Finance Minister Nirmala Sitharaman presented the first Union Budget of the new government in Parliament on Friday. Centred around the growth of the Indian economy and investment-led growth, Sitharaman's Budget speech also talked about tax simplification, start-ups and electric mobility in India. Below are the 10 key takeaways from the Union Budget 2019:
1. Vision of $5-trillion economy
The entire Union Budget 2019 has been based on the vision of making India a $5 trillion economy in the next few years. FM Sitharaman said that the Indian economy will grow to reach $3 trillion in the current year. In order to take it further, the Finance Minister emphasised on structural reforms, similar to what was seen during the five years of previous Modi government.
2. Push to investment
FM Sitharaman announced a slew of measures to increase investments in the Indian economy. Ways to improve infrastructure investments, encompassing roads, railways, aviation, waterways, metro rail network and housing were also announced in the Union Budget 2019.
The Budget also included steps to increase industrial investments in MSMEs, start-ups, Make in India and electric mobility.
3. More helps for banking sector
With legacy issues out of the way, the government will infuse Rs 70,000 crore in public sector banks to boost credit, FM Sitharaman said in her Budget speech. NBFCs that are fundamentally sound would continue to get funding from banks and mutual funds without being unduly risk-averse, she further added.
The Finance Minister mentioned that NPAs of commercial banks have reduced by over Rs 1 lakh crore over the last year.
4. Taxes made simple sans relief
The Union Budget 2019 did not deliver on the expectations of the taxpayers hoping for some relief. Instead, the Budget listed out measures to simplify tax compliance.
FM Sitharaman proposed to make PAN and Aadhaar interchangeable "for ease and convenience of taxpayers". This would allow those who do not have PAN to file Income Tax returns by simply quoting their Aadhaar number and also use it wherever they are required to quote PAN.
The Budget also proposed to make filing Income Tax returns easier by introducing pre-filled return forms. These forms will be generated by incorporating relevant information about the taxpayer from various sources such as banks, stock exchanges, mutual funds, EPFO, State Registration Departments, etc.
Sitharaman also talked about simplification of GST, a much-awaited initiative for taxpayers.
5. Women in Budget
The second female Finance Minister in the history of India, Nirmala Sitharaman had a slew of announcements for women of the country in her first Union Budget. In the Budget, the government proposed to expand the Women SHG interest subvention programme to all districts.
Moreover, an overdraft of Rs 5,000 would be allowed for every verified woman SHG member with a Jan Dhan Bank Account. One woman in every SHG will also be made eligible for a loan up to Rs 1 lakh under the MUDRA Scheme, Sitharaman further added.
6. Relief for start-ups
In its previous tenure, the Modi government emphasised on strengthening the start-up ecosystem in India. However, the start-ups and their investors faced a troublesome hurdle in the form of angel tax. To resolve this issue, FM Sitharaman announced that the start-ups and their investors who file requisite declarations and provide information in their returns will not be subjected to any kind of scrutiny in respect of valuations of share premiums.
The issue of establishing the identity of the investor and source of his funds will be resolved by putting in place a mechanism of e-verification, Sitharaman said. With this, funds raised by start-ups will not require any kind of scrutiny from the Income Tax Department.
7. Fiscal discipline over populism
In a bold move, the government decided to lower its fiscal deficit to 3.3 per cent of the GDP. In the Interim Budget presented earlier this year, the Modi government had pegged its fiscal target at 3.4 per cent.
Although this indicated an inclination towards fiscal prudence on part of the government, experts did not share the government's enthusiasm, predicting that the lowered fiscal deficit target will be a tough one to achieve.
8. Protecting domestic industry
Customs duties were increased on an array of items in the Union Budget, whereas exemptions on customs duties on several items were withdrawn. The move was meant to protect and boost the domestic industry, Sitharaman mentioned during her Budget speech.
However, defence equipment not manufactured in India were exempted from customs duties with the objective of "securing our borders".
9. Push to electric mobility
The Union Budget 2019 pushed for electric mobility in a big way with income tax deduction on interest on loans on electric vehicles, lower import duty on a host of components and investment-linked income tax exemption for setting up manufacturing for solar electric charging infrastructure and lithium storage batteries.
Customs duties on many electric components like E-drive assembly, onboard charger, E-compressor and charging gun have also been scrapped.
10. Trouble for the common man!
The Union Budget 2019 bore some troubling news for the common man as petrol and diesel prices were increased by Rs 2. Custom duties on gold and other precious metals were also increased from 10 per cent to 12.5 per cent.
To discourage cash withdrawal in huge amounts, the Budget proposed levying TDS at the rate of 2 per cent on cash withdrawal in excess of Rs 1 crore in a year from one's bank account.
(Edited by Vivek Punj)