The Union Finance minister Mrs. Nirmala Sitharaman in her maiden budget speech has shown that the NDA Government led by Hon’ble Prime Minister Mr. Narendra Modi is focussing on boosting investments to bring the economy back on track. One of her biggest challenges is to revive growth in some key sectors apart from introducing measures to tackle a declining trend in demand & GDP; apart from this other challenges are job creation, control on increasing NPAs & Recapitalisation of public sector banks, boosting investments for MSMEs, tax concessions for the middle class, increasing the range of health care insurance to mass of the Indians, defence & railway modernisation, some relief for stock markets, assurance of quality food & education for every citizen and development of other key areas e.g. allied transport and tourism sector etc.
Through her maiden budget, Finance Minister Mrs. Nirmala Sitharaman has demonstrated a strong intent to overcome all these challenges and accelerate the economic growth in India. The Finance Minister in her budget speech touched upon ease of doing business, ease of living, streamlining multiple labour laws & current rental laws, boosting the rural economy, reliefs for MSMEs & Start-ups, tax incentives for electric vehicle buyers, recapitalisation of Banks, transformation of the higher education sector & proposal of a National Education Policy etc.
Let’s have a quick view of the key Highlights of the Union Budget 2019:
Income Tax
1. No change in personal Income Tax Rates.
2. Home Loan Interest on Self Occupied Property increased from Rs. 2 Lacs to Rs. 3.5 Lacs for loan taken upto 31st March 2020. The Finance Minister has proposed to increase the deduction that can be claimed for interest paid on loans taken for affordable housing by Rs 1.5 lacs to Rs 3.5 lacs per annum for houses valued up to Rs 45 lacs. The deduction is available on loans taken up to March 31, 2020. This will provide a total benefit of Rs 7 lacs over a loan period 15 years.
3. For the ease of taxpayers, PAN & Adhaar have now been made interchangeable; if you don’t have PAN still you can file your ITR by quoting your Adhaar and you can use Adhaar wherever PAN is required to be used.
4. The deduction under Income Tax Act amounting to Rs. 2.5 Lacs for interest on loan taken to buy the Electric Vehicle.
5. To discourage the business payment in cash, the Government has proposed the TDS @2% on cash withdrawal from the bank account exceeding Rs. 1 Crore in a financial year.
6. The tax rate of 25% to be applicable to Companies having Turnover upto Rs. 400 crores increased from the current limit of Rs. 250 Cr; this would cover 99.3% of total companies in India and now only 0.70% of total companies in India would fall under the higher tax bracket.
7. Enhancement of Surcharge on taxable income of Super Rich people. The Finance Minister has proposed to increase the surcharge to 3 per cent for taxpayers earning Rs 2 Cr to Rs. 5 Cr and for those earnings above Rs 5 Cr to 7 per cent.
Excise Duty
1. The Government has increased the excise duty on fuels i.e. petrol, diesel by Re 1 per liter.
MSME
1. A huge incentive in the form of 2% Interest Subvention for GST Registered MSMEs on all fresh & incremental business loans, Rs. 350 crores have been allocated by the Government on this account.
2. Pension benefits will be offered to 3 crore Shop owners with annual turnover of less than Rs 1.5 crore under new scheme called Pradhan Mantri Man Dhan Scheme.
3. The Government would create a new Payment platform for MSMEs to enable filing of bills and payment on this platform itself. This would give a huge time saving.
Startup
1. The Government would launch an exclusive TV channel for startups under Doordarshan bouquet to provide a platform for start-ups to disseminate information in the industry.
2. Big Relief on Angel Tax issue, the start-ups and investors who file requisite declarations will not be subjected to any kind of scrutiny in respect of valuation of share premium. A mechanism of e-verification will be put in place and with this, the funds raised by start-ups will not require any tax scrutiny.
Relief on Digital Payments
1. No charges or Merchant Discount Rate (MDR) would be imposed either on the merchant or the customer on the payment trough Credit/Debit card waived for the business having an annual Turnover of Rs. 50 Cr. 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.
Education
1. The Government to come with a new National Education Policy to transform India’s higher education system up to the global standards.
2. The allocation of Rs 400 crore for world-class higher education institutions in Financial year 2019-20.
3. The Government would launch a new program ‘Study in India’ to attract foreign students in higher education sector.
Adhaar to NRIs
1. NRIs with Indian Passport would be issued Adhaar on their arrival to India and existing the requirement of 180 days has been waived off.
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