Key Highlights of Union Budget- 2019


Date: 7-July,2019Last Updated: 28-June,2021
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Union Finance minister Nirmala Sitharaman presented her maiden Financial Budget in the Parliament charting a roadmap for Prime Minister Narendra Modi's vision to transform India into a $5 trillion economy. The stock markets were tepid with the Sensex at 39,964.12 points while the Nifty was at 11,951.80 when she began to present the budget.

Reiterating on Modi's vision, she presented a budget that stressed on investment led growth and reforms enhancing the ease of direct and indirect taxes. She iterated on the need to transform rural lives by strengthening connectivity infrastructure. This budget is a strong boost for the country's entrepreneurial ecosystem as the Finance Minister commended the role of entrepreneurs and said that they are India's job creators and wealth creators. Programmes to impart industry skills and streamlining of labour laws has been proposed, which will be great news for youth employment.

Here are the key budget highlights:

Real Estate

  • An additional deduction of 1.5 lakh has been introduced for interest paid on loans, for affordable housing borrowed up to March 31, 2020.
  • There will be an enhanced interest reduction of up to 3.5 lakh on loans for affordable homes valued upto 45 lakh.
  • A Tenancy Law will be finalized and given to the states.

Taxation

  • Taxpayers will have to pay zero taxes for income upto Rs. 5 lakh.

  • There will be an increase of surcharge by 3% for individuals with income between 2 to 5 crore and a 7% rise in surcharge for individuals earning more than 7 crore.

  • A proposal is being made to make PAN and Aadhar interchangeable, and to allow those without a PAN to file taxes by quoting the Aadhar number
  • A system where in faceless and anonymous assessment of income tax will be made, is going to be rolled out in phases from this year.

  • A promising move in this year's money budget, is a proposal to levy TDS of 2% on cash withdrawal crossing 1 crore in a year, from a single bank account. This will discourage business payments in cash.

  • The lower tax rate of 25% applicable to companies with an annual turnover of 250 crore will be extended to all companies with turnover of 400 crore which will cover 99.3% of companies.

  • Taxpayers with an annual turnover of less than Rs 5 crores will have to file GST returns quarterly in a year.
  • A proposal has been made to restrict Securities Transaction Tax (STT) to the difference between settlement and strike price of options.

  • To resolve the issue of Angel Tax, the start-ups and investors who file requisite declarations will not be put through any kind of scrutiny with respect to valuation of share premium. A mechanism of e-verification will be put into force.

Investments and Market

  • A suggestion has been made to SEBI for increasing the threshold of public shareholding in listed companies from 25% to 35%.

  • A proposal has been made for setting up a Social Stock Exchange for listing Social enterprises and voluntary organisations.

  • The exemption period of capital gains arising from sale of residential houses in order for investment into start-ups has been extended to 31-3-2021.

TDS

  • Business establishments with annual turnover of Rs 50 crore will need to offer low-cost digital mode of payments to their customers. No charges will be levied or merchant discount rates shall be imposed on customers as well as merchants.

  • As a welcome move to discourage the practice of making business payments in cash, a proposal has been made to levy TDS of 2% on cash withdrawal crossing 1 crore in a year from a single bank account.

Agriculture

  • The FM proposed zero-budget farming which will ease business and allow easy living. Such steps can help in doubling farmers income. Zero-Budget farming is natural farming which neither uses chemicals nor organic methods with its reliance on manure. It’s a self-sustainable practice with minimum external intervention.

Transport

  • There will be an increase of special additional duty for road and infrastructure cess on diesel and petrol by 1 %.

MSME's

  • 350 crore rupees have been allocated at an interest rate of 2% subvention on fresh or incremental loans for all GST-registered MSMEs.

  • To enable easy filing of bills and payment of Government contracts, a payment platform will be created for MSMEs.

  • There will be an offering of pension benefits to 3 crore shop owners with an annual turnover of less than Rs 1.5 crore under new scheme called ‘Pradhan Mantri Man Dhan Scheme’.

Women

  • The FM proposes to expand the interest subsidy to women Self Help Groups (SHG) in all districts in India. For every verified woman member belonging to a SHG, having a Jan Dhan account, an overdraft of Rs 5,000 will be announced. Under the Mudra scheme, one woman in every SHG will be eligible for a loan of upto Rs.1 lakh.

Youth and Employment

  • The government is planning to streamline multiple labour laws into a set of 'four labour codes'. Youth will receive industry relevant skills under the Kaushal Vikas Yojana.

Rural Sector

  • The FM assured that by 2022, every single rural family will have cooking gas and electricity connection, except those unwilling to take the connection.

What the experts say?

In the first innings of the Modi government, the RERA act (Real estate and regulation development act 2016) was passed, which brought in organization and transparency in the Real Estate Market. Hopes were pinned on a major infrastructure boost in this budget announcement.

The fraternity was looking forward for industry status, single window clearance for developers and financial incentives to find a resolution for growing piles of unsold properties. More tax cuts & incentives are also speculated. But the industry met with disappointment since nothing remarkable was declared in this government budget

The silver lining however is that the government will incentivize Public Sector Undertaking (PSU) banks to buy assets from Non-Banking Financial Companies (NBFC) under the pool purchase program, thereby addressing the NBFC crisis, which will increase the confidence in the sector.

The good news for the consumer is the interest deduction of up to Rs.3.5 lakh for affordable housing loans to purchase a house valued up to 45 lakhs. This measure will definitely boost sales and will empower the ability of the salaried class to invest in Real Estate.

For middle class home buyers, it brings a huge sigh of relief as they could save up to Rs.7 lakhs on a loan with a term period of 15 years.

We will need to wait and watch to know more about the amendments in the ‘Model Tenancy Law’ that will hopefully drive back the community to invest into the Real Estate market.

While many including the Prime Minister have lauded the budget as a People Friendly move, there has been large scale criticism with some citing the budget as doing nothing for Pharma and Healthcare sectors. The Real Estate budget wasn't entirely disappointing, since a growth in property sales is expected very soon due to reforms which have immensely empowered the home buyer.

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