Budget 2019: Key takeaways from Finance Minister Nirmala Sitharaman’s maiden Budget

Finance Minister Nirmala Sitharaman presents the Union Budget 2019-20 in Parliament on Friday; becomes the only second women in the history of independent India to present the Union Budget. Finance

Finance Minister Nirmala Sitharaman presents the Union Budget 2019-20 in Parliament on Friday; becomes the only second women in the history of independent India to present the Union Budget.

Finance Minister Nirmala Sitharaman presents #Budget2019 in the Parliament.

Sitharaman said that the nation will grow to become a $3 trillion dollar economy in the current year itself. It is now the sixth largest economy in the world. pic.twitter.com/WUNjLzblfD

— Northeast Live (@NELiveTV) July 5, 2019

The usual practice of keeping the budget documents in a suitcase was replaced by a four-fold red cloth. Finance Minister Nirmala Sithraman in her first Budget speech made key proposals and announcements.

Here are the key takeaways from the Budget speech:

For economy

• Targets to become a $3 trillion economy in FY20, $5 trillion in a few years
• Proposes changes to kick-start domestic and foreign investment
• Will create blueprint for gas, water grids and regional airports
• Govt proposes to expand Swachch Bharat to include solid waste management in every village
• Setting up enhanced disinvestment target of Rs 1,05,000 crore in FY20 as against Rs 90,000 crore set in the Interim Budget
• A new series of coins of Re 1, 2, 5, 10 and 20 easily to be made available for public use shortly
• Proposes investment linked tax benefit for manufacture of products like lithium batteries and solar chargers
• Govt will start raising part of its gross borrowing programme in external markets in external currencies
• Import of defence equipment is being exempted from basic customs duty
• To set up digital repository to preserve tribal heritage

Labour reforms

• Govt to streamline multiple labour laws into a set of four labour codes
• To focus on training new age skills like AI, robotics, 3D printing
• To liberalise FDI in aviation, media, animation and insurance intermediaries
  
• To implement enabling measures to boost International Financial Service Centres (IFSCs)
• To set up a Credit Guarantee Enhancement Corporation
• To initiate steps for electronic fund raising programme for listing of social enterprises, voluntary organisations
• Considering whether govt holding can go below 51 percent in certain CPSEs on case-to-case basis
• To hike statutory limits for foreign investments in some companies
• Expert committee to be set up to make recommendations on infrastructure finance
• With a view of incentivising investment in GIFT City, govt proposes several tax benefits

Market reforms

• Asks SEBI to evaluate hiking minimum public shareholding to 25 percent from 35 percent
• Government will work with exchanges to allow AA bonds to be used as collateral
• Proposes rationalising and streamlining of KYC (know your customer) norms for Foreign Portfolio Investors (FPIs) to make it investor-friendly
• NRI portfolio route to be merged with FPI for seamless investment in stock markets
• Credit Guarantee Enhancement Corporation will be set up in 2019-20, action plan to deepen markets for long-term bonds with specific focus on infra sector to be put in place
• Will take up measures to make RBI and SEBI depositories inter-operable
• To allow FPIs/NRIs to subscribe to listed debt papers of REITs and InvITs
• To bring ETFs in line with equity-linked savings schemes of mutual funds to encourage retail investors
• Propose to give relief to Securities Transaction Tax (STT) on exercise of options will be cut to only profit

Banks

• State-run banks to get Rs 70,000 crore capital to boost credit
• To bring out a remedy against cash being deposited without knowledge of bank account holders

NBFCs

• Fundamentally sound NBFCs to keep getting funding from banks and mutual funds
• To allow FIIs and FPIs investment in debt securities issued by NBFCs
• Requirement of Debenture Reservation Reserve to be done away with for NBFCs
• 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 FY20

Agriculture

• Govt to invest widely in agriculture infrastructure
• Support private entrepreneurship in value addition in agriculture
• Proposes Pradhan Mantri Matsya Sampada Yojana to address critical infrastructure gap in fisheries sector

Transportation

• To carry out comprehensive restructuring of National Highway programme
• Cargo volume on Ganges to increase four times over the next four years
• In second phase of Bharat Mala project, states will be helped to develop roadways
• 1,25,000 km of roads will be upgraded under Pradhan Gram Sadak Yojana under Phase III at estimated cost of Rs 80,250 crore

Aviation

• Time right for India to enter into aircraft financing and leasing
• Will create congenial atmosphere for development of MRO services
• To harness India’s space ability commercially, New Space India (NSIL) has been incorporated to tap the benefits of ISRO
• Will re-initiate privatisation of Air India

Power

• Package for power sector tariff and structural reforms to be unveiled soon

Retail

• Local sourcing norms to be eased for single-brand retail FDI
• No merchant discount rate (MDR) charges on digital transaction made at big establishments having annual turnover of more than Rs 50 crore

Insurance

• Proposes to reduce net owned fund requirements to Rs 1,000 crore for onshoring of international insurance companies

Real estate

• RBI to get regulation authority of housing finance sector
• Will finalise a model tenancy law and circulate to states; and propose steps for rental housing
• Proposes setting up 1.95 crore houses under Pradhan Mantari Awas Yojna (Rural)
• Offers additional tax deduction of Rs 1.50 lakh on interest paid on home loans taken up to March 2020

MSMEs

• To extend pension benefit to three crore retail traders with an annual turnover less than Rs 1.5 crore under Pradhan Mantri Karam Yogi Man Dan Scheme
• Centre will create a payment platform for MSMEs for payment of bills
• 100 new clusters will be set up in 2019-20 to enable 50,000 artisans to come into the economic value chain
• To launch mission to integrate traditional artisans and creative persons with global market; to obtain GI/patents for them
• Will set up 10,000 new farmer producer organisations
• To start television programme exclusively for startups
• Proposes to expand self-help groups to all districts; one woman in every SHG to get a loan up to Rs 1 lakh under Mudra Yojana
• Startups who provide details in returns will have no scrutiny in respect of valuation of share premium
• Period of exemption from capital gains from sale of startups extended
• Startups will not be required to justify fair market value of shares issued to investors in Category II Alternative Investment Funds

Railways

• Railways to be encouraged to invest more in suburban rail network via special purpose vehicles (SPVs) and enhance metro rail network through public-private partnerships
• Railway station modernisation programme will be launched this year

Education

• Will bring in new education policy to propose changes in school, higher education
• Propose to set up a national research foundation to fund, coordinate and to promote research in the country
• National Research Foundation will assimilate research grants by ministries
• A Gandhi-pedia is being developed to sensitise youth about Mahatma Gandhi’s ideas
• A draft legislation for higher education commission of India to be presented
• Proposes Study in India programme to attract foreign students
• National Sports Education Board to be set up under Khelo India scheme
• Allocate Rs 400 crore for world-class higher education institutions in FY20
• 5 percent customs duty imposed on imported books

 For NRIs

• Aadhaar cards to be issued to non-residents Indians with Indian passports after arrival in India without waiting for 180 days

Personal taxation

• NPS Trust will be separated from Pension Fund Regulatory and Development Authority (PFRDA)
• PAN and Aadhaar made interchangeable, allowing those who do not have PAN to file return
• Pre-filled tax returns to contain information from salaries, bank interest, capital gain and dividend income to be made available
• Surcharge on individuals having taxable income of Rs 2 crore to Rs 5 crore, and Rs 5 crore and more raised

Tourism

• To build 17 iconic sites to encourage arrival of tourists in India
  

Taxation

• Lower 25 percent corporate tax will apply on companies with up to Rs 400 crore turnover, covering 99.3 percent  of corporate India
• Simplified return form for GST registered businesses in the offing
• Basic customs duty on auto parts, optical fibres, digital camera, cashew, certain synthetic rubber, vinyl flooring hiked
• Customs duty exempted on components of specified electronic goods
• Customs duty on certain parts of electric vehicles removed
• Cess on petrol, diesel raised by Re 1 per litre; customs duty on gold raised to 12.5 percent from 10 percent
• A nominal basic excise duty imposed on tobacco- Proposes Legacy Dispute Resolution scheme to solve litigations in service tax and excise

COMMENTS