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Press Information Bureau
Government of India
Ministry of Finance
05 JUL 2019
Lower rate of 25 % Corporate Tax extended to companies with Annual Turnover up to Rs. 400 crore from earlier cap of upto Rs 250 crore
The Union Budget 2019-20 has proposed to extend the lower rate of 25 % Corporate Tax to all companies with annual turnover up to Rs. 400 crore. Currently, this rate is only applicable to companies having annual turnover up to Rs. 250 crore. Presenting the General Budget 2019-20 in the Parliament today, the Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman said, “This will cover 99.3 percent of the companies. Now only 0.7 percent of companies will remain outside this rate”.
PAN – Adhaar Interchangeability proposed
The Budget also proposes to make PAN and Aadhaar interchangeable and allow those who do not have PAN to file Income Tax Returns by simply quoting their Aadhaar number and also use it wherever they are required to quote PAN. The Finance Minister said that more than 120 crore Indians now have Aadhaar and the proposal aims at ease and convenience of tax payers.
Pre-filling of Income-tax Returns
The Finance Minister said that pre-filled tax returns will be made available to taxpayers which will contain details of salary income, capital gains from securities, bank interests, and dividends etc. and tax deductions. She further said that Information regarding these incomes will be collected from the concerned sources such as Banks, Stock exchanges, mutual funds, EPFO, State Registration Departments etc. “This will not only significantly reduce the time taken to file a tax return, but will also ensure accuracy of reporting of income and taxes”, the Minister added.
Faceless e-assessment to eliminate undesirable practices
In her speech, the Finance Minister said that the existing system of scrutiny assessments in the Income-tax Department involves a high level of personal interaction between the taxpayer and the Department, which leads to certain undesirable practices on the part of tax officials. To eliminate such instances, and to give shape to the vision of the Prime Minister, the FM said that a scheme of faceless assessment in electronic mode involving no human interface is being launched this year in a phased manner. To start with, such e-assessments shall be carried out in cases requiring verification of certain specified transactions or discrepancies, she added.
The Finance Minister further said that the cases selected for scrutiny shall be allocated to assessment units in a random manner and notices shall be issued electronically by a Central Cell, without disclosing the name, designation or location of the Assessing Officer. “The Central Cell shall be the single point of contact between the taxpayer and the Department. This new scheme of assessment will represent a paradigm shift in the functioning of the Income Tax Department”, she said in her speech.
Slew of Measures to Encourage Digital Payments
The Budget also proposes to levy TDS of 2 percent on cash withdrawal exceeding Rs. 1 crore in a year from a bank account. This is in continuation of a number of initiatives taken in the recent past for the promotion of digital payments and less cash economy, and to promote digital payments further, said the Minister.
The low-cost digital modes of payment such as BHIM UPI, UPI-QR Code, Aadhaar Pay, certain Debit cards, NEFT, RTGS etc. will promote less cash economy. The Finance Minister proposed that the business establishments with annual turnover more than Rs. 50 crore shall offer such low cost digital modes of payment to their customers and no charges or Merchant Discount Rate (MDR) shall be imposed on customers as well as merchants. She added, “RBI and Banks will absorb these costs from the savings that will accrue to them on account of handling less cash as people move to these digital modes of payment”.
Simplification and Ease of Living
Noting that India’s Ease of Doing Business ranking under the category of ‘paying taxes’ showed a significant jump from 172 in 2017 to 121 in the 2019, the Finance Minister said above measures will leverage technology to make compliance easier for the taxpayers.
The Budget also proposes to simplify the tax law to reduce genuine hardships to taxpayers which include enhancing threshold of tax for launching prosecution for non-filing of returns from Rs. 3,000 to Rs. 10,000, for proceeding against a person and exempting appropriate class of persons from the anti-abuse provisions of section 50CA and section 56 of the Income Tax Act.
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Press Information Bureau
Government of India
Ministry of Finance
05 JUL 2019
Several tax proposals aim to promote investments in start-ups and sunrise industries in the country
PROMOTING INVESTMENTS
Several of the tax proposals announced by the Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman, while presenting the Union Budget 2019-20 in Parliament today, are aimed at promoting investments in Sunrise Advanced Technology industries and in Start-ups. To boost economic growth and Make in India, a Scheme is to be launched to invite global companies through a transparent competitive bidding to set up mega-manufacturing plants in sunrise and advanced technology areas such as Semi-conductor Fabrication (FAB), Solar Photo Voltaic cells, Lithium storage batteries, Solar electric charging infrastructure, Computer Servers, Laptops, etc. Such global companies are to be give investment linked income tax exemptions under Section 35 AD of the Income Tax Act, and other indirect tax benefits.
The Finance Minister, Smt. Nirmala Sitharaman presenting her maiden budget, said “to resolve the so-called ‘angel tax’ issue, the start-ups and their investors who file requisite declarations and provide information in their returns
will not be subjected to any kind of scrutiny in respect of valuations of share premiums. The issue of establishing identity of the investor and source of his funds will be resolved by putting in place a mechanism of e-verification. With this, the funds raised by start-ups will not require any kind of scrutiny from the Income Tax Department. Special administrative arrangements shall be made by CBDT for pending assessments of start-ups and redressal of their grievances. No inquiry or verification in such cases can be carried out by the Assessing Officer without obtaining approval of his supervisory officer. ” Start-ups will not be required to justify fair market value of their shares issued to Category-II Alternative Investment Funds also. Valuation of shares issued to these funds shall be beyond the scope of income tax scrutiny. She said it is also proposed to relax some of the conditions for carry forward and set off of losses in the case of start-ups. It is also proposed to extend the period of exemption of capital gains arising from sale of residential house for investment in start-ups up to 31.3.2021.
AFFORDABLE HOUSING
Affordable housing gets further encouragement in the form of additional tax deduction of Rs.1.5 lakh beyond Rs. 2 lakh of interest paid on loans borrowed upto 31st March, 2020 for purchase of an affordable house valued up to Rs. 45 lakh. The Finance Minister said “thus a person purchasing an affordable house will now get an enhanced interest deduction up to Rs. 3.5 lakh. This will translate into a benefit of around Rs 7 lakh to the middle class home-buyers over their loan period of 15 years.”
MODERNISATION OF TAX ADMINISTRATION
Expressing thanks to the taxpayer, including self-employed, small traders, salary earners and senior citizens, Smt. Sitharaman said that “the direct tax revenue has significantly increased over the past couple of years. It has increased by over 78% from Rs. 6.38 lakh crore in Financial Year 2013-14 to around Rs. 11.37 lakh crore in Financial Year 2018-19. It is now growing at double digit rate every year.”
Saying that those in the highest income brackets need to contribute more to the nation’s development and for revenue mobilization, the Finance Minister announced enhancement of surcharge of 3 % on individuals having taxable income from Rs. 2 crore to Rs. 5 crore and 7 % for those with taxable income of Rs. 5 crore and above.
At the same time, several measures are announced to leverage technology to make tax administration and tax payment easier. Those without Pan Card are now allowed to file income tax returns by quoting their Aadhar number.
Pre-filled tax returns would be made available to taxpayers with details of salary income, capital gains from securities, bank interests, and dividends and tax deductions etc,. Information regarding these incomes will be collected from the concerned sources such as Banks, Stock exchanges, mutual funds, EPFO, State Registration Departments etc.
A Scheme of Faceless Assessment in electronic mode involving no human interface is being launched this year in a phased manner. To start with, such e-assessments shall be carried-out in cases requiring verification of certain specified transactions or discrepancies. Cases selected for scrutiny shall be allocated to assessment units in a random manner and notices shall be issued electronically by a Central Cell, without disclosing the name, designation or location of the Assessing Officer. The Central Cell shall be the single point of contact between the taxpayer and the Department.
CORPORATE TAX
On corporate tax, the Minister said, “we continue with phased reduction in rates. Currently, the lower rate of 25 % is only applicable to companies having annual turnover up to Rs 250 Crore. This is proposed to be widened to include all companies having annual turnover up to Rs 400 crore. This would cover 99.3% of the companies. With this only, 0.7 % of companies will remain outside this rate”.
DIGITAL PAYMENTS
To further encourage digital payments practices in the country or discourage cash payments, the Finance Minister announced several measures which include discouraging the practice of making business payments in cash, proposal to levy 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 is to be imposed on customers as well as merchants. RBI and Banks will absorb these costs from the savings that will accrue to them on account of handling less cash as people move to these digital modes of payment. Necessary amendments are being made in the Income Tax Act and the Payments and Settlement Systems Act, 2007 to give effect to these provisions.
ELECTRIC VEHICLES
For promotion of electric vehicles in a big way in the country, both direct and indirect tax incentives are announced. The Finance Minister said –“considering India’s large consumer base, we aim to envision India as a global hub of manufacturing of Electric Vehicles”. Inclusion of Solar storage batteries and charging infrastructure in the above Scheme will boost our efforts, she said. The Finance Minister announced that the “Government has already moved GST Council to lower the GST rate on electric vehicles from 12% to 5%. Also to make electric vehicle affordable to consumers, our Government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles. This amounts to a benefit of around Rs 2.5 lakh over the loan period to the taxpayers who take loans to purchase electric vehicle”. The Minister while proposing increase in customs duties on automobile and automobile parts, had provided for exemption of customs duties on certain parts of electric vehicles.
CUSTOM DUTY PROPOSALS
In general, other Customs Duty proposals are aimed at promoting Make in India, reducing import dependence, protection to MSME sector, promoting clean energy, curbing non-essential imports and correcting inversions.
To provide level playing field to domestic industry, custom duties are enhanced on 36 items including :
Similarly, to support domestic industry, Customs Duty has been proposed to be reduced on certain raw materials and capital goods as follows:
While Customs duty is imposed on certain electronic goods, now being manufactured in India to promote domestic industry, custom duty on the other hand is removed on certain other capital goods required for manufacture of specified electronic goods.
To encourage export of sports goods, certain items to a certain limit, like foam and pinewood are included in the list of items allowed for duty free import. Similarly, “Export duty is being rationalised on raw and semi-finished leather to provide relief to this sector’ the Minister said.
The Minister said “Defence has an immediate requirement of modernisation and upgradation. This is national priority. For this purpose, import of defence equipment that are not being manufactured in India are being exempted from the basic customs duty.”
GST AND WAY FORWARD
While stating that with introduction of GST, 17 taxes and 13 cesses have become one tax, it also led to transformation of operations wherein a transport truck has started doing two trips in the same time that it was doing one with simplification of operations. She said reduction of GST rates have led to relief of about 92,000 crore rupees per annum.
The Finance Minister stated that free accounting software for preparation of tax returns is being made available to small businesses and a fully automated GST refund module is expected to be implemented soon. She said taxpayer with an annual turnover of less than 5 crores is to file quarterly returns. Electronic invoice details are to be captured in a central system to enable pre-filled taxpayer returns and a simultaneous e-way bill to be generated. These are expected to begin from January, 2020 reducing the compliance burden significantly.
LEGACY DISPUTE RESOLUTION
The Minister proposed a “Legacy Dispute Resolution Scheme that will allow quick closure of litigations.” She said “more than 3.75 lakh crore rupees is blocked in litigations in service tax and excise duties from pre-GST regime.” She urged the trade and business to avail this opportunity of dispute resolution scheme to be called as Sabka Vishwas Legacy Dispute Resolution Scheme, 2019. This scheme is to be notified in due course allows persons discharged under it not liable for prosecution.
CUSTOMS VIOLATIONS
The Minister also proposed certain amendments to the Customs Act to prevent certain bogus entities from resorting to unfair practices to benefit from export incentives. Provisions to make violations involving duty free scripts and drawback facility of over 50 lakh rupees cognizable and non-bailable offence are being made in the Customs Act. The amendment to the Customs Act, 1962 proposes to introduce provision for verification of Aadhar or any other identity to prevent smuggling. It also empowers customs authorities to arrest a person who has committed an offence outside India.
NBFCs
A provision for allowing all Non-Banking Financial Companies to avail the facility of offering the interest to be taxed in the year in which it is actually received like in the case of Scheduled Banks is to be made. This was announced by the Finance Minister in her Budget Speech today.
INTERNATIONAL FINANCIAL SERVICES CENTRE(IFSC)
Several direct tax incentives including 100% profit-linked deduction under Section 80-LA in any ten-year block within a fifteen-year period has been announced for the International Financial Services Centre (IFSC) in GIFT City. “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 (AIF) and interest payment on loan taken from non-residents”, have also been announced for IFSC.
EXCISE ON CIGARETTES
The Finance Minister said as National Calamity and Contingent duty is contested with regard to tobacco products and crude as there is no basic excise duty on these items, a nominal basic excise duty is now proposed to be imposed. Rates for such basic excise duties have been announced as set forth in the Fourth Schedule to the Central Excise Act, 1944.
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Press Information Bureau
Government of India
Ministry of Finance
05 JUL 2019
Union Budget proposes measures to deepen Corporate Debt markets
A number of measures to further deepen bond markets have been proposed by the Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman, while presenting the Union Budget 2019-20 in Parliament today.
The Finance Minister said, “Corporate Debt markets are crucial for the infrastructure sector. Though the number and value of bond issuances had gone up, there has been a dip in the last two years. The market is skewed in favour of private placement”.
The Finance Minister added that given the need to further deepen bond markets, a number of measures are proposed to be taken up, which are as follows;
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DSM/RM/SVS/MKV/YK
Press Information Bureau
Government of India
Ministry of Finance
05 JUL 2019
Union Budget envisions India as a global hub for manufacturing electric vehicles
The Union Budget has outlined various proposals for giving a boost to manufacturing of electric vehicles and developing India as a global hub for the same.
In her maiden budget speech in Parliament today, the Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman said that Under Phase-II of the FAME Scheme, only advanced battery and registered e-vehicles will be incentivized, with greater emphasis on providing affordable and environment friendly public transportation options for the common man. The main objective of the Scheme is to encourage faster adoption of electric vehicles through upfront incentive on purchase of such vehicles and also by establishing the necessary charging infrastructure for the same. Phase II of FAME has an outlay of Rs10,000 crore for a period of 3 years, and has commenced from 1st April, 2019.
The Finance Minister has further said that the inclusion of solar storage batteries and charging infrastructure in the FAME scheme will give a boost to manufacturing, which is needed for India to leapfrog and become a global hub for manufacturing of these vehicles.
The Finance Minister also said that the Government has already moved GST council to lower the GST rate on electric vehicles from 12% to 5%. Also to make electric vehicles affordable to consumers, the Union Budget says the government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles. This amounts to a benefit of around Rs 2.5 lakh over the loan period to the taxpayers who take loans to purchase electric vehicle.
To further incentivise e-mobility, customs duty is being exempted on certain parts of electric vehicles.
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DSM/RM/BB/NP/rs
Press Information Bureau
Government of India
Ministry of Finance
05 JUL 2019
Union Budget stresses the need for heavy investment in infrastructure, Digital Economy and job creation in small and medium firms
The Union Budget 2019-20 stresses upon the need for heavy investment in infrastructure, digital economy and job creation in small and medium firms to fulfil the aspiration of making India a 5 trillion Dollar economy. While delivering the budget speech in Parliament today, the Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman pointed out that the Indian economy has added one trillion dollar in the last five years due to the various initiatives and reforms undertaken by the Government, and is poised to grow to be a 3 trillion dollar economy in the current year. Underlining the importance of “Make in India” for fulfilling this goal, the Finance Minister has proposed a number of initiatives as part of a framework for kick-starting the virtuous cycle of domestic and foreign investments.
Talking about the importance of programmes like Pradhan Mantri Gram Sadak Yojana, Industrial Corridors, Dedicated Freight Corridors, Bhartamala, Sagarmala, Jal Marg Vikas and UDAN for enhancing physical connectivity through various modes, the Finance Minister said these initiatives will improve logistics, reduce the cost of transportation and increase the competitiveness of domestically produced goods.
In the civil aviation sector, the Minister said that the Government will implement the essential elements of a regulatory roadmap for making India a hub for aircraft financing and leasing activities. This is critical to the development of a self-reliant aviation industry, creating aspirational jobs in aviation finance, besides leveraging the business opportunities available in India’s financial Special Economic Zones (SEZs), - International Financial Services Centre (IFSC).
She also said that the Government will adopt suitable policy interventions to create a congenial atmosphere for the development of Maintenance, Repair and Overhaul (MRO) industry in the country.
For the Railways sector, the Budget has proposed using Public-Private Partnership to unleash faster development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services. The Finance Minister informed that 657 kms of Metro Rail network has become operational across the country. She also said that India’s first indigenously developed inter-operable transport card based on National Common Mobility Card(NCMC) standards, that was launched in March this year will make travel across various modes convenient for people.
Talking about phase-II FAME Scheme that encourages faster adoption of electric vehicles, the Minister said that only advanced battery and registered e-vehicles will be incentivized under the Scheme with greater emphasis on providing affordable and environment friendly public transportation options for the common man.
For the highways sector, the Finance Minister has said that the Government will carry out a comprehensive restructuring of National Highway Programme to ensure that the National Highway Grid of desirable length and capacity is created using financeable model. After completing the Phase 1 of Bharatmala, states will be helped to develop State road networks in the second phase.
Talking about the Government’s vision for using rivers for cargo transportation, the Finance Minister said that the movement of cargo volume on Ganga is estimated to increase by nearly four times in the next four years. This will make movement of freight, passenger cheaper and reduce our import bill. In this regard she mentioned the Jal Marg Vikas Project for enhancing the navigational capacity of Ganga, and said that two multi-modal terminals at Sahibganj and Haldia and a navigational lock and Farrakka would be completed this year.
The Finance Minister has further said that in order to take connectivity infrastructure to the next level the Government will make available a blueprint this year for developing gas grids, water grids, i-ways, and regional airports. This is based on the successful, One Nation, One Grid model that has ensured power connectivity to states at affordable rates.
The Finance Minster further announced that the recommendations of the High Level Empowered Committee (HLEC) on retirement of old and inefficient plants, and addressing low utilisation of Gas plant capacity due to paucity of Natural Gas, will also be taken up for implementation now. Smt. Sitharaman also said that Government is examining the performance of Ujjwal DISCOM Assurance Yojana (UDAY) to improve it further. She said the Government will work with the State Governments to remove barriers like cross subsidy surcharges, undesirable duties on open access sales or captive generation for Industrial and other bulk power consumers. Besides these structural reforms, considerable reforms are needed in tariff policy. A package of power sector tariff and structural reforms would soon be announced.
In the housing sector, the Finance Minister announced that several reforms measures would be taken up to promote rental housing and a Model Tenancy Law will soon be finalised and circulated to the states. She further said that public infrastructure and affordable housing will be taken up through innovative instruments such as joint development and concession on land parcels held by Central Public Sector Enterprises.
For the MSME sector, Rs. 350 crore has been allocated for FY 2019-20 under the Interest Subvention Scheme, for 2% interest subvention for all GST registered MSMEs, on fresh or incremental loans.
The Finance Minister further said that the Government will create a payment platform for MSMEs to enable filing of bills and payment. This will help eliminate delays in payment and give a boost to investment in MSMEs .
The Finance Minister announced that the Government of India has decided to extend the pension benefit to about three crore retail traders and small shopkeepers whose annual turnover is less than Rs.1.5 crore under a new Scheme Pradhan Mantri Karam Yogi Maandhan Scheme. Enrolment into the Scheme will be kept simple requiring only Aadhaar and a bank account and rest will be on self-declaration.
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