Union Budget: Tax on super-rich; EVs, affordable housing get big push
NEW DELHI : Finance Minister Nirmala Sitharaman today announced the Union Budget 2019, with a lot of emphasis on improving India’s transportation system. One of the focus of this year’s budget was Green Mobility, with a lot of push towards Electric Vehicles.
Describing the Union Budget as development friendly and future oriented, Prime Minister Narendra Modi said it is a “green budget” which focuses on the environment and pitches for green and clean energy and transportation needs.
While there were no additional breaks announced in income taxes for the middle class, the government announced a slew of incentives for those looking to buy affordable homes and electric vehicles. Ms Sitharaman also announced new levies of Rs. 2 per litre on petrol and diesel – a move that instantly drew opposition criticism. The country’s first full-time Finance Minister, Nirmala Sitharaman delivered one of longest budget speeches at 2 hours 17 minutes.
Nirmala Sitharaman earlier announced the reduction of GST on electric vehicles from 12% to 5% and said that to make EVs affordable for consumers, government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on the loans taken to purchase EVs. Sitharaman also said the government has already approved Rs 10,000 crore for FAME II scheme on April 1, 2019 to encourage faster adoption of electric vehicles by providing right incentives and charging infrastructure.
Taking a pragmatic approach, Finance Minister Nirmala Sitharaman today announced no changes in personal income tax rates but levied additional surcharge on the super rich. She also sought to spur growth with reduction in corporate tax and sops to housing sector, startups and electric vehicles.
Among key announcements, Sitharaman said that digital payments will get cheaper, govt will launch an ATM-like One Nation One Card for pan-India travel and new model rental laws will be unveiled to Finance Minister Sitharaman raised taxes for the super-rich and hiked duties on fuel, gold and automobile parts in her first Budget on Friday, in measures aimed at tackling a five-year low in growth while tightening fiscal consolidation.
To restart investment, Prime Minister Narendra Modi’s government also eased FDI in the insurance and aviation sectors, tightly controlled for decades, and reduced taxes for corporates. After his spectacular re-election, PM Modi aims at making India a $5 trillion economy by 2024-25. But the government did not announce a big jump in public spending despite expectations. Nirmala Sitharaman said the fiscal deficit for this year would be trimmed to 3.3 per cent of the GDP.
Here are 10 major announcements made in the Budget 2019:
The fiscal deficit target was revised to 3.3 per cent for 2019-20 from 3.4 per cent, a move which came as a surprise for some economists who had expected the target to be eased further.
The government will ease foreign direct investment (FDI) restrictions in single-brand retail, open up FDI in sectors such as aviation, insurance, media and animation, and allow foreign investors to buy debt of listed real estate investment trusts (REITs).
Proposing to increase the surcharge on the super-rich, the Finance Minister said the effective tax rates for individuals with a taxable income of Rs. 2 crore-Rs. 5 crore and over Rs. 5 crore would be hiked by around 3 and 7 per cent.
Companies with an annual turnover of Rs. 400 crore will be under the 25 per cent tax bracket. That would leave only 0.7 per cent of companies outside the 25 per cent corporate tax rate.
Income tax returns can be filed using either Aadhaar card or PAN card, a move widely expected to strengthen the taxpayer base and improve tax collection.
NRIs may get Aadhaar cards on arrival without the mandatory waiting period, by showing their Indian passport. NRIs currently need to have spent 180 days to be eligible for an Aadhaar card.
Ms Sitharaman proposed a health sector outlay of Rs. 62,659.12 crore for the current financial year – the highest in the last two financial years – with Rs. 6,400 crore earmarked for the centre’s flagship health insurance scheme, Ayushman Bharat.
The government allocated Rs. 400 crore to create “World Class Institutions” in the field of education – an over three-fold increase compared to the revised estimates for 2018-19. Gold and fuel are costlier: An additional duty and cess of Rs. 2 will be added to the cost of petrol and diesel per litre. Import duty on precious metals such as gold has been raised to 12.5 per cent from 10 per cent.
The government promised electricity and clean cooking facilities to all rural families by 2022. It also It said 1.25 lakh kilometres of roads will be upgraded in next five years at an estimated cost of Rs. 80,000 crore.
Maintaining status quo on income tax slabs and rates, the government allowed an additional deduction of up to Rs. 1.5 lakh against interest paid on loans taken by March 31, 2020 to buy houses worth up to Rs. 45 lakh. The government said the move will lead to a benefit of around Rs. 7 lakh to middle class home-buyers over 15 years.(With Agency Inputs ).
