Union Budget 2019 Highlights: FM levies more tax on the Super-rich, while making home loans cheaper for the middle class


  • By 2022, all villages will have water, electricity and clean cooking facilities.
  • Additional deduction of up to ₹1,50,000 for interest paid on loans borrowed up to March 31, 2020 for purchase of an affordable house valued up to ₹45 lakh.
  • Enhance surcharge on individuals having taxable income from ₹2 crore to ₹5 crore and ₹5 crore and above so that effective tax rates for these two categories will increase by around 3 % and 7 % respectively.
The Finance Minister Nirmala Sitharaman unveiled her maiden Budget covering aspects of startups, education, home loans, disinvestment and many others.

Here are key announcements made by her, from her Budget speech.


The Indian economy will grow to become a $3 trillion dollar economyin the current year.

In Purchasing Power Parity terms, we are in fact, the third largest economy already, only next to China and the USA.

Rail & Land

Railways should take up Public Private Partnership in Railways to unleash faster development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services.

Current (house) rental laws are archaic and do not address the relationship between the Lessor and the Lessee realistically and fairly. A Model Tenancy Law will also be finalized and circulated to the states.

Large public infrastructure can be built on land parcels held by Central Ministries and Central Public Sector Enterprises all across the country. Through innovative instruments such as joint development and concession, public infrastructure and affordable housing will be taken up.

Small businesses & Artisans

Government will create a payment platform for MSMEs to enable filing of bills and payment thereof on the platform itself.

Pension benefits to about three crore retail traders and small shopkeepers whose annual turnover is less than ₹1.5 crore, is extended.

The Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI) envisions setting up 100 new clusters during 2019-20 which will aid 50,000 artisans.

The Scheme contemplates to set up 80 Livelihood Business Incubators (LBIs) and 20 Technology Business Incubators (TBIs) in 2019-20 to develop 75,000 skilled entrepreneurs in agro-rural industry sectors.



FDI & Disinvestment

The Government will examine suggestions of further opening up of FDI in aviation, media (animation, AVGC) and insurance sectors in consultation with all stakeholders.

100% Foreign Direct Investment (FDI) will be permitted for insurance intermediaries.

Local sourcing norms will be eased for FDI in single brand retail sector.

I propose to increase the statutory limit for foreign portfolio investors (FPI) investment in a company from 24% to sectoral foreign investment limit with option given to the concerned corporates to limit it to a lower threshold.

FPIs will be permitted to subscribe to listed debt securities issued by ReITs and InvITs.

The cumulative resources garnered through Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs) and toll operate transfers exceeded ₹24,000 crore.

Government is setting an enhanced target of ₹1,05,000 crore of disinvestment receipts for the financial year 2019-20.

It is right time to consider increasing minimum public shareholding in the listed companies. I have asked SEBI to consider raising the current threshold of 25% to 35%.

I propose to initiate steps towards creating an electronic fund raising platform – a social stock exchange - under SEBI to list social enterprises.

Rural Growth

By 2022, I would like to assure the nation that every single rural family, except those who are unwilling to take the connection will have electricity and a clean cooking facility.

In the second phase of Pradhan Mantri Awas Yojana –Gramin, 1.95 crore houses are proposed to be provided to the eligible beneficiaries.

Pradhan Mantri Gram Sadak Yojana phase III will look to upgrade 1,25,000kms of roads over the next five years, with an estimated cost ofRs 80,250 crore.

Water & Sanitation

Ensuring India’s water security and providing access to safe and adequate drinking water to all Indians is a priority of the Government.

A new Mantralaya will look at the management of water resources. It will work to ensure Har Ghar Jal (piped water supply) to all rural households by 2024 under the Jal Jeevan Mission.

More than 95% of cities also have been declared ODF. More than 45,000 public and community toilets across 1700 cities have been uploaded on Google maps, covering more than 53% of India’s urban population.

Women & Education

An amount of₹400 crore has been provided under the head, “World Class Institutions”, for FY 2019-20, more than three times the revised estimates for the previous year.

I propose to start a programme, ‘Study in India’, that will focus on bringing foreign students to study in our higher educational institutions

For every verified women SHG self-help group member having a Jan Dhan Bank Account, an overdraft of 5,000 shall be allowed. One woman in every SHG will also be made eligible for a loan up to1 lakh under the MUDRA scheme.

Banks & NBFCs

Public Sector Banks are now proposed to be further provided ₹70,000 crore capital to boost credit for a strong impetus to the economy.

For purchase of high-rated pooled assets of financially sound NBFCs, amounting to a total of Rupees one lakh crore during the current financial year, Government will provide one time six months' partial credit guarantee to Public Sector Banks for first loss of up to 10%.

Reserve Bank of India (RBI) is the regulator for NBFCs.However, RBI has limited regulatory authority over NBFCs.Appropriate proposals for strengthening the regulatory authority of RBI over NBFCs are being placed in the Finance Bill.

I am proposing to return the regulation authority over the housing finance sector from NHB to RBI.

To facilitate on-shoring of international insurance transactions and to enable opening of branches by foreign reinsurers in the International Financial Services Centre, it is proposed to reduce Net Owned Fund requirement from₹ 5,000 crore to₹1,000 crore.

India’s sovereign external debt to GDP is among the lowest globally at less than 5%. The Government would start raising a part of its gross borrowing programme in external markets in external currencies.

Lowering Tax

We continue with phased reduction in corporate tax rates. Currently, the lower rate of 25% is only applicable to companies having annual turnover up to ₹250 crore. I propose to widen this to include all companies having annual turnover up to ₹400 crore. This will cover 99.3% of the companies.

Our government will provide additional income tax deduction of ₹1.5 lakh on the interest paid on loans taken to purchase electric vehicles. This amounts to a benefit of around ₹2.5 lakh over the loan period to the taxpayers who take loans to purchase electric vehicle.

Interest paid on housing loans is allowed as a deduction to the extent of ₹2 lakh in respect of self-occupied property. I propose to allow an additional deduction of up to ₹1,50,000 for interest paid on loans borrowed up to March 31, 2020 for purchase of an affordable house valued up to₹45 lakh.

This will translate into a benefit of around ₹7 lakh to the middle class home-buyers over their loan period of 15 years.

Levying taxes

I propose to levy tax deducted at source TDS of 2% on cash withdrawal exceeding ₹1 crore in a year from a bank account.

Business establishments with annual turnover more than ₹50 crore shall offer such low cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants.

I propose to enhance surcharge onindividualshaving taxable income from ₹2 crore to ₹5 crore and ₹5 crore and above so that effective tax rates for these two categories will increase by around 3 % and 7 % respectively.

Duties

Import of defence equipment that are not being manufactured in India are being exempted from basic customs duty.

To encourage domestic publishing and printing industry, 5% custom duty is being imposed on imported books.

I propose to increase Special Additional Excise duty and Road and Infrastructure Cess each by one Rupee a litre on petrol and diesel.

It is also proposed to increase custom duty on gold and other precious metals from 10% to 12.5%.

Nominal basic excise duty is being imposed on tobacco products and crude oil.

Aadhar & Startups

I propose to consider issuing Aadhaar Card for Non-Resident Indians with Indian Passports after their arrival in India without waiting for 180 days.

I propose to make PAN and Aadhaar interchangeable and allow those who do not have PAN to fileIncome Taxreturns by simply quoting their Aadhaar number andalso use it wherever they are required to quote PAN.

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 ofvaluations of share premiums.






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