InvestorQ : What are the key highlights of the Union Budget 2019
Anjana Aiyar made post

What are the key highlights of the Union Budget 2019

Arya Nanda answered.
3 years ago

Some of the key highlights of the budget can be captured as under:

· Corporate tax rates reduced from 30% to 25 for companies with turnover up to Rs.400 crore. This was originally Rs.250 crore.

· Company promoters had avoided paying DDT and personal dividend tax by resorting to buyback of shares to reward shareholders. Now buybacks will also be taxed at 20%.

· Nirmala Sitharaman has asked SEBI to consider raising public shareholding limit for listed corporates from 25% to 35%. According to an ET study, there are 1400 companies with promoter stake of more than 65%.

· The good news for MSME borrowers is that they will get 2% interest subvention. The government has assured no angel tax for start-ups in full compliance.

· After a long wait, the budget has given a boost to green and environment friendly Electric Vehicles (EV). The budget has proposed duty exemption on EV parts and inputs as well as income tax deduction of interest on loans for EVs up to Rs.1.50 lakhs.

· Budget has permitted 100% FDI in insurance intermediaries with a promise to review other limits. FPIs will also have free limit as defined by the sectors. Local sourcing norms will be eased for single brand retail to facilitate further FDI in retail.

· The budget proposes to merge the equity investment rules for FPIs and NRIs to be able to tap the vast resource of NRI money into Indian equities. This is to tap the $75 billion of annual NRI remittances into India that purely go into banks.

· There is a boost for affordable housing. The benefits of Section 24 on interest paid on home loans will be increased by Rs.1.50 lakhs per annum in case of low cost houses up to Rs.45 lakhs. This will take total exemption limit to Rs.3.50 lakhs.

· The rich have to pay more tax, in the form of higher surcharge. Surcharge on Income Tax is at 10% above Rs.50 lakhs and 15% above Rs.1 crore. This surcharge will be enhanced to 18% in case of incomes above Rs.2 crore and 25% for income above Rs.5 crore.

· Here is a boost to digital transactions. Merchants will be asked to provide digital transactions like card payments, UPI etc at no cost. Such costs will be absorbed by the banks.

· To prevent cash laundering in the economy and through the bank, the budget will also deduct TDS of 2% on cash withdrawals that cross Rs.1 crore from an account in 1 year.

· All HFCs will be outside the regulatory purview of NHB and under the overall surveillance of RBI. The government will give a guarantee on a special fund created by banks for liquidity to strong NBFCs.

· Two important identity documents; Aadhar and PAN will now be interchangeable. Persons without PAN can use Aadhar as an acceptable document for tax filing as well as for high value purchases.

· PSU banks will be recapitalized up to Rs.70,000 crore to make them more competitive and enable them to expand their asset books. This is likely to be done through recapitalization bonds by the government.

· All growth comes at a cost and the government projects require funds. The government has increased the duties on petrol and diesel by Rs.1, which will partially reduce the benefits of lower crude prices for customers.

Having said the above, there are enough benefits for the start-ups and MSMEs that should give a boost to the economy as a whole.