Highlights of Union Budget 2019

Budget Overview

By presenting the first budget of Narendra Modi government’s second term, Finance Minister Nirmala Sitharaman became the second woman finance minister of India after Indira Gandhi. In the maiden budget, finance minister Nirmala Sitharaman aimed at boosting the infrastructure and foreign investment in the country. In her maiden budget, Nirmala Sitharaman moved away from the colonial practice of bringing the budget documents in a briefcase and switched to carrying them in a ‘Bahi-Khata’. Finance minister took a realistic approach in its budget by increasing the tax rate for the super rich and relief to the common man by keeping the personal tax rates constant, along with additional tax relief for home loan holders.

The finance minister showed confidence while stating that India can become a $ 5 trillion economy in the next few years as it is a $ 3 trillion economy this year itself. Direct tax revenue has increased by 78%. Schemes like UDAN, Sagarmala and BharatMala are helping in improving the transport infrastructure and bringing down the urban-rural divide. Railways will need an investment of Rs. 50 lakh crore during the period 2018-30. NPAs have come down by Rs. 1 lakh crore during the last year and by Rs. 4 lakh crore over the last four years. Finance Minister Sitharaman also made other key announcements like the government’s plan of launching One Nation One Card for pan-India travel which is like an ATM card. A new model rental laws for boosting affordable housing and making digital payments cheaper was also highlighted. Government has already asked the GST council to lower the GST rate on electric vehicles (EV) from 12% to 5% Here are the key highlights of the Full Union Budget 2019 from Finance Minister Nirmala Sitharaman’s speech:

Taxes

  • Personal Income Tax Rates to remain unchanged
  • Additional tax relief of Rs 1.5 Lakh on home loans towards a house bought up to Rs. 45 Lakh
  • Custom duty on fuel will be hiked by 1 rupee, making petrol and diesel costlier, also gold and precious items will become expensive
  • Surcharge on the income of super-rich increased to 3% for income of Rs. 2 crore and 7% on income of Rs. 5 crore
  • Corporate tax rate reduced to 25% from 30% for companies with an annual turnover of Rs. 400 crore
  • Interchangeability of PAN and Aadhaar for ITR allowed for people who don't have PAN cards
  • Duty raised on items like vinyl flooring, auto parts, tiles, cashew kernels, some synthetic rubber, digital and video recorder and CCTV camera.

Affordable Housing

  • Reforms to be introduced in Rental laws.
  • Modern tenancy law will be shared with states to promote house renting.

Digital Payments

  • No charges on digital payments
  • MDR charges waived on cashless payment
  • 2% TDS on withdrawals of Rs. 1 crore in a year from bank accounts for business payments

Ease of Living

  • Rs. 3,000 pension per month for informal sector workers
  • Aadhaar card under 180 days for NRIs on arrival in India
  • Govt to open embassies in countries where India doesn't have a resident diplomatic mission as yet

Transportation

  • Inter-operable One Nation One transport card – ATM-like National transport card for universal travel which can be used on various modes of transport (road, railways, metro, etc).
  • Govt plans to create MRO (Manufacturing, Repair and Operate) industry
  • PPP to be used to unleash faster development and the delivery of passenger freight services
  • A comprehensive restructuring of National Highways Programme for creation of National Highways Grid
  • The government envisions using rivers for cargo transport, thereby decongesting roads and railways

Economy

  • Fiscal deficit in FY19 at 3.3% of the GDP
  • Govt will start raising part of borrowing in foreign currency
  • Govt external debt to GDP is among the lowest in the world

Women empowerment

  • Nari tu Narayani: Women SHG Interest Subvention Programme to be expanded to all districts in India
  • Rs. 1 lakh loan will be provided for women members of SHG
  • Rs. 5,000 rupees overdraft facility to every verified woman SHG member having a Jan Dhan account

Auto sector

  • The government will provide Rs. 1.5 lakh income tax deduction on interest payments on a loan taken for the purchase of electric vehicles.
  • Customs duty on certain parts of electric vehicles being exempted to promote e-mobility.
  • FAME II scheme aims to encourage faster adoption of electric vehicles by the right incentives and charging infrastructure

Banking reform

  • Govt will provide one-time 6-month credit guarantee on the purchase of high-rate pooled assets of NBFC amounting of Rs. 1 lakh crore in this FY
  • Proposal to provide Rs. 70,000 crore capital for PSU Banks
  • Regulation of HFCs (Housing Finance Cos) to move to RBI from National Housing Bank

Divestment

  • Divestment target of Rs. 1.05 lakh crore for FY20
  • Govt to modify the present policy of retaining 51% stake in PSUs
  • Govt to continue with strategic divestment of select CPSEs.

Railways

  • A new PPP model will marshal the new dawn of Indian railway.
  • Railways to be encouraged to invest more in suburban rail network via SPVs
  • Railway infrastructure will need an investment of Rs. 50 lakh crore between 2018 and 2030.

MSME

  • Propose easing angel tax for startups
  • Angel tax won’t require scrutiny from I-T department for startups
  • ‘Stand Up India' Scheme to continue till 2025
  • New television channel for start-ups
  • 2% interest subvention for GST-registered MSME on fresh or incremental loans.
  • Pension benefit extended to retail traders with annual turnover less than Rs 1.5 crore
  • New payment platform for MSMEs to be created

Education

  • Govt to launch 'Study in India' programme to attract foreign students in higher education
  • Allocate Rs. 400 crore for world-class higher education institutions in FY20
  • A new education policy will be unveiled soon
  • National research foundation to fund, coordinate and to promote research in the country
  • New Higher Education Commission with focus on higher autonomy
  • New national education policy to propose changes in school, higher education

Tourism

  • 17 iconic world-class tourist sites to be developed

FDI

  • Under the Single Brand Retail Sector, local sourcing norms will be relaxed
  • Govt of open FDI in aviation, insurance, animation AVGC and media

Investment

  • Existing KYC norms for FPIs to be rationalized and simplified to make it more investor-friendly
  • Long-term bonds for market
  • To allow FIIs & FPIs investment in debt securities issued by NBFCs
  • Credit Guarantee Enhancement Corporation to be set up long-term bonds with a specific focus on infra sector
  • Propose Social Stock Exchange under SEBI for listing social enterprises & voluntary organisations
  • To merge the NRI portfolio route with FPI route
  • To hike the statutory limit for foreign investment in some companies
  • To set up a credit guarantee enhancement corporation
  • Govt will take up measures to make RBI & SEBI depositories inter-operable
  • SEBI to mull increasing minimum public shareholding to 35% from 25%
  • User friendliness of trading platforms for corporate bonds will be reviewed, including issues arising out of capping of International Securities Identification Number
  • To deepen corporate tri-party repo market in corporate debt securities.
  • Plan to enable stock exchanges to allow AA rated bonds as collaterals.
  • Annual Global Investors' Meet for attracting global players to come and invest in India
  • To allow FPIs to subscribe to listed debt papers of REITs

For Rural India

  • Gaon, Garib and Kisan are the focus of the government
  • Har Ghar Jal for all rural houses by 2024 through New Jal Shakti ministry which will work with states
  • Pradhan Mantri Gram Sadak Yojana phase 3 is envisaged to upgrade 1,25,000 km of road length over the next 5 years
  • Govt will set up 100 new clusters for 50,000 artisans in FY20
  • To invest Rs. 80,250 cr. for upgrading of roads under PM Gram Sadak Yojana
  • Every single rural family except those unwilling to have electricity by 2022

Agriculture

  • Govt to promote innovative Zero Budget Farming
  • 10,000 new farmer producer organisations
  • 80 Livelihood business incubators and 20 technology business incubators to be set up in 2019-20 under ASPIRE to develop 75,000 skilled entrepreneurs in agro-rural industries

Space

  • India has emerged as a major space power. It is time to harness our ability commercially
  • A public sector enterprise, New Space India Limited (NSIL) has been incorporated to tap benefits of ISRO

Sports

  • To popularise sports at all levels, the National Sports Education Board for Development of Sportspersons to be set up under Khelo India

Social stock exchange

  • Electronic fundraising platform, a social stock exchange, to be set up to list social enterprises and voluntary organizations working for social welfare objectives

Note: Page created with inputs from Times of India and Economic Times