Key Highlights of Union Budget 2019-20

Speed Post News Network

New Delhi : Union Finance and Corporate Affairs Minister Nirmala Sitharaman made her maiden Budget Speech on July 5, 2019, 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, well-nourished women & children, safety of citizens.
• Emphasis on MSMEs, Start-ups, defence manufacturing, automobiles, electronics, fabs and batteries, and medical devices under Make in India.

Towards a 5 Trillion Dollar Economy

• “People’s hearts filled with Aasha (Hope), Vishwas (Trust), Aakansha (Aspirations)”, says FM.
• Indian economy to become a 3 trillion dollar economy in the current year.
• Government aspires to make India a 5 trillion dollar economy.
•  “India Inc. are India’s job-creators and nation’s wealth-creators”, says FM.
• Need for investment in:
  • Infrastructure.
  • Digital economy.
  • 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.
• 657 kilometers of Metro Rail network has become operational across the country.  
• National Highway Programme to be restructured to ensure a National Highway Grid, using a financeable model.
• Power at affordable rates to states ensured under ‘One Nation, One Grid’
• 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.

• New Space India Limited (NSIL), a PSE, incorporated as a new commercial arm of Department of Space.

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 March 31, 2020 for purchase of house valued up to Rs. 45 lakh.
  • Overall benefit of around Rs. 7 lakh over loan period of 15 years.

Boost to Electric Vehicles

• Additional income tax deduction of Rs. 1.5 lakh on interest paid on electric vehicle loans.
• Customs duty exempted on certain parts of electric vehicles.

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 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 identity of the investor and source of funds.

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.

Defence

• Defence equipment not manufactured in India exempted from basic customs duty