Union Budget 2019: Instant Updates and Highlights from 5th July, 2019

The Union Budget 2019 #BudgetForNewIndia was the 1st of its kind, since it is India’s first fulltime woman Finance Minister, Smt. Nirmala Sitharaman delivered her first budget today in Lok Sabha at 11.00 am. Technically she isn’t  the first Finance Minister though the first one to officially hold the Finance Minister’s portfolio in the cabinet. Historically, in 1970-71, the then Prime Minister of India Smt. Indira Gandhi briefly held the post as an additional charge.

This year’s budget is an all-inclusive budget. However, the main beneficiaries being the consumption sector, youth, women, entrepreneurs and farmers. The enhanced subsidies and cash benefit’s to farmers, significant tax rebate for people who have income up to Rs. 5 lakhs, benefits offered to the pension class under the unorganized sector clearly indicates this budget is focused on the salaried individuals, farmers and emerging entrepreneurs and Startup owners. Basically, the rural and middle-class taxpayers and investors.

“Emphasis is on the overall development of the economy and we are focusing on the ease of living,” the Finance Minister said addressing a press conference.”

Here is an insight into the Good, Bad & Ugly parts of the union budget 2019

General overview

• No changes in personal income tax rate
• 2% TDS on cash withdrawals of Rs 1 crores a year
• Incentives for electric vehicles
• Streamlining labour law
• PSUS for housing
• Public holding of listed companies up to 35% Simplified KYC norms for FIIs and FPIs
• FDI in Aviation, Insurance and Media
• Credit guarantee and investment corporation of India to be set up
• Rs 70,000 crore capital infusion in PSBs
• RBI to get regulation authority of housing finance sector
• Rs 100 crore infrastructural spending
• Prices of petrol, diesel and precious metals to increase
• All companies having annual turnover of 400 crores, will now be under the bracket of 25%.

For Transport and connectivity

• FM Sitharaman said the time is right for India to enter into aviation finance
• The Udaan scheme is providing air connectivity to the common man, and bridging rural and urban divide
• Bharatmala programme will help develop roads and highways, while Sagarmala will enhance port connectivity
• National Common Mobility Card was launched by PM Modi in March this year. This will enable people to pay multiple transport charges across India. This card runs on RuPay card and allows users to pay bus charges, parking charges, etc
• Launch a massive programme of railway station modernization
• Railway infra would need an investment of Rs 50 lakh crore between 2018 and 2030. PPP to be used to unleash faster development and delivery of passenger freight services
• Launch a massive programme of railway station modernization

For MSME & Start-up’s

• Govt to create a payment platform for MSMEs to enable filing of bills and payment on the platform itself
•  Proposed on easing angel tax for startups 
• Angel tax: Won’t require scrutiny from Income Tax department for startup 
• Proposed Rs 350 Crore to be allocated for 2% interest subvention for GST-registered MSME on fresh or incremental loans. 
• ‘Stand Up India’ Scheme to continue till 2025 
• To extend pension benefit to retail traders with annual turnover less than Rs 1.5 crore 
• New payment platform for MSMEs to be created
  
• Electronic Fundraising Platform, a social stock exchange under SEBI, to be set up to list social enterprises and voluntary organizations working for social welfare objectives
• Labour laws to be streamlined into four basic labour codes
• A TV programme exclusively for Start-ups, matchmaking with venture capitalists, tax planning and more
• Government’s increasing focus on emerging new technologies in the form of artificial intelligence, data science, big data, Internet of Things, would revitalise technology companies
• Invest heavily in the infrastructure and job creation in the MSMEs
• The loan of Rs 1 crore for MSMEs will be cleared within 59 minutes through an online portal
• Banks to provide assistance under Stand-Up India scheme
• We’ll work with state govts to remove barriers, cross subsidy, surcharges, undesirable duties on open access sales, or captive generation for industrial and bulk power consumers
• Propose to extend period of exemption of capital gains arising from sale of residential house for investment in startups to 31-3-2021

For Real Estate Sector

• It is proposed that several reform measures will be taken up to promote rental housing
• A modern tenancy law will be finalized and given to the states
• “One Nation, One Grid” for power availability to states at affordable rates
• 1.95 crore houses proposed to be provided under PMAY Grameen by 2021
• By 2022, power and LPG will be provided to all households
• Affordable housing, received a significant impetus as the projects registered up to 2020 received a tax exemption
• benefit of exemption on capital gains up to Rs 2 crore for investments in two houses would promote reinvestment in the property
• with regulators RBI & SEBI to enable stock exchanges to allow AA rated bonds as collaterals

Taxation

• FM thanked honest taxpayers of India for their valuable contribution
• The direct tax revenue has increased to Rs 11.37 lakh crore from 2013-14 to 2018-19
• Tax proposals to stimulate growth, promoting digital economy and simplify tax administration and increase transparency
• GST rate on electric vehicles to be reduced to 5% from 12%. Rs 1.5 lakh tax subsidy to taxpayers taking loans to buy electric vehicles
• Additional deduction of Rs 1.5 Lakh till 31 March 2022, enhanced interested deduction up to Rs 3.5 lakh for loans taken to buy affordable house under Rs 45 Lakh
• Propose to allow an additional tax deduction of Rs 1.5 lakh on interest paid on housing loans for self-occupied house owners
• Interchangeability of PAN and Aadhaar card to be allowed for ease and convenience to taxpayers. ITR can be filed without PAN by quoting Aadhaar
• Those having annual income of Rs 5 lakh exempt from paying taxes
• And further simplified GST. Taxpayers to file a single monthly return except small taxpayers and a few exceptions
• Taxpayer with annual taxpayer over 5 crores shall pay only quarterly return
• No need for a separate e-way bill
• Electronic invoice will reduce compliance burden
• To implement fully automated GST refund module
• Tax deduction of 150,000 rupees on e-vehicle loan interest
• The government proposed to increase import duty on gold and precious metal from 10% to 12.5%
• Amendments to customs act proposed to control bogus entities availing wrong concessions
• Extended benefits for home loans will be available for home loans till March 2020

Income tax:

• Income Tax Slabs Remain Unchanged in Budget 2019.
• Increase in surcharge for those earning Rs 2 to 5 crore and for those earnings above Rs 5 crore.
• Taxpayers with annual turnover of less than Rs 5 crore to file only quarterly returns
• All companies having annual turnover of 400 crores, will now be under the bracket of 25%. This will cover 99.3% of all the companies.
• Those in highest income bracket need to contribute more to national development. Propose to enhance surcharge on individual income of Rs 2-5 crore and over Rs 5 crore by 3% and 7% respectively

For Women

• Sitharaman announced the expansion of the interest subvention programme to all districts to promote women self-help groups
• Every woman SHG member having a verified Jan Dhan account will get an overdraft facility of Rs 5,000, 
• One woman in every SHG to get 1 lakh rupees under MUDRA for her business

For Education

• Proposed a new education policy, and reforms in higher education
• She said the government will make renewed efforts to promote research in the country
• Allocate Rs 400 crore for world-class higher education institutions in FY 20
• National research foundation to fund, coordinate and to promote research in the country. 
• A new program ‘Study in India’, would focus on bringing foreign students to India in our higher educational systems”

For Rural India

• Gaon, Garib and Kisan focus of the government. Finance minister stated that ease of doing business and ease of living should apply to farmers too
• New Jal Shakti ministry will work with states to ensure Har Ghar Jal for all rural houses by 2024
• Pradhan Mantri Gram Sadak Yojana phase 3 is envisaged to upgrade 1,25,000 km of road length over the next 5 years
• Govt will set up 100 new clusters for 50,000 artisans in FY 20
• To invest Rs 80,250 cr for upgradation of roads under PM Gram Sadak Yojana
• Govt will work with states to allow farmers to benefit from National Agriculture Market or eNAM
• Promote innovative zero Budget farming
• 10,000 new farm produce organisations to be developed
• 80 Livelihood business incubators and 20 technology business incubators to be set up in 2019-20 under ASPIRE to develop 75,000 skilled entrepreneurs in agro-rural industries

Miscellaneous

• New Rs 1, 5, 10 & 20 coins to be available for public use soon
• NRI investment in Indian capital market is less. I propose to merge the NRI portfolio investment scheme route with FPI route
• 100 per cent FDI permitted for insurance intermediary. Propose to call a Global Investors Meet in India: top industrialists, top pension, insurance & sovereign funds, top digital tech funds
• Foreign portfolio investment route for NRI
• The department of fisheries will address critical gaps in the value chain, including production, quality control, post-harvest management, etc
• User friendliness of trading platforms for corporate bonds will be reviewed, including issues arising out of capping of International Securities Identification Number
• Propose to develop 17 iconic tourism sites
• Propose digital repository for tribal heritage
• Propose to revamp India Development Assistance Scheme
• Opened 5 new embassies in Africa FY19, to open 4 more
• Propose to launch mission to integrate traditional artisans

Conclusion:

To sum up, the government has sought to draw a balance between fiscal discipline and welfare announcements. Focusing mainly on infrastructure development, startups and MSME growth, with an idea of promoting the campaign of “Make in India”. It also deals with social and economic issues faced by the common people, hence proposals for providing basic necessities like electricity, water and affordable housing are included. The salaried individuals, medium and small enterprises and women are given a little ease. GST compliance burden is reduced. The primary disappointment for citizens would be no change in personal income tax rate and increase in prices of petrol and diesel. However, this step is basically to promote the use of electronic vehicles in the country … that is why the budget provides benefits on loans for buying electronic vehicles and reduction in custom duty charge for the same. Finally, development in the education sector is proposed with a plan of making India a global education hub.