Budget statement 2019

Presenting Union Budget 2019 has added to the list of ‘firsts’, for India’s Finance Minister Nirmala Sitharaman, who was the first full-time female defence minister of the Country and now the first full-time female finance minister of the Country. Taking forward the ‘Ten-Dimensional Vision’ for the decade, set-forth by the Narendra Modi led government in the interim Budget of 2019-2020 presented in February 2019, Union Budget 2019 has set in motion the aspirational pursuit of India becoming a USD 5 Trillion economy, in the next few years. The focus of the Budget is to catalyze, fast, sustained and investment driven growth. Finance Minister’s speech emphasized policy measures ranging from transforming rural lives, infrastructural availability for greater industrial investment, enhancing sources of capital for infrastructure financing, making India a more attractive Foreign Domestic Investment (FDI) destination, transforming India’s higher education system to one of the global best education systems, providing ease of living to its citizens in India and encourage and facilitate the role of women towards women-led initiates and movements etc. Economic survey 2018-19 focused heavily on the need for an “optimal tax policy” and a tax system that can foster innovation, raise revenues efficiently and fairly while encouraging bonafide taxpayers and punishing malafide ones. The main focus of the survey has been on fostering investment through optimal tax policy, improving Tax compliance, ramping up capacity in the lower judiciary and promoting Electric Vehicles. While the Finance Minister highlighted the accomplishments under different schemes launched during the previous tenure of the current government, the current focus has been on more macro issues, amongst others, like management / preservation of Water Resources by constituting a “Jal Shakti Mantralaya”. The Finance Minister also proposed a scheme to provide pension to 30 Million retail traders under “Pradhan Mantri Karam Yogi Maandhan Scheme”. The budget has also given importance on achieving balanced socio-economic growth through fiscal policies to promote Electric Vehicles, developing inland waterways to decongest rails and roads, to provide Social Stock Exchanges for listing social enterprises working for realization of social welfare objective, promote start up, launch of exclusive channel for startups and many more. Several measures have been proposed to ease FDI norms by allowing 100% FDI in insurance intermediaries and proposal for easing of local sourcing norms for Single Brand Retail Trading, to promote foreign capital. Further, it is proposed to consider suggestions for further opening up of FDI in aviation, media (animation, AVGC) and insurance sectors. The Finance Minister started the tax proposals by thanking the honest taxpayers for their contribution towards nation building and boasted an increase in tax collections by over 78%, from INR 6,380 Billion in Financial Year 2013-14 to around INR 11,370 Billion in Financial Year 2018-19. While the budget proposals were almost none with respect to tax benefits for individuals, the aim was to stimulate growth, incentivize affordable housing, promote digital economy, bring greater transparency and encourage startups by releasing entrepreneurial spirits. Some proposals focused on ease of doing business by minimizing scrutiny assessments on ‘angel tax’ issues, faceless assessments, interchangeability of Aadhar & PAN. To promote electric vehicles the government extended additional income tax deduction of INR 0.15 Million on the interest paid on loans taken to purchase electric vehicles for individuals. Further, it is proposed to provide investment linked income tax exemptions on “Mega Investment in Sunrise and Advanced Technology Areas”. Budget also extended some income tax reliefs for affordable housing sector, NBFCs, units situated in IFSCs, startups. With respect to indirect taxes, in order to further simplify the GST processes, quarterly returns have been proposed to be introduced for taxpayers with turnover less than INR 50 Million. A dispute resolution cum amnesty scheme called “the Sabka Vishwas Legacy Dispute Resolution Scheme, 2019” is being introduced for resolution and settlement of legacy cases of Central Excise and Service Tax, the proposed Scheme covers past disputes of taxes which have got subsumed in GST. Budget also saw some rate changes in indirect taxes, like increase in ‘Special Additional Excise duty’ and ‘Road and ‘Infrastructure Cess’ each, by one rupee a litre on petrol and diesel, increase custom duty on gold and other precious metals from 10% to 12.5%. Finance Minister has summoned forth everyone to place emphasis on their Duty towards our nation. On the Government’s part, with the slew of policy reforms and fiscal benefits to the corporates, the Finance Minister has tried to set the trajectory, towards arguably, a well-tested formula for success of “Reform, Perform, Transform”.