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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 Shipping
05 JUL 2019
UNION BUDGET 2019-20: Pathway to 5 Trillion Dollar Economy
The maiden budget presented by Finance Minister Shrimati Nirmala Sitharaman has struck key chords with the Indian populace and chartered ambitious initiatives and plans for New India’s promising future.
This budget was drawn keeping in mind the needs of the upcoming generations and not the upcoming elections. With its mantra being “transform, reform, and perform”, this budget signifies a well-intentioned departure from a “token approach” to a “total approach”.
The Union Budget 2019 focused on developing the ease of living for the common citizen of India, with developmental initiatives proposed for rural India, railways, connectivity, introducing unified digital payments, inland waterways, taxation, education, and financial sectors.
With its focus on strengthening “Gaon, Garib, aur Kisan”, the budget aspires to provide running water, electricity, gas connection, and clean toilets to every rural household by 2022 through initiatives like “Har Ghar Jal” and Swachh Bharat Abhiyaan, with proposals for the latter to tackle solid waste management in cities too.
Instead of being written off as yet another woman-empowering budget, it focuses on developing a women-led economy through multiple initiatives. By chanting “Nari tu Narayani”, the FM introduced Rs 1 Lakh loan under mudra scheme for women entrepreneurs and Rs. 5,000 overdraft for every verified SHG member having a Jan Dhan account.
The budget also highlighted India’s aspiration to be a major space power through initiatives like the Gaganyaan, Chandrayaan and introduced New Space India Limited (NSIL), a new commercial arm for research and development carried out by ISRO.
Connectivity was another issue touched upon by the budget with the introduction of Sagar Mala and Bharat Mala, initiatives that will boost India’s infrastructure further. The budget also pushed for the concept of “One Nation One Grid”, and also introduced various incentives to boost sales of e-vehicles. The budget also proposed to increase the cargo carrying capacity of the Ganga by four times.
The budget called attention to the successful execution of PM Gram Sadak Yojna, which is just 3 per cent short of fulfilling its 2022 target. Also, it highlighted cost savings of around Rs. 18,341 crores through the distribution of 35 crores LED bulbs leading to an energy efficient new India.
The FM congratulated honest tax paying citizens of India for the increase of 78% in the direct tax revenue over the last five years. It also highlighted the reduction of NPAs in public sector banks by 1 lakh crore and recovery of over 4 lakh crores through stringent banking laws like IBC etc.
In 2013-14, India was the 11th largest economy in the world and today hold the spot of the 6th largest economy in the world. The vision of the union budget 2019 is to pave a pathway for India to become a $5 trillion dollar economy over the next few years.
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*The author is Minister of State for Shipping (Independent Charge) and Chemical and Fertilizers
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NP/MS
Ministry of Finance
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
Interchangeability of PAN and Aadhaar to file tax return proposed
2 % TDS on cash withdrawal exceeding Rs. 1 crore in a year from a bank account to encourage digital payments
Pre-filled tax returns to be made available to taxpayers to improve accuracy and reduce time taken to file a tax return
Scheme of Faceless Assessment in electronic mode being launched in a phased manner to eliminate undesirable practices
Businesses with Annual Turnover more than Rs. 50 crore to offer low cost digital modes of payment; no MDR charges to be imposed on customers/ merchants
Dated: 05 JUL 2019
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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DSM/RM/BB/RCJ/NK/MS
(Release ID: 1577365)
Ministry of Finance
Tax rates for individuals having taxable income from Rs. 2 cr - 5 cr and Rs. 5 cr & above to be increased by around 3 % and 7 % respectively
Direct Tax revenue increases by over 78 % in FY2018-19 from FY 2013-14; rose to Rs. 11.37 lakh crore from Rs. 6.38 lakh crore
Relief proposed in Levy of Securities Transaction Tax (STT)
Additional deduction of up to Rs.1.5 lakh for interest paid on loans for purchase of affordable house
Additional Income Tax deduction of Rs. 1.5 lakh on interest paid on loans taken to purchase Electric Vehicles
Dated: 05 JUL 2019
The effective tax rates for the higher income group individuals having taxable income from Rs. 2 crore to Rs. 5 crore and Rs. 5 crore and above is proposed to be increased by around 3 percent and 7 percent respectively. Presenting the General Budget 2019-20 in the Parliament today, Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman said, “In view of rising income levels, those in the highest income bracket need to contribute more to the Nation’s development”. Thanking the taxpayers, she said that they are playing a major role in Nation building.
Referring to several measures taken in the past to alleviate the tax burden on small and medium income earners, the Minister said, “Those having annual income upto Rs. 5 lakh are not required to pay any income tax”. This includes self-employed as well as small traders, salary earners, and senior citizens, she added.
Tax Revenue Up
Due to slew of efforts taken by the Government, the direct tax revenue has significantly increased by over 78 percent from Rs. 6.38 lakh crore in Financial Year 2013-14 to around Rs. 11.37 lakh crore in Financial Year 2018-19. The Minister stated that the increase has been significant in last couple of years. The Direct Tax revenue grew by 19.13 percent to Rs. 10, 02, 741 crore in 2017-18 (Rs. 8, 41, 713 crore in 2016-17) and by 13.46 percent in 2018-19. The number of taxpayers also increased by approximately 48 percent over the period 2013-14 to 2017-18, from 5.71 crore taxpayers to 8.4 crore taxpayers, due to various initiatives and taxpayer outreach programmes undertaken by the Government.
Relief in Levy of Securities Transaction Tax (STT)
In her speech, the Finance Minister proposed to give relief in levy of Securities Transaction Tax by restricting it only to the difference between settlement and strike price in case of exercise of options.
Additional Deduction of Interest for Affordable Housing
In order to provide a further impetus to affordable housing, the Minister proposed to allow an additional deduction of up to Rs.1,50,000/- for interest paid on loans borrowed up to 31st March, 2020 for purchase of an affordable house valued up to Rs. 45 lakh. Therefore, 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.
For realisation of the goal of ‘Housing for All’ and affordable housing, a tax holiday has already been provided on the profits earned by developers of affordable housing. Also, interest paid on housing loans is allowed as a deduction to the extent of Rs. 2 lakh in respect of self-occupied property.
Promoting Electric Vehicles
To make Electric Vehicles affordable to consumers, the Minister said that 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. Considering India’s large consumer base, the she stated, “We aim to leapfrog and 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”. The Government has already moved GST council to lower the GST rate on electric vehicles from 12% to 5%, she added.
Level Playing Field for Non Banking Financial Companies (NBFCs)
Recognising the increasingly important role of NBFCs in India’s financial system and to provide level playing field, the Finance Minister has proposed to tax the interest on bad or doubtful debts in the year in which it is actually received. Presently this is allowed for scheduled banks, public financial institutions, state financial corporations, state industrial investment corporations, cooperative banks and certain public companies like housing finance companies.
Measures to promote the International Financial Services Centre (IFSC)
To promote IFSC in GIFT City, the Finance Minister proposed to further provide several direct tax incentives to an IFSC including 100 percent profit-linked deduction under section 80-LA in any ten-year block within a fifteen-year period, exemption from dividend distribution tax from current and accumulated income to companies and mutual funds, exemptions on capital gain to Category-III AIF and interest payment on loan taken from non-residents.
Compulsory Filing of Return
The General Budget 2019-20 proposes to make return filing compulsory for persons, who have deposited more than Rs. 1 crore in a current account in a year, or who have expended more than Rs. 2 lakh on foreign travel or more than Rs. 1 lakh on electricity consumption in a year or who fulfils the prescribed conditions, in order to ensure that persons who enter into high value transactions also furnish return of income. It is also proposes to provide that a person whose income becomes lower than maximum amount not chargeable to tax due to claim of rollover benefit of capital gains shall also be required to furnish the return.
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DSM/RM/BB/RCJ/NK/MS
(Release ID: 1577407)
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)