Union Budget 2019

News

• Finance Minister Nirmala Sitharaman presented the maiden budget of Narendra Modi 2.0 government in the Lok Sabha.

   Highlights of Union Budget 2019

• PAN and Aadhaar will become interchangeable. You can use your Aadhaar number to file your I-T Returns soon.
• ₹5 lakh minimum limit announced for taxpayers. In view of rising income levels, those in the ₹2-5 crore and ₹5 crore-and-above brackets will see increase in effective tax rate by 3% and 7%, respectively.
• GST rate on electric vehicles proposed to be lowered to 5%. Additional income tax deduction of ₹1.5 lakh on interest on loans taken to purchase electric vehicles.
• Additional deduction of ₹1.5 lakh on loans up to March 31 2020 for buying affordable houses, giving ₹ 7 lakh benefit to home buyers.
• Proposal to provide Aadhaar cards for NRIs with Indian passports, after their arrival in India, with no waiting period.
• ₹20 coin coming up.
• Excise duty on fuel hiked by ₹1.
• To resolve the angel tax issue, startups will not be subject to any scrutiny in respect to valuation. Funds raised by startups will not require any scrutiny by the I-T department.
• TDS of 2% on cash withdrawals exceeding ₹1 crore in a year from bank accounts, to discourage business payments in cash.
• Period of exemption for capital gains arising from sale of house for investment in startups to be extended to March 31, 2021.
• ₹70,000 crore in recapitalisation for public sector banks.
• ₹1.05 lakh crore disinvestment target for the year.
• TV channel to be launched for promoting startups and to help matchmaking for funds.
• New national educational policy hopes to transform Indian education into one of the best in the world, with focus on bringing in foreign students.
• ₹50 lakh crores proposed for Railway infrastructure.
• By 2022, the 75th year of Independence, every single rural family, except those who are unwilling to take the connection, will have electricity and clean cooking facility.
• Stress on zero-budget farming, which is a form of gardening as a self-sustainable practice, with minimum external intervention.
• The pension benefit will be extended to 3 crore retail traders under PM Karam Yogi Maan Dhan Scheme. It requires only Aadhaar numbers and bank accounts.
• ₹1 crore worth of loans proposed to MSMEs.
• Investment by FIIs and FDIs in debt securities in infrastructure debt funds to be allowed. Minimum public shareholding in listed companies can be increased from 25% to 35%.
• Global Investors Meet to happen in India.

Budget 2019 | Petrol, diesel to be costlier; tax on super-rich, gold imports

News

• Finance Minister hiked tax on petrol and diesel, raised import duty on gold, levied additional surcharge on super rich and brought a tax on high value cash withdrawals as Finance Minister sought to spur growth with reduction in corporate tax and sops to housing sector, startups and electric vehicles.

Beyond News

• Presenting the maiden budget of Modi 2.0 government in Lok Sabha, Ms. Sitharaman, the first full-time woman Finance Minister, proposed measures to ease liquidity crisis facing shadow banking sector (NBFCs) and providing ₹70,000 crore capital to public sector banks while seeking to raise additional resources through privatisation of some PSUs.
• In relief to tax payers, Finance Minister provided for an additional deduction of ₹1.5 lakh on interest paid on loans borrowed up to March 31, 2020 on purchase of a house up to ₹45 lakh.
• Corporate tax on companies with turnover of up to ₹400 crore has been slashed to 25 per cent from current 30 per cent. Presently, the lower tax rate is applicable on companies having a turnover of up to ₹250 crore.
• To boost use of electric vehicles, an additional income tax deduction of ₹1.5 lakh on interest paid on loans taken to purchase EVs has been proposed.
• Also the government has asked the GST Council to reduce tax rate on EVs from 12 per cent to 5 per cent. Customs duty on certain parts of EVs has been reduced.
• Finance Minister said startups and investors who file requisite declarations will not be subjected to any kind of scrutiny in respect of valuation of share premium.
• A mechanism of e-verification will be put in place and with this, the funds raised by startups will not require any tax scrutiny.
• Finance Minister raised special additional excise duty and road cess on petrol and diesel by ₹1 per litre each, saying lower crude oil prices provide with an opportunity to review taxes on the sector.
• Also, customs duty on gold and precious metals was raised from 10 per cent to 12.5 per cent to mobilise resources.
• Basic customs duty was raised on an array of products including tiles, cashew kernels, vinyl flooring, auto parts, some synthetic rubber, digital and video recorder and CCTV camera.
• Excise duty of ₹ 5 per 1000 has been imposed on cigarettes of length exceeding 65 mm, while 0.5 per cent duty has been levied on chewing tobacco, zarda and tobacco extracts and essence.
• Finance Minister also proposed to made Aadhaar and PAN interchangeable for the purpose of filing Income Tax returns.
• To boost cash-less economy, Finance Minister said business establishments with annual turnover of₹50 crore will have to use BHIM, UPI, Aadhaar Pay, NEFT, RTGS modes of payments with no charges or merchant discount rates will be imposed on customers or merchants.
• The Finance Minister also proposed an additional income tax deduction of ₹1.5 lakh on interest paid on loans taken to buy electric vehicles.

Agriculture sees biggest boost in allocation in Union Budget 2019

News

• The budgeted expenditure for 2019-20 was pegged at Rs. 27.86 lakh crore, a 13.4% increase over the revised estimates for 2018-19.
• As usual, interest payments and subsidies (for food, petroleum and fertilizers) made up the largest components of the budget.

Beyond News

• In terms of allocation, agriculture & allied activities received the biggest push (74% absolute increase) among all sectors compared to FY19. A huge chunk of this allocation is expected to go towards the PM Kisan scheme.
• The government would invest widely in agriculture infrastructure and support private entrepreneurship for value addition in the farm sector. Also stressed on “zero budget farming”, a practice which involves zero credit and reducing dependence on chemical fertilizers.
• Commerce and industry and energy are the sectors that saw a decline in absolute terms. Rural development saw a modest rise of 4.2%.
• With an increase in the budget expenditure, there is bound to be a rise in absolute terms across the sectors. Hence, it is imperative to look at what proportion of the budget was allocated to them.
• For instance,  defence allocation, which saw a 7% increase in absolute terms, lost out in terms of proportion in the 2018-19 budget estimates, defence accounted for 11.62% of the total expenditure, while in FY20, this dropped to 10.96% a difference of 0.66 percentage points.
• Also announced waiver of basic customs duty for import of defence equipment not manufactured in India.
• Agriculture, which formed 3.5% of the budget in FY19, comprised 5.4% of budgeted expenditure in FY20, an increase of 1.9 percentage points (the biggest rise).