Petrol, diesel prices up; import duty raised on many items
Will empower poor, give youth a better tomorrow: PM
NEW DELHI, July 5: The Modi 2.0 Government’s maiden Budget today hiked petrol and diesel prices, raised import duty on dozens of items and increased tax on the super-rich as it sought to spur growth through higher spending and sops for startups, housing and corporates.
Presenting the Budget for 2019-20, Finance Minister Nirmala Sitharaman announced further opening up of aviation, insurance and media sectors to foreign investment while throwing a lifeline to the struggling shadow banks (NBFCs) to boost investment and lending in the economy.
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She made no changes to the income tax slabs but hiked surcharge on the super-rich. Those with a taxable income of Rs 2 to 5 crore will now pay 39 per cent tax while those with more than Rs 5 crore income would pay 42.47 per cent.
“Those in the highest income brackets need to contribute more to the nation’s development,” she said.
Also, 2 per cent TDS on cash withdrawals exceeding Rs 1 crore and mandatory filing of returns by certain category of individuals was brought in with a view to tighten compliance.
With sluggish growth in tax revenues, she announced plans to sell stakes in PSUs and sought more dividend from the RBI and public sector banks and companies in order to boost revenue and bring down the deficit.
For the same, excise duty and cess on petrol and diesel were hiked by Rs 2 per litre each and import duty on dozens of items ranging from gold to automobile parts and tobacco products was increased.
The customs duty on gold has been increased to 12.5 per cent from 10 per cent.
To spur consumption, she lowered corporate tax on companies with revenue of up to Rs 400 crore to 25 per cent from 30 per cent. Currently, the lower rate is applicable only to companies with revenue up to Rs 250 crore.
Sitharaman said the reduced tax rate would cover 99.3 per cent of corporates in the country.
The Budget also sought to boost ‘Make in India’ by way of reducing duties on certain inputs and raw materials and creating a level playing field by increasing duties on certain goods. Emphasis has also been placed on promoting electrical mobility by reducing customs duty on parts used to manufacture electric vehicles.
While customs duty on some parts used in EV manufacturing has been brought down to nil, the GST rate on electric vehicles will be lowered to 5 per cent from 12 per cent.
To boost the use of electric vehicles, an additional income tax deduction of Rs 1.5 lakh on interest paid on loans taken to purchase EVs has been proposed.
“The Indian economy will grow to become a USD 3 trillion economy in the current year (from USD 2.7 trillion last year). It is now the sixth largest in the world,” she said, adding the target is to take it to USD 5 trillion in coming years. “This budget is setting out a vision, a target, for every sector of our society.”
Sitharaman surprised most analyst by narrowing the budget deficit target to 3.3 per cent of the GDP for the current fiscal from 3.4 per cent previously.
In addition to funding an expansion of cash support scheme for farmers, a new pension scheme and relief for small taxpayers, as previously announced, the Budget includes a Rs 70,000 crore capital infusion in public sector banks.
First-time homebuyers, buying a house not exceeding Rs 45 lakh, would get an additional deduction of Rs 1.5 lakhs towards interest.
For NBFCs, she announced measures to improve their access to funding by providing a limited backstop for purchases of their assets. The government will provide a partial guarantee to state banks for the acquisition of up to Rs 1 lakh crore of highly rated assets from non-bank finance companies.
Also, the Reserve Bank of India will take over as the regulator of housing finance firms, replacing the National Housing Bank, she said.
Sitharaman, who in the first term of the Narendra Modi government was the Defence Minister, exempted some defence equipment from basic customs levy. She also said the Government would allow more foreign investment in the insurance and media industries.
The Government will also sell its first global bond to raise funding for infrastructure spending.
Meanwhile, opposition Congress described the Budget as “insipid”, saying it belied expectations and gave no “meaningful relief” to any section of the society.
They said there are risks of India missing 3.3 per cent fiscal deficit target for the current financial year if tax revenue falls short of projection.
“In today’s budget, India’s Government announced a lower fiscal deficit target for fiscal 2019, while maintaining its support for growth and incomes. Achieving these competing goals will be very challenging. We expect the economy to grow relatively slowly, despite the Government’s income support measures,” it said.
The Finance Bill proposed to bring about several changes in taxation to remove pain points of companies undergoing insolvency resolution. The losses of the company would be allowed to be carried forward despite the change in shareholding of more than 49 per cent, albeit with conditions.
Giving relief to startups, she said they will not be subject to ‘angel tax’ scrutiny where the companies and investors file certain declarations. A mechanism of e-verification will be put in place and with this, the funds raised by startups will not require any tax scrutiny.
She also said the government will spend Rs 100 lakh crore for infrastructure in the next five years.
Describing the Union Budget as citizen friendly, development friendly and future oriented, Prime Minister Narendra Modi today said it will empower the poor and provide the youth with a better future.
Terming the Budget as one that extends “hope” and boosts “self confidence”, he said the policies of the Government will empower the downtrodden and turn them into a “power house” for the development of the country.
In a televised address after the Union Budget was tabled in Parliament, Modi said it is a “green budget” which focuses on the environment and pitches for green and clean energy and transportation needs.
Modi said the Budget underlines structural reforms in the agricultural sector and has a roadmap to transform the farm sector and doubling farmers’ income.
Lauding the Budget as a document for building a “New India”, he said it will strengthen the poor and will create a better future for the youth of the country.
Highlighting the potential benefits of the Budget, the PM said it will accelerate the pace of development in the country and will greatly benefit the middle class.
“The Budget will simplify the tax process and help in modernising infrastructure in the country,” Modi said.
He was of the view that the Budget will strengthen the enterprises as well as the entrepreneurs. He said the Budget will further increase the participation of women in the development of the country.
Noting that the Budget is “full of hope”, he said it will boost India’s development in the 21st century.
The Prime Minister said the Union Government has taken all round steps for the empowerment of poor, farmers, dalits, oppressed and the underprivileged sections of the society.
He said this empowerment would make them the “powerhouse” of the country in the coming five years.
“The country will get the energy to fulfil the dream of a USD 5 trillion economy from these empowered sections,” the PM said.
The Home Ministry has been allocated Rs 1,19,025 crore in the Union Budget 2019-20, Rs 5,858 crore more than the last fiscal with special focus on improving police infrastructure, border areas and modernisation of police forces.
The Ministry, currently headed by Amit Shah, received a modest 5.17 per cent hike over the revised estimate of 2018-19 amounting to Rs 1,13,167 crore.
The Delhi Police, which maintains law and order in the national capital, has been allocated Rs 7,496.91 crore while Rs 2,129 crore has been proposed for the development of infrastructure along the Indo-Pak, Sino-Indian and other international borders.
The Central Reserve Police Force (CRPF), which is engaged in anti-militancy operations in Jammu and Kashmir and the the Northeast, and is often deployed for internal security duties, has been allocated Rs 23,963.66 crore for 2019-20, compared to Rs 22,646.63 crore in 2018-19.
The Border Security Force, which guards the Indo-Pak and Indo-Bangladesh borders, has been allocated Rs 19,650.74 crore for the next fiscal, compared to Rs 18,585.96 crore in 2018-19.
The total allocation to Central Armed Police Forces, including CRPF, Border Security Force, Indo-Tibetan Border Police, Central Industrial Security Force, Sashastra Seema Bal, Assam Rifles and National Security Guard, is Rs 71,713.9 crore. It was Rs 67,779.75 crore in 2018-19.
The Intelligence Bureau, which is responsible for gathering internal intelligence, has been allocated Rs 2,384.1 crore, as against Rs 2,056.05 crore in the last fiscal.
The Special Protection Group, which is responsible for the security of the Prime Minister, former Prime Ministers and their close family members, has been allocated Rs 535.45 crore. It was allocated Rs 411.68 crore given in 2018-19.
In this budget, Rs 4,757 crore has been allocated for development of police infrastructure, including constructions of barracks, residential quarters, purchase of vehicles, arms and ammunition.
The 2019-20 budget allocated Rs 3,462 crore for modernisation of police forces, Rs 825 crore for border area development programme, Rs 842 crore for relief and rehabilitation for migrants and repatriates in Jammu and Kashmir and Rs 953 crore for freedom fighters pensions.
A total of Rs 50 crore was earmarked for women safety scheme ‘Nirbhaya Fund’ and Rs 296 crore for National Cyclone Risk Mitigation Project.
As the preparation for the 2021 census has began, the budget allocated Rs 621.33 crore for census, survey and statistics head under the Registrar General of India.
An amount of Rs 50 crore is proposed for special industry initiative in Jammu and Kashmir, Rs 78.09 crore for the propagation of the Hindi language and Rs 4,895.81 crore for grants-in-aid to the State Governments and union territories.
In addition, among the Union Territories, Andaman and Nicobar Islands has been allocated Rs 4,817.48 crore, Rs 4,291.70 crore has been earmarked for Chandigarh, Rs 1,177.99 crore has been allocated to Dadra and Nagar Haveli, Rs 821.4 crore to Daman and Diu and Rs 1,276.74 crore to Lakshadweep.
In the budget 2018-19, Rs 1,112 crore has been given to Delhi and Rs 1,601 crore to Puducherry.
Finance Minister Nirmala Sitharaman said the Government is proposing additional tax deduction of Rs 1.50 lakh on interest paid on home loans taken up to March 2020.
She said the Government will also provide income tax deduction of Rs 1.5 lakh on interest paid on loans taken for purchase of electric vehicles.
The Finance Minister also proposed investment-linked tax benefit on manufacturing of products like lithium batteries and solar chargers.
Sitharaman also proposed that 25 per cent corporate tax will apply on companies with up to Rs 400 crore turnover; covering 99.3 pc of corporate India.
The Government aims to simplify tax administration and bring transparency, she added.
On startups, she said those who provide details in returns will have no scrutiny in respect of valuation of share premium, saying startups have taken firm root and their growth needs to be encouraged.
Funds raised by startups will not require any scrutiny by tax department, she said adding the period of exemption from capital gains from sale of start-up has been extended.
She also said one-time six-month partial credit guarantee to be given to PSU banks for purchase of high-rated pooled assets of financially sound NBFCs amounting to Rs 1 lakh crore in 2019-20.
Meanwhile, Railways received a budgetary allocation of Rs 65,837 crore and highest ever outlay for capital expenditure amounting to Rs 1.60 lakh crore in the Budget for the year 2019-20 presented on Friday, which includes a whopping 200 per cent increase in funds for passenger amenities.
Last year, the outlay for the railways was Rs 1.48 lakh crore while the Budget allocation was Rs 55,088 crore. In the interim Budget, the allocation was Rs 1.58 lakh crore.
In the 2019-20 Budget, funds of Rs 7,255 crore have been allocated for construction of new lines, Rs 2,200 crore for gauge conversion, Rs 700 crore for doubling, Rs 6,114.82 crore for rolling stock and Rs 1,750 crore for signalling and telecom. The allocations have remained the same as in the interim budget presented in February.
“This is a budget for 130 crore Indians, rich or poor, for entrepreneurs, for the industry, promoting new work and opportunities,” said Railway Minister Piyush Goyal.
The allocation for rail passenger comfort this fiscal has gone up to Rs 3,422.57 crore from Rs 1,657 crore in the Budget presented last year by then finance minister Arun Jaitley. In the 2017-2018 financial year, the budgetary allocation for railway passenger amenities was Rs 1,100.90 crore.
Indication of the sharp rise was given in the interim Budget in which the allocation for passenger amenities jumped by 50 per cent from the amount allocated in 2018-2019.
Finance Minister Nirmala Sitharaman, while presenting the Budget, said the railway infrastructure would need an investment of Rs 50 lakh crores between 2018 and 2030 and proposed that a public private partnership (PPP) be used to unleash faster development and delivery of passenger freight services for railway projects to boost connectivity.
“Railways will be encouraged to invest in suburban railways through special purpose vehicles (SPVs) and enhance metro rail network through PPPs,” she said. (PTI)
FM discards briefcase, carries ‘bahi-khata’
Breaking the age-old tradition, Finance Minister Nirmala Sitharaman today entered Parliament carrying Budget documents in a red ‘bahi khata’ (traditional Indian ledger) instead of a briefcase used by her predecessors.
The word ‘budget’ has its origin in the French word Bougette, which means leather briefcase. Traditionally, Budget documents — which primarily include the Minister’s speech copy, finance bill and some other papers related to revenue receipt and expenditure — were carried in a brown briefcase, a legacy passed on by the British.
India’s Budget briefcase is a copy of the ‘Gladstone Box’ that is used in the British budget.
In Britain, one Budget briefcase is passed on from one Finance Minister to another but in India, different Finance Ministers have carried different cases.
Sitharaman’s predecessor Arun Jaitley carried a tan-brown coloured briefcase in 2018.
“I thought it was better we move out from British handhold. And I thought it was good enough to do something on our own. It was easier for me to carry also and very Indian,” she said in the customary briefing post Budget presentation.
Sitharaman, the first full-time woman Finance Minister of the country, carried the budget documents draped in red silk cloth with the national emblem and keyhole.
Some of the Indian parliamentary traditions have their roots in the colonial legacy. Even after independence, the Budget for decades was presented at 5 pm, which was seen as better synced with local time in England.
During the Atal Bihari Vajpayee government, the then Finance Minister Yashwant Sinha broke this colonial tradition and started Budget presentation in the morning.
Since then all Governments have been presenting the budget at 11 am. Two years back, the tradition of presenting the budget on the last day of February too was done away with and moved forward to February 1 to allow for the process of Parliamentary approvals to be completed for the new fiscal began on April 1.
The ‘Gladstone Box’ came into prominence after the then British budget chief William E Gladstone in 1860 used a red suitcase with Queen’s monogram embossed in gold to carry his bundle of papers. Because his speeches were extraordinarily long and needed a briefcase to carry the papers, the briefcase came to be known as ‘Gladstone Box’.
The original Gladstone after becoming shabby was officially retired from service in 2010.
On Budget day, the Indian Finance Minister poses with the Budget briefcase outside Parliament just was Britain’s Chancellor of the Exchequer poses with his suitcase in front of 11 Downing Street before the Budget speech.
Sitharaman too posed for camera persons before entering Parliament for the Budget presentation.
Commenting on the shift from a briefcase to bahi-khata, Chief Economic Advisor Krishnamurthy Subramanian said the Government is following “Indian tradition”.
“It is in Indian tradition. It symbolises our departure from the slavery of Western thought. It is not a Budget, but a Bahi-Khata (ledger),” he added.
India’s first Finance Minister R N Shanmukham Chetty carried a leather portfolio to present the first Budget in 1947.
From 1970 onwards, Finance Ministers started carrying a hardbound briefcase but unlike Britain, their shape and colours varied. (PTI)
Highlights
* Tax deducted at source of 2% for cash withdrawals of over Rs 1 cr a year
* Surcharge hiked on individuals with taxable income above Rs 2 cr
* Effective tax rate on Rs 2-5 crore taxable income hiked by 3%
* Effective tax rate on over Rs 5 crore taxable income hiked by 7%
* Companies with turnover up to Rs 400 cr to pay 25% tax
* Aadhaar, PAN interchangeable for filing income tax returns
* To launch automated, faceless assessment of tax
* To make pre-filled tax return forms available
* Legacy dispute resolution plan to settle litigation in excise, service tax cases
* Fiscal deficit for 2019-20 at 3.3% of GDP
* Gross market borrowing pegged at Rs 7.1 lakh crore
* GST collections pegged at Rs 6.63 lakh crore
* Disinvestment target pegged at Rs 1.05 lakh cr
* Dividend income from state-owned companies seen at Rs 57,486 cr
* Dividend/surplus from RBI, financial institutions at Rs 1.06 lakh cr
* Customs duty on gold, precious metals hiked to 12.5%, from 10%
* Customs duty on stainless steel hiked to 7.5% from 5%
* Special Additional excise, road cess on petrol, diesel hiked by Re1/litre
* Tax deduction of Rs 1.50 lakh on e-vehicle loan interest
* Extra Rs 1.50 lakh tax deduction on affordable housing loans
* RBI, banks to absorb merchant discount rate at small shops
* To impose basic excise duty on tobacco products
* Excise duty of Rs 5/1,000 sticks imposed on filter cigarettes
* India now 6th largest economy vs 11th five years ago
* India to become USD 3 trn economy in FY20
* Well within capacity to reach USD 5-trln economy in few years
* To soon announce policy package for power tariffs
* PSU banks to get Rs 70,000 cr capital
* Housing finance cos to be regulated by RBI, as against National Housing Bank at present
* Proposed more power to RBI over NBFCs in Finance Bill
* One-time, six-month guarantee to PSU banks to buy some NBFC loans
* Strategic divestment of CPSEs to remain a priority
* Mulling below 51% stake in PSUs on case-to-case basis
* Govt to re-initiate process of Air India sale
* Plans to increase minimum public shareholding in listed cos to 35% from 25%
* Steps taken for easing angel tax issue of startups
* Startups, investors not to face scrutiny for share premium if they file return. (PTI)
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