One more Union Budget edition has been released today by government of India with the main aims to increase Seamless digital governance and Risk mitigation and Social security.
Three stream objectives presented in Union Budget for Indian economy are onerous. However it lacks support of measures and proposal to achieve this. Several budgetary provisions are made in each stream. It would be interesting to seek further details about those proposals.
For corporate’s, DDT is removed. This would be direct reduction to their costs on distribution of profits. It would be interesting to see how this will impact Shareholders more specifically for those who are in higher tax bracket. There is no clarity whether dividend distribution by Companies now will be under TDS procedure or not. If TDS is to be deducted, administratively there is no ease of living for payer and receiver. Planning for advance tax payments for high net worth individuals would also be crucial in next financial year.
Individual Income tax rate reductions without claiming any exemptions and deductions is welcome step. However it would be interesting to see how many would opt this scheme, considering the availability of current exemptions on account of housing loans and interests on it.
Start Ups have received some extended period and turnover benefit to claim tax exemptions.
Depositors have benefited by having insurance coverage to Rs 5 lakh deposits in banks.
Find some quick inputs as captured from live Union Budget speech of FM.
Objectives aims for Union Budget:
Aspirational India – better standards of living
- Agricultural development plans (16 action points proposed)
- Sanitation plans
- Education plans
Economic Development – higher productive and greater efficiency
- Mechanism for Pre investment advisory to be introduced
- Corporatization of major port and its listing on stock exchange
- 100 more airports to be developed
- Promote smart electricity metering – prepaid metering, freedom to choose the supplier and rates
- Gas Market – Transparent price mechanism
- Promoter New technologies like Analytics, Fintech – enable private sector to build data center parks. Digital linking of gram panchayats
- IPR – Digital platform to be setup.
- Institute of excellence – for IPR
- Seed funding to early stage start-ups
- National Mission on Quantum Technology
Caring Society – education, health, tourism, environment
- Indian Institute of Heritage & Culture – deemed university
- Clean Air cities
- Ease of living
Good Governance measures
- Trusting every citizen
- Business should have confidence in government – tax payer charter to be introduced through statute.
- Companies Act & other acts – amendments proposed towards rationalizing of criminal liabilities
- National recruitment agency to conduct common entrance test
- Robust mechanism for appointment to various Tribunals
- Strengthening of contract act
- Artificial intelligence in information and statistic collection and dissemination
Financial Sector improvement measures
- Aim to have clean reliable and robust financial sector
- Safety of Bank Depositors money
- Deposit insurance coverage increase to Rs 5 lakhs per bank depositor
- Limit for NBFC for debt recovery under SARFACI reduced
- MSME measures:
NBFC to extend invoice financing
Scheme to provide subordinate debt from Banks – treated as quasi equity
RBI debt restructuring window enhanced by 1 year
- Specified Government Securities will be open to NR
- New debt ETF to be floated
- NBFC & HFC – liquidity crises – support to be given by government
- Gift City Gujrat – setting up of International Bullion Exchange
- Disinvestment – LIC IPO to be made soon
Tax reforms
Nominal GDP growth for year 2020- 21 estimated at 10%
- Direct tax
Personal Income Tax – Optional New simplified regime with reduced tax rates for income upto 15 Lakhs – No exemptions/ deductions available
Old personal tax regime would also be available with old rates and exemptions/ deductions
- Dividend Distribution Tax –DDT to be removed and there will be adoption of old classical system – Dividend will be taxed at the hands of recipient at applicable rates
- Deduction by holding company for dividend paid by its subsidiary is to be allowed. (Not sure about the applicability of this point?)
- Concessional corporate tax rate extended to domestic companies engaged in generation of electricity
- Foreign sovereign wealth fund – 100% tax exemptions in infrastructure and other specified sectors
- Start-up – ESOPs – Taxable as perquisites at the hands of employees – exemption for 5 years
- Start-up Tax – Upto 100 Cr turnover – tax exemption for 3 years within 10 years period
- Co –op Society – Option to be taxed at 22% plus surcharge and cess without claiming any exemptions and deductions – MAT/ AMC removed
- MSME –turnover limit for mandatory Audit increased to Rs 5 Cr.
- Affordable Housing Loan deductions – loan sanction date extended by 1 year
- Tax Holiday for affordable housing projects date extended by 1 year
- Capital Gains – Transactions in real estate – limit of difference in rate increased from 5% to 10% for calculation of capital gain.
- Charitable Institutions – process of tax exemption registration to be made electronic and unique registration number to be issued. For new entities 3 years provisions registration to be made available.
- Faceless Tax Appeals Scheme to be introduced
- Direct Tax Vivad Se Vishwas Scheme – complete waiver of interest and penalty up to 31st March 2020.
- Allotment of PAN – online to be provided instantly
Indirect Tax
- GST –
Addhar based verification of tax payers to be introduced
QR CODE for invoices to be introduced
- Customs –
Higher revision in customs duty on import of goods to be manufactured by MSME
Nominal Health cess on Import of medical equipment’s
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Good analysis and updates.. Great Effort.
Thank you for this initiative.