Union Finance Minister Nirmala Sitharaman on Friday presented the first budget of the Narendra Modi 2.0 government in the Lok Sabha. In the Union Budget 2019-20, she announced that budget aims ‘Mazboot Desh Ke Liye Mazboot Nagrik’ (Strong country, Strong Citizen) and to revive economic growth through higher investments. The Finance Minister hiked tax on petrol and diesel, raised import duty on gold, levied an additional surcharge on super rich and brought a tax on high-value cash withdrawals.
According to budget announcements, the super-rich people have to pay more and there is no change in the lower income tax slab. She announced a 3 per cent increase in Income tax for those earning Rs 2-5 crore and 7 per cent for income above Rs 5 crore. In order to garner the fund for schemes, the budget increased Special Additional Excise Duty and Road and Infrastructure Cess each by Re 1 per litre on petrol and diesel.
Now, PAN card and Aadhaar card can be used interchangeably to file income tax returns. Prime Minister Narendra Modi said that the budget assures the country that the poor will be empowered and the youth will get a better tomorrow. This budget will accelerate the speed of development. On the other hand, the Congress party criticised it.
Nirmala Sitharaman, the first full-time woman Finance Minister said, “India will become a $3 trillion economy this year. The government planned many structural reforms to kick start foreign and domestic investment. We need to invest heavily in infrastructure, digital economy, job creation.”
Public-private partnership (PPP) for railways, increased FDI in media and aviation, the issuance of Aadhaar cards to NRIs without a waiting period of 180 days on arrival, and schemes to provide power, water, and clean cooking facilities for all, TDS of 2 per cent on cash withdrawal exceeding Rs 1 crore in a year from a bank account were among the highlights of her speech.
Hiten Bhanushali, CA, Financial and Strategy Expert spoke to Afternoon Voice and stated, “Budget 2019 is a budget of marketing; while it has given the analysis of the past actions but this doesn’t draw a line of future actions. Recapitalisation of banks and revamping of regulatory architecture is nothing but investing hard-earned taxpayers’ money to the NPA of banks. No inquiry on the valuation is explained on the startup valuation game — this is a way of taking back black foreign money into India by doing higher valuation, resulting into moving Indian black money lying in foreign accounts moving them back to India and making it white money. NBFC reforms will make an impact on retail investors because the risks in NBFC’s are higher and losing the market valuation of mutual funds can result in loss to NAV’s mutual funds.”
He further explained, “On the other hand, the initiative to ensure piped water supply to all rural households will help rural and boost the farming in nonfarming lands. Giving pension benefit to the retail trader is a step toward supporting the unorganised retail traders to mitigate challenges from organised retail and modern trade. FDI relaxation in the Aviation sector is the show of the failure of UDAN project.”
“It’s indeed a big move to make Aadhaar card mandatory for filing income tax. The budget gives no relief to the salary taxpayers in any way and also no benefit of inflation to the general public. Increase in surcharge on fuel will lead to a price hike of consumer goods and daily need by 6-7 per cent, resulting in inflation,” he added.
The Congress tweeted, “Now, the government has finally accepted that unemployment is at a 45 year high, #Budget2019 must put forth a detailed plan for job creation in the country. It must reverse the adverse effects of demonetisation & GST.”
Prashant Pandey, an MBBS student of Krishna Institute of Medical Sciences said, “Prima facie good budget for the common man and the environment as no income tax will be levied on annual income less than Rs 5 lakh and heavy rebates will be given on the purchase of electric vehicles. This move will ensure saving of fast shrinking petrol and diesel. At the same time, it will lessen air pollution. People of big cities like Mumbai, Pune, and Nagpur are facing health problems due to air pollutions.”
Major highlights of Union Budget 2019-20
– Achieving green Mother Earth and Blue Skies through a pollution-free India
– Making Digital India reach every sector of the economy
– Launching Gaganyan, Chandrayaan, 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, well-nourished women, and children, the safety of citizens
– Emphasis on MSMEs, Start-ups, defence manufacturing, automobiles, electronics, fabs and batteries, and medical devices under Make in India.
MASSIVE PUSH TO ALL FORMS OF PHYSICAL CONNECTIVITY
– Industrial Corridors, Dedicated Freight Corridors
– Bhartamala and Sagarmala projects, Jal Marg Vikas and UDAN Schemes
– State road networks to be developed in the second phase of Bhartamala project
– Rs 50 lakh crore investments needed in Railway Infrastructure during 2018-2030.
– 657 kilometers of Metro Rail network has become operational across the country.
– An outlay of Rs 10,000 crore for three years approved for Phase-II of FAME Scheme.
MEASURES TO DEEPEN BOND MARKETS
– Stock exchanges to be enabled to allow AA rated bonds as collaterals
– User-friendliness of trading platforms for corporate bonds to be reviewed
– Electronic fundraising platform under the regulatory ambit of SEBI
– Listing social enterprises and voluntary organizations.
– To raise capital as equity, debt or as units like a mutual fund.
– KYC norms for Foreign Portfolio Investors to be made more investor-friendly
– Insurance intermediaries to get 100 per cent FDI
– FPIs to be permitted to subscribe to listed debt securities issued by ReITs and InvITs.
-Tax rate reduced to 25 per cent 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.
– Direct tax revenue increased by over 78 per cent in the past five years to Rs 11.37 lakh crore
– Those who don’t have PAN can file tax returns using Aadhaar
– Pre-filling of Income-tax Returns for faster, more accurate tax returns
– Additional deduction up to Rs 1.5 lakhs for interest paid on loans borrowed up to March 31, 2020, for purchase of house valued up to Rs 45 lakh
– The overall benefit of around Rs 7 lakh over a loan period of 15 years.
OTHER DIRECT TAX MEASURES
-Simplification of tax laws to reduce genuine hardships of taxpayers
– The 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 the sale of residential house for investment in start-ups extended till FY21.
– ‘Angel tax’ issue resolved- start-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 the 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.
– 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 per cent basic customs 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 the manufacture of specified electronic goods
EXPORT DUTY RATIONALISED
– Increase in special additional excise duty and road and infrastructure cess each by rupee one per litre on petrol and diesel
– Custom duty on gold and other precious metals increased
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.
BANKING AND FINANCIAL SECTOR
– NPAs of commercial banks reduced by over Rs 1 lakh crore over the last year
– Record recovery of over Rs 4 lakh crore effected over the last four years.
– Domestic credit growth increased to 13.8 per cent
– Rs 70,000 crore proposed to be provided to PSBs to boost credit
– Reforms to be undertaken to strengthen governance in PSBs
MEASURES RELATED TO CPSES
-Target of Rs 1, 05,000 crore of disinvestment receipts set for the FY 2019-20
– Government to reinitiate the process of strategic disinvestment of Air India
– Government to consider going to an appropriate level below 51 per cent in PSUs where the government control is still to be retained, on case to case basis
– The present policy of retaining 51 per cent government stake to be modified to retaining 51 per cent stake inclusive of the stake of government-controlled institutions
– TDS of 2 per cent 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