Budget 2019-20 aims to boost infrastructure and investment
05 July 2019
India today unveiled its annual budget for the 2019-20 financial year, which aims at boosting infrastructure and investment especially in the rural areas with the government taking the role of an enabler in the economy’s march towards a $5 trillion economy by 2025.
Presenting the Union Budget 2019-20, finance minister Nirmala Sitaraman said the focus is on boosting investment – both foreign and domestic – by easing restrictions and incentivising investment in areas of growth.
Prime Minister Narendra Modi’s government in its second term is seeking to boost investment to reverse weakening growth and investment that threaten to take the shine off a recent landslide election victory.
To provide further impetus to affordable housing, additional deduction of Rs1.5 lakh on interest paid on loans borrowed up to 31 March 2020 for purchase of house up to Rs45 lakh will be exempted from income tax.
To take the burden off small and medium earners and to boost spending, the finance minister said those having an annual income up to Rs5 lakh are not required to pay any income tax.
The finance minister, however, announced an increase in surcharge paid by those earning more than Rs2 crore in a year. For high net individuals with taxable income of Rs2 crore, Rs5 crore and above, the surcharge will be increased by 3 per cent and 7 per cent respectively.
At the same time, she said, “We are thankful to taxpayers who play an important role in nation building.”
In an effort to further improve the start-up ecosystem, the finance minister proposed to extend the concessions of startups not requiring to justify fair market value of their shares issued to certain investors, including category 1 alternative investment funds, to shares issued to category 2 alternative investment funds also.
The budget sought to hike customs duty on gold and precious metals to 12.5 per cent from 10 per cent.
Sitharaman proposed to increase special additional excise duty and road and infrastructure cess on petrol and diesel by Re1 a litre each.
To discourage the practice of making business payments in cash, FM proposed to levy TDS of 2 per cent on cash withdrawal over Rs1 crore per year from bank account.
Sitaraman said the government has proposed to make PAN and Aadhaar interchangeable for income tax return (ITR) filing. In case a person doesn't have a pan card, the Aadhar number can be quoted instead. The finance minister also announced the introduction of a new scheme of faceless income tax assessments in electronic mode.
Start-ups and investors who file declarations will not be subject to scrutiny on valuation premiums, as part of the government’s efforts to resolve the angel tax issue, Sitaraman said.
She also propose exclusive TV programme for startups to be launched, with channel designed and executed by startups themselves. Standup India will be continued for the entire period coinciding with the 15th Finance Commission, ie, 2020 - 2025.
In order to get non-banking finance companies out of the present impasse, the budget proposed that for purchase of high-rated pooled assets of financially sound NBFCs amounting to Rs1 lakh crore during 2019-20 will have to give one-time six-month partial credit guarantee to creditor PSBs.
Sitaram said the government has proposed to provide Rs70,000 crore for PSU bank recapitalisation, adding that banks have managed to bring down non-performing asset (NPA) by recovery of Rs4 lakh crore over the last four years, adding that NPAs of state-run banks have come down by Rs1 lakh crore in the last one year.
The government, she noted, has already moved GST Council to lower the GST rate on electric vehicles (EV) from 12 percent to 5 per cent. Also, to make EVs affordable for consumers the government will provide additional income tax deduction of Rs1.5 lakh on the interest paid on the loans taken to purchase EVs.
Corporate tax rate will be 25 per cent for all companies with turnover of up to Rs400 crore per annum.
The budget also proposed to realign government holding in CPFCs. The National Pension scheme (NPS) will be separated from PFRDA with separate organisational structure.
Sitaaman also proposed a hike in PSU divestment target to Rs1.05 lakh crore and said strategic disinvestment will remain a priority area.
The finance minster also proposed that every verified woman member of self help groups (SHGs) having a Jan Dhan account, an overdraft of Rs5,000 will be allowed.
She also proposed the setting up of an expert committee to study long term finance and recommend the structure and flow of funds through development finance institutions.
Sitharaman said the government is developing 17 iconic tourism sites as world-class destinations. To popularise sports at all levels, National Sports Education Board for development of sportspersons to be set up under Khelo India:
The FM drew attention to the women of India, 'Naari tu Narayaani'. She said, "This Government believes that we can progress with greater women participation."
For non-resident Indians, the minister said those NRIs with Indian passport will be issued an Aadhar card, after they arrive in India, without having to wait for the customary 180 days.