social infrastructure.
• Water, water management, clean rivers.
• Blue Economy.
• Self-sufficiency and export of food-grains, pulses, oilseeds, fruits and vegetables.
• Achieving a healthy society via Ayushman Bharat, wellnourished women & children, safety of citizens.
• Emphasis on MSMEs, Startups, defence manufacturing, automobiles, electronics, fabs and batteries, and medical devices under Make in India.
Towards a $5 Trillion Economy
• “People’s hearts filled with Aasha (Hope), Vishwas (Trust), Aakansha (Aspirations)”, says FM.
• Indian economy to become a $3 trillion economy in the current year.
• Government aspires to make India a $5 trillion economy.
• “India Inc. are India’s jobcreators and nation’s wealthcreators”, says FM.
• Need for investment in infrastructure, Digital economy and Job creation in small and medium firms
• Initiatives to be proposed for kick-starting the virtuous cycle of investments.
• Common man’s life changed through MUDRA loans for ease of doing business.
• Measures related to MSMEs: – Pradhan Mantri Karam Yogi Maandhan Scheme
• Pension benefits to about three crore retail traders & small shopkeepers with annual turnover less than Rs.1.5 crore. • Enrolment to be kept simple, requiring only Aadhaar, bank account and a self-declaration. – Rs.350 crore allocated for FY 2019-20 for 2% interest subvention (on fresh or incremental loans) to all GST-registered MSMEs, under the Interest Subvention Scheme for MSMEs.
– Payment platform for MSMEs to be created to enable filing of bills and payment thereof, to eliminate delays in government payments.
• India’s first indigenously developed payment ecosystem for transport, based on National Common Mobility Card (NCMC) standards, launched in March 2019.
• Inter-operable transport card runs on RuPay card and would allow the holders to pay for bus travel, toll taxes, parking charges, retail shopping.
• Massive push given to all forms of physical connectivity through:
– Pradhan Mantri Gram Sadak Yojana.
– Industrial Corridors, Dedicated Freight Corridors.
– Bhartamala and Sagarmala projects, Jal Marg Vikas and UDAN Schemes.
• State road networks to be developed in second phase of Bharatmala project.
• Navigational capacity of Ganga to be enhanced via multi modal terminals at Sahibganj and Haldia and a navigational lock at Farakka by 2019-20, under Jal Marg Vikas Project.
• Four times increase in next four years estimated in the cargo volume on Ganga, leading to cheaper freight and passenger movement and reducing the import bill.
• Rs. 50 lakh crore investment needed in Railway Infrastructure during 2018-2030.
• Public-Private-Partnership proposed for development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services.
• 657km of Metro Rail network has become operational across the country.
• Policy interventions to be made for the development of Maintenance, Repair and Overhaul (MRO), to achieve self- reliance in aviation segment.
• Regulatory roadmap for making India a hub for aircraft financing and leasing activities from Indian shores, to be laid by the Government.
• Outlay of Rs. 10,000 crore for 3 years approved for Phase-II of FAME Scheme.
• Upfront incentive proposed on purchase and charging infrastructure, to encourage faster adoption of Electric Vehicles.
• Only advanced-battery-operated and registered e-vehicles to be incentivized under FAME Scheme.
• National Highway Programme to be restructured to ensure a National Highway Grid, using a financeable model.
• Joint development and concession mechanisms to be used for public infrastructure and affordable housing on land parcels held by the Central Government and CPSEs.
• SEBI to consider raising the threshold for minimum public shareholding in the listed companies from 25% to 35%.
• Know Your Customer (KYC) norms for Foreign Portfolio Investors to be made more investor friendly.
• Government to supplement efforts by RBI to get retail investors to invest in government treasury bills and securities, with further institutional development using stock exchanges.
• Measures to make India a more attractive FDI destination:
– FDI in sectors like aviation, media (animation, AVGC) and insurance sectors can be opened further after multi-stakeholder examination.
– Insurance Intermediaries to get 100% FDI.
– Local sourcing norms to be eased for FDI in Single Brand Retail sector.
• Government to organize an annual Global Investors Meet in India, using National Infrastructure Investment Fund (NIIF) as an anchor to get all three sets of global players (pension, insurance and sovereign wealth funds).
• Statutory limit for FPI investment in a company is proposed to be increased from 24% to sectoral foreign investment limit. Option to be given to the concerned corporate to limit it to a lower threshold.
• FPIs to be permitted to subscribe to listed debt securities issued by ReITs and InvITs.
• NRI-Portfolio Investment Scheme Route is proposed to be merged with the Foreign Portfolio Investment Route.
• Cumulative resources garnered through new financial instruments like Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs) as well as models like Toll-Operate-Transfer (ToT) exceed Rs. 24,000 crore
Direct Taxes
• Tax rate reduced to 25% for companies with annual turnover up to Rs. 400 crore
• Surcharge increased on individuals having taxable income from Rs. 2 crore to Rs. 5 crore and Rs. 5 crore and above.
• India’s Ease of Doing Business ranking under the category of ‘paying taxes’ jumped from 172 in 2017 to 121 in the 2019.
• Direct tax revenue increased by over 78% in past 5 years to Rs. 11.37 lakh crore
Tax Simplification and Ease of living – making compliance easier by leveraging technology:
• Interchangeability of PAN and Aadhaar
– Those who don’t have PAN can file tax returns using Aadhaar.
– Aadhaar can be used wherever PAN is required.
• Pre-filling of Income-tax Returns for faster, more accurate tax returns
– Pre-filled tax returns with details of several incomes and deductions to be made available.
– Information to be collected from Banks, Stock exchanges, mutual funds etc.
• Faceless e-assessment
– Faceless e-assessment with no human interface to be launched.
– To be carried out initially in cases requiring verification of certain specified transactions or discrepancies.
Affordable housing
• Additional deduction up to Rs. 1.5 lakhs for interest paid on loans borrowed up to 31st March, 2020 for purchase of house valued up to Rs. 45 lakh.
– Overall benefit of around Rs. 7 lakh over loan period of 15 years.
Other Direct Tax measures
• Simplification of tax laws to reduce genuine hardships of taxpayers:
– Higher tax threshold for launching prosecution for non-filing of returns
– Appropriate class of persons exempted from the anti-abuse provisions of Section 50CA and Section 56 of the Income Tax Act.
Relief for Start-ups
• Capital gains exemptions from sale of residential house for investment in start-ups extended till FY21.
• ‘Angel tax’ issue resolvedstart- ups and investors filing requisite declarations and providing information in their returns not to be subjected to any kind of scrutiny in respect of valuations of share premiums.
• Funds raised by start-ups to not require scrutiny from Income Tax Department – E-verification mechanism for establishing identity of the investor and source of funds.
• Special administrative arrangements for pending assessments and grievance redressal – No inquiry in such cases by the Assessing Officer without obtaining approval of the supervisory officer.
• No scrutiny of valuation of shares issued to Category-II Alternative Investment Funds.
• Relaxation of conditions for carry forward and set off of losses.
NBFCs
• Interest on certain bad or doubtful debts by deposit taking as well as systemically important non-deposit taking NBFCs to be taxed in the year in which interest is actually received.
International Financial Services Centre (IFSC)
• Direct tax incentives proposed for an IFSC:
– 100 % profit-linked deduction in any ten-year block within a fifteen-year period.
– Exemption from dividend distribution tax from current and accumulated income to companies and mutual funds.
– Exemptions on capital gain to Category-III Alternative Investment Funds (AIFs).
– Exemption to interest payment on loan taken from non-residents.
Securities Transaction Tax (STT)
• STT restricted only to the difference between settlement and strike price in case of exercise of options.
Indirect Taxes
Make In India
• Basic Customs Duty increased on cashew kernels, PVC, tiles, auto parts, marble slabs, optical fibre cable, CCTV camera etc.
• Exemptions from Custom Duty on certain electronic items now manufactured in India withdrawn.
• End use based exemptions on palm stearin, fatty oils withdrawn.
• Exemptions to various kinds of papers withdrawn.
• 5% Basic Custom Duty imposed on imported books.
• Customs duty reduced on certain raw materials such as:
– Inputs for artificial kidney and disposable sterilised dialyser and fuels for nuclear power plants etc.
– Capital goods required for manufacture of specified electronic goods
Other Indirect Tax provisions
• Export duty rationalised on raw and semi-finished leather
• Increase in Special Additional Excise Duty and Road and Infrastructure Cess each by Rs. 1 per litre on petrol and diesel
• Custom duty on gold and other precious metals increased
• Legacy Dispute Resolution Scheme for quick closure of pending litigations in Central Excise and Service tax from pre-GST regime
• Pradhan Mantri Matsya Sampada Yojana (PMMSY) – A robust fisheries management framework through PMMSY to be established by the Department of Fisheries.
– To address critical gaps in the value chain including infrastructure, modernization, traceability, production, productivity, post-harvest management, and quality control.
• Pradhan Mantri Gram Sadak Yojana (PMGSY)
– Target of connecting the eligible and feasible habitations advanced from 2022 to 2019 with 97% of such habitations already being provided with all weather connectivity.
– 30,000km of PMGSY roads have been built using Green Technology, Waste Plastic and Cold Mix Technology, thereby reducing carbon footprint.
– 1,25,000km of road length to be upgraded over the next five years under PMGSY III with an estimated cost of Rs. 80,250 crore..
• Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI)
– Common Facility Centres (CFCs) to be setup to facilitate cluster based development for making traditional industries more productive, profitable and capable for generating sustained employment opportunities.
– 100 new clusters to be setup during 2019-20 with special focus on Bamboo, Honey and Khadi, enabling 50,000 artisans to join the economic value chain.
• India’s water security
– New Jal Shakti Mantralaya to look at the management of our water resources and water supply in an integrated and holistic manner
– Jal Jeevan Mission to achieve Har Ghar Jal (piped water supply) to all rural households by 2024
– To focus on integrated demand and supply side management of water at the local level.
– Convergence with other Central and State Government Schemes to achieve its objectives.
– 1592 critical and over exploited Blocks spread across 256 District being identified for the Jal Shakti Abhiyan.
– Compensatory Afforestation Fund Management and Planning Authority (CAMPA) fund can be used for this purpose.
• Swachh Bharat Abhiyan
– 9.6 crore toilets constructed since Oct 2, 2014.
– More than 5.6 lakh villages have become Open Defecation Free (ODF).
– Swachh Bharat Mission to be expanded to undertake sustainable solid waste management in every village.
Shahree Bharat/Urban India
• Pradhan Mantri Awas Yojana – Urban (PMAY-Urban)–
– Over 81 lakh houses with an investment of about Rs. 4.83 lakh crore sanctioned of which construction started in about 47 lakh houses.
– Over 26 lakh houses completed of which nearly 24 lakh houses delivered to the beneficiaries.
– Over 13 lakh houses so far constructed using new technologies.
• More than 95% of cities also declared Open Defecation Free (ODF).
• Almost 1 crore citizens have downloaded Swachhata App.
• Target of achieving Gandhiji’s resolve of Swachh Bharat to make India ODF by 2nd October 2019.
– To mark this occasion, the Rashtriya Swachhta Kendra to be inaugurated at Gandhi Darshan, Rajghat on 2nd October, 2019.
– Gandhipedia being developed by National Council for Science Museums to sensitize youth and society about positive Gandhian values.
• Railways to be encouraged to invest more in suburban railways through SPV structures like Rapid Regional Transport System (RRTS) proposed on the Delhi-Meerut route.
• Proposal to enhance the metrorailway initiatives by:
– Encouraging more PPP initiatives.
– Ensuring completion of sanctioned works.
– Supporting transit oriented development (TOD) to ensure commercial activity around transit hubs.
Ease of Living
• About 30 lakh workers joined the Pradhan Mantri Shram Yogi Maandhan Scheme that provides Rs. 3,000 per month as pension on attaining the age of 60 to workers in unorganized and informal sectors.
• Approximately 35 crore LED bulbs distributed under UJALA Yojana leading to cost saving of Rs. 18,341 crore annually.
• Solar stoves and battery chargers to be promoted using the approach of LED bulbs mission.
• A massive program of railway station modernization to be launched.
India’s Soft Power
• Proposal to consider issuing Aadhaar Card for NRIs with Indian Passports on their arrival without waiting for 180 days.
• Mission to integrate traditional artisans with global markets proposed, with necessary patents and geographical indicators.
• 18 new Indian diplomatic Missions in Africa approved in March, 2018, out of which 5 already opened. Another 4 new Embassies intended in 2019-20.
• Revamp of Indian Development Assistance Scheme (IDEAS) proposed.
• 17 iconic Tourism Sites being developed into model world class tourist destinations.
• Present digital repository aimed at preserving rich tribal cultural heritage, to be strengthened.
Digital Payments
• TDS of 2% on cash withdrawal exceeding Rs. 1 crore in a year from a bank account
• Business establishments with annual turnover more than Rs. 50 crore shall offer low cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants.
Mega Investment in Sunrise and Advanced Technology Areas
• Scheme to invite global companies to set up megamanufacturing plants in areas such as Semi-conductor Fabrication (FAB), Solar Photo Voltaic cells, Lithium storage batteries, Computer Servers, Laptops, etc
– Investment linked income tax exemptions to be provided along with indirect tax benefits.
