Budget 2019 - snr.company€¦ · Enhanced interest deduction up to Rs.3.5 lakh for purchase of an affordable house. TDS of 2% on cash withdrawals exceeding Rs.1 Crore in a year from

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Budget 2019

Introduction to Budget 2019

Page 2 of 24Private & Confidential

Union Finance Minister Nirmala Sitharaman presented the Union Budget for the year 2019-20 on 5th July 2019 in the Lok

Sabha that aims to boost investment at a time when the economy is showing signs of slowdown. This budget is the first Union

budget of second tenure of Modi Government and while the FM did not announce any changes in personal income tax rates

however she proposed to levy additional surcharge on the super rich taxpayers.

Budget 2019 has clearly outlined the Modi government’s intentions and the Union Finance Ministry’s roadmap to strengthen

the Indian economy. It was imperative for the Prime Minister Narendra Modi and FM Sitharaman to assure the countrymen

that the central government has gone for reformatory budget with focus on taking care of structural issues. The special

emphasis has been laid on Start-Ups where many tax sops were proposed.

Notably, FM found wisdom in a line from Pura Nanooru, a Tamil Sangam Era work by Pisirandaiyaar. The verse ," Yannai

pugundha nilam" was sung as an advice to the King Pandian Arivudai Nambi, the English translation of which comes out as

under:

"a few mounds of rice from paddy that is harvested from a small piece of land would suffice for an elephant. But what if

the elephant itself enters the field and starts eating? What it eats would be far lesser than what it would trample over!"

Admiringly, in the above verse, by referring the Government as the Elephant, the Taxpayer as the Farmer of the Paddy Field

and the Mounds of Rice as the Income-tax Collections, the importance, significance and effectiveness of tax rationalisation

measures aimed at ensuring voluntary compliance and tax deposition by taxpayers as against the coercive tax recovery

measures, has been emphasised and encouraged by the Hon'ble Finance Minister.

In a nutshell, Budget 2019 has set a path for a $5 trillion economy by outlining a host of measures in the area of Make In

India, labour reforms, financial sector reforms, social impact, enhancing ease of doing business and forcing acclimate

change.

Budget Key Features

Budget 2019 – Presentation Outline


Other Highlights

Sectoral Highlights

Tax Proposals

Policy Changes

Key Features

Budget 2019 – Key Features

❖ Vision for USD $5 trillion economy driven by investment in next few years;

❖ To form 10,000 new farmer producer organisations to ensure economies of scale in next five years;

❖ New Jal Shakti Mantralaya to ensure Har GharJal;

❖ Bharat-Net is targeting internet connectivity in local bodies and in every Panchayat in the country;

❖ To make India Open Defecation Free by 2nd October 2019;

❖ Minimum public share-holding proposed to be raised from 25% to 35% for all listed Companies;

❖ New National Education Policy to transform India’s higher education system to one of the global best education systems;

❖ One women in every Self-Help Group (SHG) will be made eligible for a loan up to INR 1 Lakh under the MUDRA scheme.

❖ Aadhar card for Non-Resident Indians with Indian Passports after their arrival in India without waiting for 180 days.

❖ Faceless E-Assessments: A scheme of faceless E-assessment involving no human interface to be launched this year;

❖ For enhancing ease of tax payers, Aadhaar and PAN shall be made interchangeable.

❖ Turnover Threshold for applicability of lower corporate tax rate of 25% increased from ₹250 crore to ₹400 crore;

❖ Enhanced interest deduction up to Rs.3.5 lakh for purchase of an affordable house.

❖ TDS of 2% on cash withdrawals exceeding Rs.1 Crore in a year from bank accounts to promote less cash economy;

❖ Effective tax rate for individuals having taxable income above Rs. 2 crore has been increased by 3 to 7 percant. Page 4 of 24Private & Confidential

Key Features

Sectoral Highlights



Other Highlights

Tax Proposals

Policy Changes

Key Features

Sectoral Highlights

❖ Boost to agro-rural industries through cluster-based development under SFURTI scheme

with focus on bamboo, honey & khadi clusters;

❖ Pradhan Mantri Matsya Sampada Yojana launched: The scheme will address critical gaps

in strengthening value chain, including infrastructure, modernisation, production,

productivity & quality control;

❖ Constitution of Jal Sakti Mantralaya to ensure Har Ghar Jal to all rural households by

2024 under Jal Jeevan Mission;

❖ In 2nd Phase of Pradhan Mantri Awas Yojana – Gramin (PMAY-G), 1.95 crore houses are

proposed to be provided during 2019-21.

❖ Pradhan Mantri Gramin Sadak Yojana (PMGSY)-III is envisaged to upgrade 1,25,000 kms

of road length over the next five years, with an estimated cost of Rs. 80,250 crore.

Sectoral Highlights

Farmer Welfare & Water Security


Small Businesses

❖ Pradhan Mantri Laghu Vyapaari Mann-Dhan Yojana (PMLVMY): Pension benefits to around

3 crore retail traders & small shopkeepers with annual turnover less than Rs. 1.5 crore.

❖ Credit Guarantee Enhancement Corporation to be set-up in 2019-20;

❖ Model tenancy law to be finalized for promotion of rental housing;

❖ To permit transfer of FII/ FPI investment in debt securities issued by IDF-NBFCs to

domestic investors.

Sectoral Highlights


❖ Under Pradhan Mantri Awas Yojana-Urban over 81 lakh houses with an investment of

about Rs. 4.83 lakh crore have been sanctioned.

❖ Enhancement of Metro-railway initiatives by encouraging more PPP initiatives has

been proposed;

Urban India

Infrastructure Development

Youth

❖ New National Education Policy to transform India’s higher education system;

❖ National Research Foundation to be established to fund, coordinate & promote R&D.

Rs. 400 Crore provided for ‘World Class Institutions’ for FY 2019-20;

❖ National Sports Education Board to be setup under Khelo India.

❖ A draft legislation for setting up Higher Education Commission of India (HECI), would

be presented .

❖ It has been proposed to expand the Women SHG interest subvention programme to all

districts;

❖ It has been proposed to allow an overdraft of Rs. 5,000 for every verified SHG member

having a Jan Dhan Account;

❖ One woman in every SHG will also be made eligible for a loan up to Rs. 1 lakh under

the MUDRA scheme.

Sectoral Highlights

Women Led Development


India’s Soft Power

❖ It is proposed to consider issuing Aadhaar Card for NRIs with Indian Passports after their

arrival to India without waiting for 180 days;

❖ Government decided to open Indian Embassies and High Commissions abroad in

countries where India does not have a Resident Diplomatic Mission yet.

Tax Proposals



Other Highlights

Sectoral Highlights

Tax Proposals

Policy Changes

Key Features

Tax Proposals

Individual Tax Payers

(Till 60 Years of Age)

Senior Citizens

(60 to 80 Years of Age)

Senior Citizens

(80 Years and above)

Income Tax Rate

Upto 2,50,000 Exempt

2,50,001 to 5,00,000 5%

5,00,001 to 10,00,000 20%

Above 10 Lacs 30%

Income Tax Rate


3,00,001 to 5,00,000 5%

5,00,001 to 10,00,000 20%

Above 10 Lacs 30%

Income Tax Rate


5,00,001 to 10,00,000 20%

Above 10 Lacs 30%


Surcharge : Applicable @ 10% in cases of income between 50 Lacs to 1 Crores

@ 15% in case income is between 1 Crores to 2 Crores

@ 22% in case income is between 2 Crores to 5 Crores

@ 37% in case income is more than 5 Crores

Cess : Health & Education Cess of 4% would continue.

❖ Tax Rate on Domestic Companies having turnover up to Rs. 400 crore in financial year

2017-2018 has been reduced to 25%. Earlier, this tax rate was applicable for

companies having annual turnover up to Rs. 250 crore;

❖ Tax U/s 115QA on distributed profits (i.e. on buyback of shares) is made applicable to

listed companies at par with unlisted companies. Income shall be exempt in the

hands of shareholders U/s 10(34A)

Tax Proposals

Changes in Tax Rates


Tax Deducted at Source

❖ Section 194M is proposed to be inserted and made effective 1st September 2019

wherein it is made obligatory for individual or HUF (who are not liable to deduct TDS

under the provisions of section 194C and 194J) to deduct tax at source at the rate of 5%

while making payments to contractors or professionals for personal purposes if the

annual payment made to a contractor or professional exceeds Rs.50 lakh.

❖ For the purpose of tax deduction at source from payment made for acquisition of

immovable property u/s 194IA, consideration shall include other charges in the

nature of club membership fee, car parking fee, electricity and water facility fee,

maintenance fee, advance fee or any other charges of similar nature which are

incidental to the purchase of immovable property.

❖ Section 194N is proposed to be inserted to require banks, Co-op society and post

offices to deduct TDS @ 2% in case aggregate cash payments exceeds Rs.1 Crore in a

financial year out of accounts maintained with them;

❖ Section 194DA is proposed to be amended w.e.f. 1st Sep 2019 to provide deduction of

TDS @ 5% on the income component of the sum paid to a resident under a policy

which is not exempt u/s. 10(10D) instead of 1% on the gross amount paid at present

Tax Proposals


Widening Tax Base

❖ Section 9 has been proposed to be amended to provide that gift of any sum of

money, or property situated in India, by a person resident in India to a person outside

India (not being a gift otherwise exempt), on or after 5th day of July 2019, shall be

deemed to accrue or arise in India.

❖ Under section 139 it is proposed to make return filing compulsory for persons, who

have deposited more than Rs. 1 crore in a current account in a year, or who have

expended more than Rs. 2 lakh on foreign travel or more than Rs. 1 lakh on

electricity consumption in a year or whose income becomes lower than maximum

amount not chargeable to tax due to claim of exemption U/s 54 to 54GB.

❖ Provisions of section 139A is proposed to be amended to provide for

interchangeability of PAN & Aadhaar.

Penalties & Prosecution

❖ It is proposed to amend proviso to sub-section (1) of section 201 to extend the

benefit to a deductor to be not treated as an assessee-in-default, even in respect of

failure to deduct tax on payment to non-resident (w.e.f 01-Sep-2019). Consequential

relief in section 40(a)(ia) for not disallowing any such expense is also proposed

❖ The tax payable limit for prosecution in case of non-filing of ITR has been raised from

Rs. 3,000 to Rs. 10,000.

Tax Proposals


Tax Incentives to International Financial Services Centre (IFSC)

❖ It has been proposed to extend the benefit of exemption to IFSC of 100% for 10

consecutive years & such exemptions can be claimed in any 10 consecutive years out

of 15 years of commencement;

❖ It is proposed to provide tax exemptions for interest received by a non-resident in

respect of monies lent to a unit located in IFSC.

❖ A non-resident is currently not required to pay capital gains tax on the transfer of

specified securities made on a recognized stock exchange in the IFSC. This benefit is

proposed to be extended to a Category-III Alternative Investment Fund (AIF) in IFSC of

which all the unit holders are non-residents;

❖ It is proposed to extend the benefit of exemption of DDT to distribution of dividend by

a company located in IFSC out of accumulated profit which has been accumulated by

the unit from operations in IFSC after 1st April 2017.

❖ There would be no additional tax on distribution of any amount, on or after 1st

September 2019, by a specified Mutual Fund out of its income derived from

transactions made on a recognized stock exchange located in any IFSC.

❖ Deduction u/s 80LA shall be allowed to a NR having income from interest, dividend

referred to in sec 115A.

Tax Proposals


Other Tax Incentives

Tax Incentives for Affordable Housing

❖ Section 80EEA has been inserted to provide for additional deduction of interest up to

Rs. 1,50,000 on loan taken for purchase of house having stamp duty value up to Rs.

45 lakh. This deduction shall be over and above deduction of Rs.2,00,000/- available

U/s 24(b) of Income Tax Act.

❖ The loan should have been sanctioned during the FY 2019-20;

❖ Investments made by Category-II AIF shall also be exempted from the applicability of

sec 56(2)(viib);

❖ Deduction of interest upto Rs. 1,50,000 on loan taken for purchase of electric vehicle

shall be allowed u/s 80EEB. The loan shall be obtained on or before 31-03-2023.

❖ It is proposed to increase the limit of exemption from 40% to 60% of total amount

payable under NPS to assessee on closure of his account or opting out of scheme

Tax Proposals

Goods & Services Tax (GST)


❖ Return filing would be simplified in future and in view of this, a simplified single

monthly return is being rolled out. Taxpayers with annual turnover of less than INR 5

Crore need to file quarterly return in future.

❖ Free accounting software for return preparation has been made available to small

businesses. A fully automated GST refund module shall be implemented. Multiple tax

ledgers for a taxpayer shall be replaced by one.

❖ Government may specify supplier who shall mandatorily offer facility for digital

payments to its recipient

❖ Aadhaar submission or authentication mandatory for persons obtaining registration

under GST laws

❖ Government proposes to empower Anti Profiteering Authority to impose penalty

equivalent to 10% of profiteered amount where profiteered amount is not deposited

within 30 days from date of order

❖ Provision made for allowing interest to be paid only on net cash tax liability (putting

rest to the matters where department was demanding interest on gross liability)

❖ It is also proposed to move to an electronic invoice system wherein invoice details

will be captured in a central system at the time of issuance itself. The returns would

get prefilled from the invoice system automatically which will reduce the compliance

burden of the taxpayers.

Tax Proposals

❖ Exemptions is granted on following service for specified period:

• Service provided by State Government by way of grant of liquor license (Period 01-Apr-

2016 to 30-Jun-2017)

• Services provided by Indian Institutes of Management to the students (Period 01-Jul-2003

to 31-Mar-2016

• Earlier exemption on long term lease of thirty years or more of plots for development of

infrastructure now extended to undertakings or by any other entity controlled or owned

by Central Government or State Government or Union territory, to the developers in any

industrial or financial business area (Period 01-Oct-2013 to 30-Jun-2017)

Refund application for service tax paid above to be filed within six months


❖ It is proposed to increase special additional excise duty and Road and infrastructure

cess each by one rupee a litre on petrol and diesel.

❖ It is proposed that misuse of duty free scrips and drawback facility involving more

than fifty lakh rupees will be a cognizable and non-bailable offence.

Excise Duty

Service Tax

Tax Proposals

❖ Import of defence equipment, not being manufactured in India, are being exempted

from the basic custom duty.

❖ Basic custom duty is being increased on items such as cashew kernels, PVC, Vinyl

flooring, tiles, metal fittings, mountings for furniture, auto parts, certain kinds of

synthetic rubbers, marble slabs, optical fibre cable, CCTV camera, IP camera,

digital and network video recorders etc.

❖ Exemptions from custom duty on certain electronic items which are now being

manufactured in India are being withdrawn.

❖ End use based exemptions on palm stearin, fatty oils, and exemptions to various

kinds of papers are also being withdrawn.

❖ 5% custom duty is being imposed on imported books to encourage domestic

publishing and printing industry.

❖ To increase custom duty on gold and other precious metals from 10% to 12.5%.

❖ Custom duty reductions are being proposed on certain raw materials and capital

goods which includes inputs of CRGO Sheets, amorphous alloy ribbon, ethylene di-

chloride, propylene oxide, cobalt matte, naphtha, wool fibres, inputs for

manufacture of artificial kidney and disposable sterilised dialyser, and fuels for

nuclear power plants.

Customs Duty


For complete list of items with their tax rate, please click on Amendments

Tax Proposals

❖ Dispute resolution cum amnesty scheme called ‘The Sabka Vishwas Legacy Dispute

Resolution Scheme, 2019’ is being introduced for resolution and settlement of

legacy cases of Central Excise and Service Tax.

❖ The scheme covers past disputes of taxes which have got subsumed in GST namely

Central Excise, Service Tax and Cesses. All persons are eligible to avail the scheme

except for few exclusions.

❖ The scheme provide relief which varies from 40 to 70 percent of the tax dues for

cases other than voluntary disclosure cases, depending on the amount of tax dues

involved.

❖ The scheme also provides relief from payment of interest and penalty. The person

discharged under this scheme shall also not be liable for prosecution.

❖ The scheme provides for method of payment of tax dues, arrears and restrictions

regarding the manner of payment etc.

❖ The scheme shall be available from a date to be notified.

Sabka Vishwas Legacy Dispute Resolution Scheme


Other Highlights



Sectoral Highlights

Policy Changes

Key Features

Other Highlights

Tax Proposals

❖ Public sector banks are proposed to be further provided INR 70,000 crore capital to

boost credit in the economy.

❖ NBFCs have to maintain a Debenture Redemption Reserve and in addition, a special

reserve as required by RBI, for the public placement of Debt.

❖ It is proposed to give the regulation authority over the housing finance sector from

National Housing Bank(NHB) to Reserve Bank of India (RBI).

❖ New series of coins of 1,2, 5, 10 and 20 rupees, easily identifiable to the visually

impaired, were released by the PM on 7th March 2019 and will be available for public

use shortly.

Other Highlights

Banking & Financial Sector


❖ The government is aiming to leapfrog and envision India as a global hub of

manufacturing of Electric Vehicles.

❖ It is proposed to lower the GST rate on electric vehicles from 12% to 5%.

❖ It is proposed to provide additional Income Tax deduction of INR 1.5 lakh on the

interest paid on loans taken to purchase electric vehicles.

❖ Custom duty is being exempted on certain parts of electric vehicles.

Electric Vehicles

Other Highlights


Start Ups

❖ The startups 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.

❖ No inquiry or verification can be carried out by the Assessing officer, for pending

assessments or grievance redressal, without obtaining approval of his supervisory

officer.

❖ No income tax scrutiny for the valuation of shares issued to Category-II alternative

investment funds. Earlier, it was exempt only for Category-I funds.

❖ The condition for carry forward and set off of losses in cases of eligible start-ups is

proposed to be relaxed enabling them to carry forward their losses on satisfaction of

any one:

• Continuity of 51% shareholding/voting power or

• Continuity of 100% of original shareholders.

❖ Following amendments are proposed in Section 54GB providing exemption of capital

gains from sale of residential property on investment of net consideration in equity

shares of eligible start-ups:

• Extension in date of transfer of residential property for investment in eligible start-

ups from 31-Mar-2019 to 31-Mar-2021

• The condition of minimum holding of 50% of share capital or voting rights in the

start ups is proposed to be relaxed to 25%.

• The condition restricting transfer of new asset being computer or computer

software is proposed to be relaxed from the current 5 years to 3 years.

Policy Changes



Other Highlights

Sectoral Highlights

Tax Proposals

Policy Changes

Key Features

Policy Changes


❖ It is estimated that Railway Infrastructure would need an investment of 50 lakh

crores between 2018-2030. It is proposed to use Public-Private Partnership to

unleash faster development and completion of tracks, rolling stock manufacturing

and delivery of passenger freight services.

❖ One Nation, One Grid to take connectivity infrastructure to the next level & ensure

power availability to states at affordable rates.

❖ The recommendations of the High-Level Empowered Committee (HLEC) on

retirement of old & inefficient plants and addressing low utilization of Gas plant

capacity due to paucity of Natural Gas, will also be taken up for implementation

now.

❖ Credit Guarantee Enhancement Corporation for which regulations have been

notified by the RBI, will be set up in 2019-20 to provide investment-driven growth

that requires access to low cost capital.

❖ Government has decided to modify present policy of retaining 51% Government

stake to retaining 51% stake inclusive of the stake of Government controlled

institutions.

❖ Minimum public share-holding proposed to be raised from 25% to 35% for all listed

Companies

Policy Changes

Locations

Delhi

Email : [email protected] Website : www.snr.company

A-15, Second Floor, Hauz Khas,

New Delhi- 110016(India)

Tel. +91 11 41655801, 41655802

No 605, 2nd Floor, 62nd Cross,

5th Block Rajajinagar, Bangalore,

Karnataka- 560010 (India)

Tel. +91 80 42064178

Bangalore

PuneOffice no 2A, Gangotri Complex, 927,

Synagague Street, Camp,

Pune 411001 (India)

Ph: +91 20 30492191

Private & Confidential Page 24 of 24

Budget 2019 - snr.company€¦ · Enhanced interest deduction up to Rs.3.5 lakh for purchase of an affordable house. TDS of 2% on cash withdrawals exceeding Rs.1 Crore in a year from

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