Union Finance Minister Nirmala Sitharaman on Friday presented her first Budget for 2019-20. This is the full budget of the second term of the Narendra Modi government. Setting a new precedent, Sitharaman carried the budget documents wrapped in a red cloth, instead of the leather briefcase that until now her predecessors marched out with.
Here are the major takeaways from the Budget.
1. Income tax: The Finance Minister said that the government had decided to enhance the surcharge on individuals having taxable income more than Rs 2 crore per year. Stating that those in the highest salary bracket needed to contribute more, Nirmala Sitharaman said that those in the Rs 2-5 crore annual income bracket, and Rs 5 crore and above annual income tax bracket will pay 3% and 7% more income tax respectively. However, there have been no changes in taxes for the salaried class. In the interim budget, the government had announced a full tax rebate for those earning up to Rs 5 lakh per annum.
2. Interchangeability of PAN and Aadhaar: The government said that around 120 crore Indians now had Aadhaar cards and is planning to make it ‘interchangeable’ with permanent account number (PAN) cards. This means that any place where a citizen has to show their PAN card, can now use their Aadhaar card. The FM also announced that the Indian government will consider issuing Aadhaar cards to Non-Resident Indians (NRIs) who have an Indian passport after their arrival in India, without having to wait for the mandated 180 days.
3. Save taxes on loans for affordable housing: The Finance Minister announced that for those who are paying interest on homes valued up to Rs 45 lakh can get an additional tax deduction of Rs 1.5 lakh. This is applicable for loans taken upto March 2020.
5. Relaxation of FDI norms: The FM also said that the governing was mulling relaxation of FDI norms for sectors such as aviation, insurance and the media as well, to attract more overseas investment. Nirmala Sitharaman also said that India's FDI inflows in 2018-19 was $64.37 billion, a growth of 6%.
6. The Model Tenancy Act: In order to improve the availability of rental housing across all income categories, the Model Tenancy Act proposes to establish a "framework for the regulation of tenancy matters (residential and commercial) and to balance the rights and responsibilities of landlords and tenants." It also seeks to include a process of swift adjudication for resolution of disputes.
7. Jal Shakti Ministry: The Centre has reiterated its stand for a 'Jal Shakti' Mantralaya to look at the management of water resources and supply and work with states to ensure 'Har Ghar Jal' (water in every household) by 2024. This ministry will subsume the current ministries of water resources, ganga rejuvenation, and drinking water and sanitation.
8. A new Rs 20 coin: The government has also introduced a new Rs 20 coin in addition to a new series of coins for Re 1, Rs 2, Rs 5, and Rs 10 will be minted so that the visually impaired can easily identify them.
9. Phased reduction of Corporate Tax: The government has said they will continue the phased reduction of corporate tax, stating that a lower tax rate of 25% would be widened to include all companies having an annual turnover of above Rs 400 crore. The Finance Minister said that this would cover 99.3% of all companies, while only 0.7% would remain outside of this rate.
10. New Space India Limited: The government said that New Space India Limited (NSIL) has been incorporated as a new commercial arm so that the Department of Space can tap benefits of Research and Development (R&D) carried out by Indian Space Research Organisation (ISRO). The NSIL will also look into commercialisation of various products related to space, in line with the government's push to emerge as a key player in space exploration.
11. Petrol and gold rates to go up, electric vehicles to get cheaper: The government has also decided to increase customs duty on petrol and disesel products by Rs 1 per litre. The customs duty on gold and precious metals has also been increased from 10% to 12.5%. Meanwhile, the Goods and Service Tax (GST) rate on electric vehicles will be lowered from 12% to 5%, the government said in its budget. It also said that an additional Income Tax reduction of Rs 1.5 lakh would be given on interest paid on loans taken to purchase electric vehicles.
12. Labour codes: The Centre said that multiple labour laws in the country would instead be replaced with four 'labour codes'. "We will streamline multiple labour laws into a set of four labour codes to ensure that process of registration and filing of returns will get standardised and streamlined," Nirmala Sitharaman said. With this, lesser disputes are expected, the government said.
13. Angel Tax: In a major announcement, the Finance Minister said that startups and their investors will not be subjected to any kind of Income Tax scrutiny for the value of their shares, if they file the requisite declaration. Provisions would also be made for complete e-verification so there is no person-to-person contact.