Mrs. Nirmala the first full time woman Finance Minister Of India presented her maiden budget in the parliament on the 5th of July, Friday. In her opening statement Mrs. Sithraman said, “The recent election was charged with brimming home and desire for a bright and stableNew India. Voter turnout was highest; every section came to stamp their approval for a performing Government.” The Finance Minister also claimed that the Indian economy will grow to become a 3 trillion dollar economy this year itself. She further added that from 1.85 trillion dollars in 2014, the economy has reached 2.7 trillion US dollars; we can very well reach 5 trillion dollars in the next few years.
Here are the key highlights of the Union Budget 2019:
Direct Tax Reforms:
1.Threshold of Turnover to be increased to 400 Crores:
Corporate tax of Rs 25% will be levied on all companies having turnover of Rs. 400 crores. This will cover 99.3% of companies. Earlier the threshold of turnover for corporate tax was Rs. 250 crores.
2. Deduction on Interest on Housing Loan increased to Rs 3.5 lakhs
To provide further impetus to affordable housing, additional deduction of 1.5 lakh rupees on interest paid on loans borrowed upto 31 Mar, 2020 for purchase of house up to 45 lakhs is being provided.This has increased the interest deduction limit on housing loans to 3.5 lakhs for middle class buyers.
3. Super rich to pay more tax:
Surcharge on individuals having taxable income from 2 crore to 5 crore and 5 crore and above is to be enhanced, so that effective tax rate will increase by around 3% and 7% respectively.
4. TDS of 2% on cash borrowings over Rs. 1 crore:
To discourage business payments in cash, Tax Deduction at Source of 2% to be levied on cash withdrawal exceeding 1 crore rupees in a year from a bank account
5. PAN and Aadhar made interchangeable:
PAN and Aadhaar to be made interchangeable for convenience of tax payers. Income Tax returns can now also be filed using Aadhaar card number, if one does not have PAN card. This will simply the process of filing tax returns.
6. Relief in levy of Securities Transaction tax to be provided:
The finance minister also promised to provide a relief in payment of Security Transaction Tax on Capital Gains.
7. Tax reforms for startups:
The Finance minister said that there will be no scrutiny on funds of startups. No justification to be given on the fair market value of shares. A special arrangement for pending assessment will be set up. An exemption on sale of house for investments will be provided upto 31.03.21.The government will also relax condition for carry forward of losses.
Indirect Tax Reforms:
1.Tax rate reduced on electronic vehicles:
Tax rate on electric vehicles has been reduced from 12% to 5%. An additional income tax deduction of 1.5 lakh rupees on interest paid on loans taken to purchase electric vehicles is also to be provided.
2. Simplifying filing of returns:
The government is further simplifying GST regime. A simplified single monthly return is being rolled out. Taxpayers with annual turnover less than 5 crore need to file only quarterly returns. A fully automated GST Refund module shall be implemented, multiple tax ledgers will be replaced by one, also invoice details to be captured in a central system.
3. Customs Duty on Gold and other precious metals to be increased to 12.5%:
The customs duty on gold and other precious metals to be increased to 12.5% . Earlies the customs duty was levied at 10% on gold and other precious metals.
4. 5% Customs Duty on imported books, defense equipment made exempt:
5% customs duty is being imposed on imported books, to promote domestic publishing and printing industry.
Import of defence equipment not manufactured in India are being exempted from basic customs duty
5. Electronic Invoice System:
Electronic invoice system will be introduced to prefill the taxpayers return. The system will be rolled out from January 2020. The government will do away with e way bill.
The other key areas of Budget 2019 has been discussed below
1.Easy Funding For MSMEs:
A Payment platform for MSMEs is to be created. A sum of 350 crore rupees will be allocated for 2% interest subvention for all GST-registered MSMEs on fresh or incremental loans.
2. Promoting Rental Housing:
Several reforms would be undertaken to promote rental housing, current rental laws are archaic as they do not address lessor-lessee relationships fairly.
3. Pension Benefits to retail traders and Shopkeepers:
Pension benefit to be extended to around 3 crore retail traders and shopkeepers with an annual turnover less than 1.5 crores under Pradhan Mantri Karam Yogi Man Dhan Scheme.
5. Reforms in Financial Sector:
An Electronic Fundraising Platform, a social stock exchange, to be set up to list social enterprises and voluntary organizations working for social welfare objectives.
Interoperability of RBI depositories and SEBI depositories necessary for seamless transfer of treasury bills; govt. will take necessary measures in this regard in consultation with RBI and SEBI .
6. FDI:
Further opening up of FDI in aviation, media, animation to be done. AVGC and insurance to be examined, in consultation with stakeholders. 100% FDI to be permitted for insurance intermediaries . Local sourcing norms for FDI to be eased for single-brand retailing sector
7. Education Sector:
New National Educational Policy to be brought in to transform Indian educational system; major changes in higher as well as school system to be made. StudyInIndia to be started to bring in foreign students into Indian higher education system
8. Labour Laws:
Multiple labour laws to be streamlined into a set of four Labour Codes, to standardize registration and filing of returns and reduce disputes.
9.Banking Sector:
RBI will limit regulatory authority over NBFC’S . NBFCS raising funds for public issues will be exempted from DRR. Public sector banks are to be sanctioned Rs. 70,000 crores to boost credit sanctioning.
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