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Press Information Bureau
Government of India
Ministry of Finance
05 JUL 2019
Budget Speech Summary – Part A
Indian economy becoming a 3 trillion dollar economy this year with World’s 3rd largest economy in terms of Purchasing Power Parity, government’s intention to invest Rs. 100 lakh crore in infrastructure in next 5 years, enhaced target of over one lakh 5,000 crore of disinvestment in 2019-20, proposal to provide Rs.70,000 crore to PSBs to boost credit, doubling of food security budget in last 5 years, faster adoption of Electric vehicles with an outlay of Rs.10,000 crore, opening of 18 new Indian diplomatic missions in Africa, development of 17 iconic Tourism Sites into world class tourist destinations and issuance of new series of coins of 1,2,5,10 & 20 rupees are some of the key highlights of the Union Budget 2019-20 presented to Parliament by Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman today.
In her maiden Budget speech, the Finance Minister said that Har Ghar Jal to all rural households by 2024 under Jal Jeevan Mission, “Housing for All” by 2022 under Pradhan Mantri Awas Yojana-(Gramin), upgradation of 1,25,000 kms of rural road under PMGSY-III in 5 years with an outlay of more than 80,000 crore with all weather connectivity provided to over 97% of such habitations, common facility centres under SFURTI for Bamboo, Honey and Khadi clusters, setting up of 80 Livelihood Business Incubators and 20 Technology Business incubators in 2019-20 to develop 75,000 skilled entrepreneurs in agro-rural industry sectors are some of the important New Deals for the Rural and Agricultural sectors of the Economy.
Smt. Sitharaman said that the first term of PM Modi-led-NDA-Government stood out as a performing Government, a Government whose signature was in the last mile delivery. Between 2014-19, government provided a rejuvenated Centre-State dynamic, cooperative federalism, GST Council, and a strident commitment to fiscal discipline. It set the ball rolling for a New India, planned and assisted by the NITI Aayog, a broad based think tank and has shown its deeds that the principle of “Reform, Perform, Transform” can succeed.
On many programmes and initiatives government had worked on unprecedented scales.
|
|
Pre- 2014 |
Post-2014 |
|
Food Security |
Rs.1.2 Lakh Crores |
Rs. 1.8 Lakh Crores |
|
Number of Patents |
4000 |
13,000(2017-18) |
|
MSP |
Rs. 89,740 crores |
Rs. 1,71,127.48 crores(2018-19) |
The Finance Minister said that mega programmes and services initiated and delivered during the last 5 years will now be further accelerated and sincere efforts will be made to further simplify procedures, incentivize performance, reduce red-tape and make the best use of technology to achieve the desired goals.
The Finance Minister elaborated that the Indian economy will grow to become a 3 trillion dollar economy in the current year and will reach the vision of Prime Minister to become 5 trillion dollar economy in the next five years. It is now the sixth largest in the world, while it was at 11th position in 2014. In Purchasing Power Parity terms, India is in fact, the 3rd largest economy already, only next to China and the USA. She said that to attain this and more the country needs to continue undertaking many structural reforms like the many big reforms in particular in the last 5 years in indirect taxation, bankruptcy and real estate. Even the common man’s life was being changed through MUDRA loans to help him do his business, and through several programmes it was being ensured that his/her kitchen had become smokeless, his/her house got electricity connection and women’s dignity was respected with the provision of toilets in homes.
Smt. Sitharaman said that gone are the days of policy paralysis and license-quota-control regimes. India Inc. are India’s job-creators and they are the nation’s wealth-creators. She said, “Together, with mutual trust, we can gain, catalyze fast and attain sustained national growth. I wish to propose a number of initiatives as part of a framework for kick-starting the virtuous cycle of domestic and foreign investments”.
Referring to connectivity as the lifeblood of an economy, the Finance Minister said that the Government has given a massive push to all forms of physical connectivity through Pradhan Mantri Gram SadakYojana, industrial corridors, dedicated freight corridors, Bhartamala and Sagarmala projects, Jal Marg Vikas and UDAN Schemes. While the industrial corridors would improve infrastructure availability for greater industrial investment in the catchment regions, the dedicated freight corridors would mitigate the congestion of our railway network benefitting the common man. The ambitious programme of Bharatmala would help develop national road corridors and highways, while Sagarmala would enhance port connectivity, modernization and port-linked industrialization. If Sagarmala is aimed at improving the infrastructure for external trade, equally it is the poor man’s transport too. Waterways are proven as a cheap mode of transport. The Jal Marg Vikas project for capacity augmentation of navigation on National Waterways is aimed at smoothening internal trade carried through inland water transport. These initiatives will improve logistics tremendously, reducing the cost of transportation and increasing the competitiveness of domestically produced goods.
The Finance Minister said that as the world’s third largest domestic aviation market, the time is ripe for India to enter into aircraft financing and leasing activities from Indian shores. She said, for providing an enabling ecosystem for growth in India of Maintenance, Repair and Overhaul (MRO) industry, it is proposed to leverage India’s engineering advantage and potential to achieve self-reliance in this vital aviation segment. She added that the government will adopt suitable policy interventions to create a congenial atmosphere for the development of MRO in the country.
The Finance Minister informed that Phase-II of FAME Scheme 2019, following approval of the Cabinet with an outlay of Rs.10,000 crore for a period of 3 years, has commenced from 1st April, 2019. The main objective of the Scheme is to encourage faster adoption of Electric vehicles by way of offering upfront incentive on purchase of Electric vehicles and also by establishing the necessary charging infrastructure for electric vehicles.
Dwelling on the Railways, Smt. Sithraman said that it is estimated that Railway Infrastructure would need an investment of Rs. 50 lakh crores between 2018-2030. Given that the capital expenditure outlays of Railways are around 1.5 to 1.6 lakh crores per annum, completing even all sanctioned projects would take decades. It is therefore proposed to use Public-Private Partnership to unleash faster development and completion of tracks, rolling stock manufacturer and delivery of passenger freight services. She said that to take connectivity infrastructure to the next level, government will build on the successful model in ensuring power connectivity – One Nation, One Grid – that has ensured power availability to states at affordable rates and she proposed to make available a blueprint this year for developing gas grids, water grids, i-ways, and regional airports.
Referring to welfare measures, the Fianance Minister said that the Government of India has decided to extend the pension benefit to about three crore retail traders & small shopkeepers whose annual turnover is less than Rs.1.5 crore under a new Scheme namely Pradhan MantriLaghuVyapari Mann-DhanYojana (PMLVMY). Enrolment into the Scheme will be kept simple requiring only Aadhaar and a bank account and rest will be on self-declaration.
Recognizing that investment-driven growth requires access to low cost capital, the Finance Minister said, India requires investments averaging Rs. 20 lakh crores every year (USD 300 billion a year) and therefore a number of measures are proposed to enhance the sources of capital for infrastructure financing:
On the subject of Foreign Direct Investment, Smt. Sitharaman said that FDI inflows into India have remained robust despite global headwinds. India’s FDI inflows in 2018-19 remained strong at US$ 64.375 billion marking a 6% growth over the previous year. She added that the Government will examine suggestions of further opening up of FDI in aviation, media (animation, AVGC) and insurance sectors in consultation with all stakeholders and suggested following measures:
On a similar issue, the Finance Minister informed that even though India is the world's top remittance recipient, NRI investment in Indian capital markets is comparatively less. With a view to provide NRIs with seamless access to Indian equities, she proposed to merge the NRI-Portfolio Investment Scheme Route with the Foreign Portfolio Investment Route.
Dwelling on the rural issues and Rural India, the Finance Minister said that Prime Minister Shri Narendra Modi’s two mega initiatives of Ujjwala Yojana and Saubhagya Yojana- have transformed the lives of every rural family, dramatically improving ease of their living. Household access to clean cooking gas has seen an unprecedented expansion, through provision of more than 7 crore LPG connections. All villages, and almost 100% households across the country havebeen provided with electricity. She informed that by 2022, the 75th year of India’s independence, every single rural family, except those who are unwilling to take the connection will have an electricity and a clean cooking facility. Similarly, under Pradhan MantriAwasYojana – Gramin (PMAY-G) a total of 1.54 crore rural homes have been completed in the last five years. In the second phase of PMAY-G, during 2019-20 to 2021-22, 1.95 crore houses are proposed to be provided to the eligible beneficiaries. These houses are also being provided with amenities like toilets, electricity and LPG connections. With the use of technology, theDBT platform and technology inputs, average number of days for completion of houses has reduced from 314 days in 2015-16 to 114 days in 2017-18.
The Finance Minister said that Pradhan MantriGram SadakYojana (PMGSY) has brought many socio economic gains in the rural areas and its target for completion was advanced from 2022 to 2019, as all weather connectivity has now been provided to over 97% of such habitations. This has been possible by maintaining a high pace of road construction of 130 to 135 km per day in the last 1,000 days. She underlined that the PMGSY-III is envisaged to upgrade 1,25,000 kms of road length over the next five years, with an estimated cost of Rs. 80,250 crore.
Smt. Sitharaman said that the ‘Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI) aims to set up more Common Facility Centres (CFCs) to facilitate cluster based development to make the traditional industries more productive, profitable and capable for generating sustained employment opportunities. The focused sectors are Bamboo, Honey and Khadi clusters. The SFURTI envisions setting up 100 new clusters during 2019-20 which should enable 50,000 artisans to join the economic value chain. Further, to improve the technology of such industries, the Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship (ASPIRE) has been consolidated for setting up of Livelihood Business Incubators (LBIs) and Technology Business Incubators (TBIs). The Scheme contemplates to set up 80 Livelihood Business Incubators (LBIs) and 20 Technology Business Incubators (TBIs) in 2019-20 to develop 75,000 skilled entrepreneurs in agro-rural industry sectors. Government also hopes to form 10,000 new Farmer Producer Organizations, to ensure economies of scale for farmers.
To provide benefits to fishermen communities through a focused Scheme – the Pradhan Mantri Matsya Sampada Yojana (PMMSY) – the Department of Fisheries will establish a robust fisheries management framework. They will address critical gaps in strengthening the value chain, including infrastructure, modernization, traceability, production, productivity, post-harvest management, and quality control.
Finance Minister said that ensuring India’s water security and providing access to safe and adequate drinking water to all Indians is a priority of the Government. A major step in this direction has been the constitution of the Jal Shakti Mantralaya, integrating the Ministry of Water Resources, River Development and Ganga Rejuvenation and Ministry of Drinking Water and Sanitation. This new Mantralaya will look at the management of our water resources and water supply in an integrated and holistic manner, and will work with States to ensure HarGharJal हर घर जल– (piped water supply) to all rural households by 2024 under the Jal Jeevan Mission. The Government has identified 1592 Blocks which are critical and over exploited, spread across 256 District for the Jal Shakti Abhiyan. Besides using funds available under various Schemes, the Government will also explore possibility of using additional funds available under the Compensatory Afforestation Fund Management and Planning Authority (CAMPA) for this purpose.
Under the Pradhan Mantri Gramin Digital SakshartaAbhiyan, over two crore rural Indians have so far been made digitally literate. To bridge rural-urban digital divide, Bharat-Net is targeting internet connectivity in local bodies in every Panchayat in the country. This will be speeded up with assistance from Universal Obligation Fund and under a Public Private Partnership arrangement.
Under Pradhan Mantri Awas Yojana – Urban (PMAY-Urban), over 81 lakh houses with an investment of about Rs.4.83 lakh crores have been sanctioned of which construction has started in about 47 lakh houses. Over 26 lakh houses have been completed of which nearly 24 lakh houses have been delivered to the beneficiaries. There is large scale adoption of new technologies for construction of these houses. Over 13 lakh houses have so far been constructed using these new technologies.
The 150th birth anniversary of Mahatma Gandhi is an apt occasion for us to re-dedicate ourselves to the ideals of Mahatma Gandhi. Prime Minister Modi took the Sankalp of achieving Gandhiji’s resolve of Swachh Bharat to make India Open Defecation Free by 2nd October 2019. I am very satisfied and happy to report that this would be achieved by the 2nd October.
The Finance Minister said that the Government will bring in a New National Education Policy to transform India’s higher education system to one of the global best education systems. The new Policy proposes major changes in both school and higher education among others, better Governance systems and brings greater focus on research and innovation. It also proposed to establish a National Research Foundation (NRF) to fund, coordinate and promote research in the country. She said that these initiatives have up-graded the quality of education. There was not a single Indian institution in the top 200 in the world university rankings five years back. Due to concerted efforts by our institutions to boost their standards and also project their credentials better, we have three institutions now – two IITs and IISc Bangalore – in the top 200 bracket.
Smt Sitharaman said that through the implementation of ‘KayakaveKailasa’, the Government will enable about 10 million youth to take up industry-relevant skill training through the Pradhan Mantri Kaushal Vikas Yojana (PMKVY). This is helping to create a large pool of skilled manpower with speed and high standards. She also added that the government will also lay focus on 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.
She said that the Government has decided to increase contribution 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. The Government is proposing to streamline multiple labour laws into a set of four labour codes. This will ensure that process of registration and filing of returns will get standardized and streamlined.
Smt Sitharaman dsaid that this Government has supported and encouraged women entrepreneurship through various schemes such as MUDRA, Stand UP India and the Self Help Group (SHG) movement. In order to further encourage women enterprise, she proposed to expand the Women SHG interest subvention programme to all districts. Furthermore, for every verified women SHG member having a Jan Dhan Bank Account, an overdraft of Rs.5,000 shall be allowed. One woman in every SHG will also be made eligible for a loan up to Rs. 1 lakh under the MUDRA Scheme.
On tourism front, the Finance Minister said that the Government is developing 17 iconic Tourism Sites into world class tourist destinations and to serve as a model for other tourism sites. The Iconic Tourism Sites would enhance visitor experience which would lead to increase visits of both domestic and international tourists at these destinations. She also informed that with the objective of preserving rich tribal cultural heritage, a digital repository is developed where documents, folk songs, photos & videos regarding their evolution, place of origin, lifestyle, architecture, education level, traditional art, folk dances and other anthropological details of the tribes in India are stored. The repository will further be enriched and strengthened.
The Finance Minister flagged the ten points of Government’s Vision:
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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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Government of India
Ministry of Commerce & Industry
05 JUL 2019
FDI inflows into India remained robust in 2018-19
The Union Minster of Finance and Corporate Affairs, Nirmala Sitharaman said that FDI inflows into India have remained robust despite global headwinds. Presenting the Union Budget 2019-20 in Parliament today, she said that India’s FDI inflows in 2018-19 remained strong at USD 64.375 billion marking a 6% growth over the previous year. The Finance Minister proposed the following steps to further consolidate the gains in order to make India a more attractive FDI destination:
Global Foreign Direct Investment (FDI) flows slid by 13% in 2018, to USD 1.3 trillion from USD 1.5 trillion the previous year – the third consecutive annual decline, according to UNCTAD’s World Investment Report 2019.
The Finance Minister further stated that it is high time India not only gets integrated into global value chain of production of goods and services, but also become part of the global financial system to mobilise global savings, mostly institutionalized in pension, insurance and sovereign wealth funds. Nirmala Sitharaman informed that the Government is contemplating organizing an annual Global Investors Meet in India, using National Infrastructure Investment Fund (NIIF) as the anchor, to get all three sets of global players-top industrialists/corporate honchos, top pension/insurance/sovereign wealth funds and top digital technology/venture funds.
An important determinant of attracting cross-border investments is availability of investible stock to the Foreign Portfolio Investors (FPIs). This issue assumes greater significance in view of the gradual shift, from stock targeted investments, towards passive investment whereby funds track global indices composition of which depends upon available floating stock. Accordingly, the Finance Minister proposed to increase the statutory limit for FPI investment in a company from 24% to sectoral foreign investment limit with option given to the concerned corporates to limit it to a lower threshold. FPIs will be permitted to subscribe to listed debt securities issued by ReITs and InvITs.
The Finance Minister in her Budget speech underlined that as Foreign Portfolio Investors are a key source of capital to the Indian economy, it is important to ensure a harmonized and hassle free investment experience for them. She proposed to rationalize and streamline the existing Know Your Customer (KYC) norms for FPIs to make it more investor friendly without compromising the integrity of cross-border capital flows.
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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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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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DSM/RM/KSP/nb