AKGVG Budget Analysis

Preface

All eyes were on the finance minister Nirmala Sitharaman as she rose to present the maiden budget of second Narendra Modi government in Lok Sabha. The budget speech started with "The people of India have validated their two goals for our country's future: national security and economic growth".We have set the ball rolling for new IndiaFINMIN mentioned.FINMIN called for reform, perform and transform citing India will become 3 trillion USD economy this year with plans to reach 5 trillion USD economy in a phased manner with:

  • Heavy investment in infrastructure
  • Digital Economy
  • Job creation

FINMIN brought to light that the government has given a massive push to all forms of physical connectivity via following schemes namely0:

  • PMGSY
  • Industrial corridors
  • Dedicated freight corridors
  • Bharatmala
  • Sagarmala
  • Jal Marg vikas
  • UDAN schemes
Talking on the quantitative parts, FINMIN informed that India's:
  • Fiscal deficit in FY19 at 3.3% of the GDP
  • External debt to GDP less than 5%:the lowest globally.
  • Disinvestment target of Rs 1 lakh crore for FY20.
  • Direct tax revenue has grown 78% from 2014 to 2019.
  • The tax collection has increased to 11.37 lakh crore to 2018-19 from 6.37 lakh crore from 2013-14 appreciating the honesty of taxpayers of India.

Sectorial Highlights

Agriculture and farmers' welfare

  • Zero budget farming decoded.
  • Ease of doing business and ease of living to apply to farmers too.
  • Pradhan Mantri Matsya Sampada Yojana proposed to address critical infrastructure gap in fisheries sector.

Rural sector

  • 1.95 crore houses proposed to be provided under PMAY Grameen by 2021
  • Water management schemes focused.
  • New Jal Mantralya to ensure 'Har Ghar Jal'
  • Safe drinking water for every citizen 2024.

Social sector

  • National Common Mobility Card to enable people to pay multiple transport charges across India.
  • Govt plans to create MRO (Maintenance, Repair and Operate) industry.
  • 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 Schemeon the basis of Aadhar, PAN and self- declaration.
  • New Space India Limited, a public sector enterprise, has been incorporated to tap the benefits of R&D carried out by Isro.
  • By 2022, power and LPG to be provided to all households.
  • Comprehensive restructuring of National Highways Programme to be done.
  • National Research Foundation to fund and coordinate research in India.
  • Labour laws to be streamlined into four basic labour codes.
  • Pradhan Mantri Grameen Digital Saksharata Abhiyan, Bharat Net is targeting internet connectivity in local bodies in every panchayat in the country.
  • National Sports Education Board for development of sportspersons to be set up under Khelo India.
  • 1 woman in every self-help group will be allowed a loan of Rs 1 lakh.
  • Every verified woman SHG member having a Jan Dhan account, will be allowed,an overdraft of Rs 5000 per month.
  • Women SHG Interest Subvention Programme to be expanded to all districts in India.

Education

  • 'Study in India' initiative will be started for foreign student.
  • Rs 400 crore for world-class higher education institutions in FY20.
  • New National Educational Policy proposed.

Infrastructure

  • Bharatmala scheme to develop roads and highways.
  • Sagarmala scheme to enhance port connectivity.
  • "One Nation, One Grid" for power availability to states at affordable rates.
  • FAME II scheme to encourage faster adoption of electric vehicles by right incentives and charging infra.
  • Upfront incentive to be offered on purchase of EVs.
  • Reform measures will be taken up to promote rental housing.
  • New tenancy law to be introduced.
  • 1.25 lakh kilometers of roads to be upgraded.
  • Rs 80,250 crore dedicated to building 125,00 km of roads in the next 5 years.
  • Comprehensive restructuring of National Highways Programme to be done.

Railways

  • PPP to be used to unleash faster development and delivery of passenger freight services.
  • Rail and metro project for 300 km have been approved.
  • Public-Private partnership proposedto unleash faster development of railways.

Investment

  • Payment platform for MSMEs to be created.
  • KYC streamlined to make it more investor-friendly.
  • 100% FDI will be permitted for insurance intermediary.
  • Investments made by FIIs and FPIs in securities issued by infrastructure debt funds and NBFCs to be transferred/ sold to domestic investors with specified lock-in periods.
  • Social Stock Exchange under SEBI proposed.
  • NRI portfolio investment scheme route proposed to be merged with FPI route.
  • New KYC for foreign investors.
  • Local sourcing norms will be relaxed for FDI.
  • Annual Global Investors' Meet to be organized in India.
  • Credit Guarantee Enhancement Corporation will be set up in 2019-20.
  • Aadhaar to NRIs with Indian passports after their arrival in India without the mandatory wait of 180 days.

Banking

  • Rs 17,000 crore of capital to boost credit to PSBs.
  • Return of regulation authority over housing finance sector from National Housing Board to the RBI.
  • On purchase of high-rate pooled assets of NBFC amounting of Rs 1 lakh core in this FY, govt will provide one-time 6 month credit guarantee to PSBs for first loss up to 10%.
  • PSU bank re-capitalisation of Rs 70,000 crore proposed.
  • A new series of coins including for Rs 20 will be made.
 

Miscellaneous

  • Gandhipedia is being developed to sensitize youth and society at large on positive Gandhian values.
  • National Research Foundation to fund and coordinate research in India proposed.
  • An exclusive TV channel for start ups.
  • 18 new diplomatic missions in Africa.

Direct Taxation Highlights

  • 25% tax for all companies with annual turnover of Rs 400 crore.
  • Additional income tax deduction of Rs 2.5 lakh on interest paid over the years on loans taken to buy electric vehicles.
  • For Startups:
    • The startups and investors who file requisite declarations will not be subjectto 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 startups will not require any tax scrutiny.
    • Even the valuation of Category II AIF funds (Real estate funds, private equity funds (PE funds), and funds for distressed assets are registered as Category II alternate investment funds, or AIFs) will be out of I-T scrutiny.
    • Provisions of carry forward and set-off relaxed.
    • Exemption from capital gains for investment in start-ups upto 31 March 2021.
  • Additional Rs 1.5 lakh deduction in income tax on home loans for affordable housing.
  • TDS of 2% for withdrawals of Rs 1 crore in a year from a bank account.
  • Tax returns to be auto-populated based on information from different sources.
  • Interchangeability of Pan and Aadhaar for ITR.
  • No charge on customer or merchant for digital payment.
  • Effective tax rate for individuals having taxable incomeabove ₹2 crore has been increased.
  • Faceless E-Assessment: A scheme of faceless electronicassessment involving no humaninterface to be launched this year..
  • Investment linked incentives for global companies for manufacturing in sectors like semi-conductors, solar power, laptops etc. under section 35AD.

Indirect Taxation Highlights

  • Customs duty exempted on certain parts of EVs.
  • Excise duty on fuel hiked by 1 rupee.
  • 'Basic duty' on defence imports exempted.
  • Custom duty on gold increased by 2%.
  • Sabka Vishwas Legacy Dispute Resolution Schemeproposed for quick closure of service tax and excise relatedlitigations
We trust you will find this Journal informative as well as useful.
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Disclaimer: The entire contents of this Journal have been prepared on the basis of relevant provisions and information existing at the time of preparation. The observations of the author are personal view and the author does not take any responsibility of the same and this cannot be quoted without the written consent of the author.

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Knowledge Updates Team
AKGVG & Associates
(Chartered Accountants)

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