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Ministry of Commerce & Industry
DD channel for start-ups
05 JUL 2019
The Union Minster of Finance and Corporate Affairs, Nirmala Sitharaman said that the Government proposes to start a channel within the DD bouquet of channels exclusively for start-ups.
Presenting the Union Budget 2019-20 in Parliament today, she said that the channel will serve as a platform for promoting start-ups, discussing issues affecting their growth, matchmaking with venture capitalists and funding and tax planning. She said that this channel will be designed and executed by start-ups themselves.
The condition for carry forward and set off of losses in cases of eligible start-ups is proposed to be relaxed enabling them to carry forward their losses on satisfaction of any one of the two conditions - continuity of 51% shareholding/voting power of continuity of 100% of original shareholders. Further, the provision which allows exemption of capital gains from sale of residential property on investment of net consideration in equity shares of eligible start-up shall be extended by 2 years. The benefit will be available for sale of residential property on or before 31st March, 2021. The condition of minimum holding of 50% of share capital or voting rights in the start-up is proposed to be relaxed to 25%. The condition restricting transfer of new asset being computer or computer software is also proposed to be relaxed from the current 5 years to 3 years.
Start-ups in India are taking firm roots and their continued growth needs to be encouraged. 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, funds raised by start-ups will not require any kind of scrutiny from the Income Tax Department, she informed.
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MM/SB
(Release ID: 1577406)
Ministry of Finance
Start-ups and their investors filing requisite declarations not to be subjected to any scrutiny regarding valuations of share premiums
E-verification mechanism proposed for establishing identity of the investor and source of his funds
TV programme proposed exclusively for Start-ups within the DD bouquet of channels
Government to launch scheme inviting global companies to set up mega-manufacturing plants in sunrise and advanced technology areas
Dated: 05 JUL 2019
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. This has been proposed in the Union Budget 2019-20 presented by the Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman in the Parliament today with a view to resolve the so-called ‘Angel Tax’ issue.
In her Budget speech, the Finance Minister said that 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, funds raised by start-ups will not require any kind of scrutiny from the Income Tax Department, she said.
The Minister said that in addition, Special Administrative arrangements shall be made by Central Board of Direct Taxes (CBDT) for pending assessments of start-ups and redressal of their grievances. “It will be ensured that no inquiry or verification in such cases can be carried out by the Assessing Officer without obtaining approval of his supervisory officer”, she added.
At present, start-ups are not required to justify fair market value of their shares issued to certain investors including Category-I Alternative Investment Funds (AIF). The Finance Minister proposed to extend this benefit to Category-II Alternative Investment Funds also. Therefore, valuation of shares issued to these funds shall be beyond the scope of income tax scrutiny, she added.
The Finance Minister proposed to relax some of the conditions for carry forward and set off of losses in the case of start-ups. She 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 and relax certain conditions of this exemption.
TV Programme Exclusively for Start-ups within the DD Bouquet of Channels
Besides the above tax benefits, the Finance Minister also proposed to start a television programme within the DD bouquet of channels exclusively for start-ups. This shall serve as a platform for promoting start-ups, discussing issues affecting their growth, matchmaking with venture capitalists and for funding and tax planning. This channel shall be designed and executed by start-ups themselves.
Mega Investment in Sunrise and Advanced Technology Areas
In order to boost economic growth and Make in India, the Finance Minister said that the Government will launch a scheme 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. and provide them investment linked income tax exemptions under section 35 AD of the Income Tax Act, and other indirect tax benefits.
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DSM/RM/BB/RCJ/NK/MS
(Release ID: 1577375)
Ministry of Finance
Stand-Up India Scheme extended till 2025
Government proposes streamlining multiple labour laws into a set of four Labour Codes
New-age skills like AI, Big Data, VR, Robotics and Internet of Things to be promoted
Dated: 05 JUL 2019
The Stand Up India Scheme has been extended upto the year 2025. This was stated by the Union Minister of Finance and Corporate Affairs, Smt Nirmala Sitharaman while presenting the Union Budget 2019-20 in the Parliament today. “Stand-Up India Scheme has delivered enormous benefits. The country is witnessing emergence of thousands of entrepreneurs from women and also from the Scheduled Castes and Scheduled Tribes, most of them assisted to set up their businesses and industry with capital provided under the Stand-Up India Scheme”, she said. The Minister said that banks will provide financial assistance for demand based businesses under this scheme, including for acquisition of scavenging machines and robots.
The Finance Minister said that the Government also proposes to streamline multiple labour laws into a set of four labour codes which will ensure the standardisation and streamlining of the process of registration and filing of returns, which is further expected to reduce the disputes.
Highlighting the achievements of the Government in the field of skill development, the Finance Minister said that through the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), the Government enables about 10 million youth to take up industry-relevant skill training. To prepare the youth for the future and also to take up jobs overseas, the Government will increase focus on skill sets needed abroad including language training, the Minister explained. She also added that focus shall be given to new-age skills like Artificial Intelligence (AI), Internet of Things, Big Data, 3D Printing, Virtual Reality and Robotics, which are valued highly both within and outside the country, and offer much higher remuneration.
The Finance Minister, Smt. Nirmala Sitharaman said that under Pradhan Mantri Rojgar Protsahan Yojana (PMRPY), the Government contribution to the Pension Scheme has been increased from 8% in 2016-17 to 12% for both Employees Provident Fund and Employee’s Pension Scheme for all sectors w.e.f. 01.04.2018. As a result of this measure, number of beneficiaries increased by almost 88 lakhs during FY 2018-19. As on 31.03.2019, total beneficiaries under the Scheme are 1,18,05,000 and the establishments benefitting are 1,45,512.
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DSM/RM/BB/NB/JP
(Release ID: 1577378)
Ministry of Finance
Several tax proposals aim to promote investments in start-ups and sunrise industries in the country
Lower 25% corporate tax rate is to be applicable to those with annual turnover upto Rs.400 crore instead of the current limit of Rs.250 crore
Increase in surcharge by 3% for those with taxable income between 2-5 crore rupees and by 5% to those with income of over rupees 5 crore
Digital economy to be promoted. A tds of 2% on cash withdrawal exceeding Rs.1 crore in a year from a bank account is proposed
Both direct and indirect tax incentives for promotion of electric vehicles in a big way announced
Several customs duty proposals announced for promoting make in India, reducing import dependence, protection to MSME sector and promoting clean energy
Special additional excise duty and road & infrastructure cess of one Rupee each on petrol and diesel proposed
Customs duty on gold and other precious metals increased from 10% to 12.5%
Dated: 05 JUL 2019
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 :
41. Wool fibre, Wool Tops
42. Inputs for the manufacture of CRGO steel: -
43. Amorphous alloy ribbon
44. Cobalt mattes and other intermediate products of cobalt metallurgy
45. Capital goods used for manufacturing of following electronic items, namely-
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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DSM/RM/KSP/nb
(Release ID: 1577415)
Key proposals are as under: