Union Budget 2019-20 (F)

UNION BUDGET
2019-20

1

Index

• A. Key Growth Indicators
• B. India’s Vision
• C. Sector wise highlights
• D. Direct Tax Reforms
• E. Indirect Tax highlights

2

A. Key Growth
Indicators

3

Introduction

“With determined human efforts, the task
will surely be completed”

- Chanakya Niti
Growth of Economy(GDP)
Global comparison among top ten economies

4

Growth & Macro Economic Stability

Growth of Economy(GDP)

US $ 5 trillion
US $ 2.7 trillion

US $ 1.85 trillion 2019 Next few years

2014

. FDI & FPI

India attracted $ 64.4 bn worth of FDI in
2018-19

100% FDI to be permitted for Insurance
Intermediaries

Statutory limit for FPI investment in a company
increased to sectoral limit

Local Sourcing norms to be eased for FDI in single brand
retail

5

Budget at a Glance

4%
Customs

21% 19% GST
Corporate

Tax

20% Rupee 3% Non
Borrowings Comes debt
and other From Capital
Liabilities
Receipts

9% non 8% Union 16%
tax Excise Income
Duties
revenue Tax

6

Budget at a Glance (contd..)

8% other 5% 7%
expenditure pensions Finance

23% Rupee and
States’ Goes to Transfers
share of
Taxes & 8%
Duties Subsidies

18% 9%
Interest Defence
Payments

13% 9%
central Centrally
Sector Sponsored
Schemes Schemes

7

B. India’s
Vision for
the next
Decade

8

Physical & Social Infrastructure

Government to liberalise FDI
in aviation, media, animation
and insurance intermediaries

Power at affordable rates to
states ensured under ‘One
Nation, One Grid”

Comprehensive restructuring of National Highways
Programme to be done to ensure creation of National
Highways Grid of desirable capacity.

Self Sufficiency

Promote Self-sufficiency and export of
food-grains, pulses, oilseeds, fruits
and vegetables;

9

Digital India

Transforming India into a
digitally empowered society

Spreading of knowledge by
reaching every nook and
corner of the country

Creating a million of jobs in this
eco-system with the support of
youth

Pollution Free India

Making renewables the major
source of energy supply by shifting
towards electric vehicles

Bringing down the import
dependence and ensuring energy
security

10

Make in India

Emphasis on MSMEs, Start-ups,
defence manufacturing, automobiles,
electronics, fabs and batteries, and
medical devices

Clean Rivers

Jal Jeevan Mission to achieve Har
Ghar Jal (piped water supply) to
all rural households by 2024

Blue Economy

Sustainable use of ocean

resources for economic growth ,

improved livelihoods, jobs and

ocean ecosystem health

through fisheries, waste

management, renewable

energy, etc.

11

Space Programmes

India - a Launch-pad of Satellites.
Focus on Space programmes,
Gaganyan, Chandrayan and
Satellite programmes;

Healthy Society

Swachh Bharat mission to
undertake sustainable solid waste
management in every village.

Working towards health care &
wellness system with the help of
Ayushmaan Bharat scheme
ensuring well-nourished women,
children and safety of citizens;

12

C. Sector wise
highlights

13

RURAL INDIA

14

Transforming Rural India

1.5 crore Rural homes
completed

1.95 crore houses proposed for
second phase

Average days for completion
314 (2015-16) to 114 (2017-18)

15

Pradhan Mantri Gram Sadak Yojana

• Completion Target

advanced from 2022

to 2019

• 97% of targeted

habitations covered

• 30,000 km built using

green technology

Pradhan Mantri Gram Sadak Yojana Outlay

15500 cr. 19000 cr.

2019-20

16

Rural Electrification UJALA

• 100% Households
Electrified

• UJALA leading to
annual cost savings of
Rs. 18,341 Crore

35 Crore LED bulbs
distributed so far
under UJALA Scheme

17

INFRASTRUCTURE

18

Infrastructure Development

Jal Marg Vikas & Sagaramala Initiatives :-
Improving Logistics & Reducing
Transportation cost

PPP in Railways Infra Development

National Mobility Card Launched

19

Make in India and Start-ups
Promotion

Changes in customs duty Exclusive TV Channel for
to promote make in Start ups
India

Mechanism of e-
verification to

resolve the issue
of ‘Angel Tax’

20

Agriculture &
Allied Sector

21

Boost to agro-rural
industries

• Cluster based

development under

SFURTI (Scheme of Fund for

Regeneration of Traditional

Industries) Scheme with

focus on bamboo, honey

and khadi clusters

• 100 new clusters to be set up
to enable 50000 artisans
during 2019-20

• 100 Business Incubators to
be set up to enable 75000
entrepreneurs under ASPIRE

22

Pradhan Mantri Matsya
Sampada Yojana

The Scheme will address critical
gaps in strengthening value
chain, including infrastructure,
modernisation, production,
productivity and quality control.

Jal Shakti Mantralaya

• Constitution of Jal Shakti
Mantralaya

• 1592 critical and over exploited
blocks identified under Jal Shakti
Abhiyan

Jal Jeevan Mission

Focus on integrated demand and
supply side management at local
level, creation of local
infrastructure for rainwater
harvesting, ground-water
recharge and household waste
water management

23

Women’s Development to
Women Led Development

Women self-help group (SHG)

• To expand women SHG

interest subvention

programme to all districts.

• Rs. 1 Lakh loan under

MUDRA scheme for one

woman in every SHG

Ujjwala Yojana

• 8 Crores LPG
connection to be given
under Ujjwala Yojana

• More than 7 Crore
connections already
given

24

Labour and Youth Welfare

Pradhan Mantri Laghu Vyapaari Mann-Dhan Yojana
(PMLYMY)
Pension benefits to around 3 crore retail traders and
small shopkeepers with annual turnover less than Rs.
1.5 crore.

Pradhan Mantri Shram Yogi
Maan Dhan (PM-SYM)
About 30 lakh workers have
joined the scheme

Rationalising of labour laws
into 4 labour codes
proposed

25

Labour and Youth Welfare (contd..)

National Research Foundation to be established to fund,
coordinate and promote R & D
Rs. 400 Crore provided for World Class Institutions for the
FY 2019-20
Study in India to bring foreign students to higher
education institution

National Sports Education Board
to be setup under Khelo India
To prepare youth for the new age
skills : Artificial Intelligence, IoT,
Big Data, 3D Printing, Virtual
Reality etc.

26

D. Direct Tax
Reforms

27

Rates of Income Tax

28

Rates of tax

Income Existing Rate Proposed Rate

Individual less than 60 years, HUF, BOI, AOP, AJP

Up to 2,50,000 Nil Nil

2,50,001 – 5,00,000 5% 5%

Individual 60 to 80 years

Up to 3,00,000 Nil Nil

3,00,001 – 5,00,000 5% 5%

Rebate u/s. 87A increased to Rs. 12,500
No tax for income <= 5 Lakh

Individual - 80 years & above

Up to 5,00,000 Nil Nil

All Individuals, HUF, BOI, AOP, AJP 20%
30%
5,00,001–10,00,000 20%

More than 10,00,000 30%

Rates of tax – (contd..)

Rate of Surcharge for Individuals, HUF, BOI, AOP, AJP

Income Existing Rate Proposed Rate
50 Lakh – 1 crore 10% 10%
1 crore – 2 crore 15% 15%
2 crore – 5 crore 15% 25%
More than 5 crore 15% 37%

Contributing more to the nations’ development

Co-operative Society

Income Existing Proposed

Upto 10,000 10% 10%

10,001 – 20,000 20% 20%

More than 20,001 30% 30%

Surcharge at 12% if the total income exceeds Rs.1 crore

30

Rates of tax

Firms and Local Authority

Income Existing Proposed

Total income 30% 30%

Surcharge at 12% if the total income exceeds Rs.1 crore

Other than Domestic Companies

Income Existing Proposed

Total income 40% 40%

Surcharge at 2% if income exceed 1crore but not 10 crore
Surcharge at 5% if income exceed 10 crore

Companies

Existing Proposed

Turnover Tax Rate Turnover Tax Rate

< 250 crores in 25% < 400 crores 25%
PY 2016-17 in PY 2017-18

Others 30% Others 30%

Surcharge at 7% if income exceed 1 crore but not 10 crore

Surcharge at 12% if income exceed 10 crore

Widening and Deepening
of Tax Base

32

TDS by Individuals and HUF

Deduction of tax at source:

• Payment to contractors (ref. 194C)
• Fees for professional or technical services

(ref. 194J)

Individual Not currently
/ HUF covered u/s.

194C/J

Payment TDS @ 5%
> 50

Lakh in a
year

Insertion
of S. 194M

33

Widening of tax base

Large Cash withdrawals – New S. 194N
TDS to be made @ 2% on cash
withdrawal in excess of INR 1 crore in a
year by a banking company or
cooperative bank or post office.

Insurance Claims
Insurance companies to deduct tax at
source at 5% on net taxable insurance
claim as against the existing rate of 1% on
gross claim u/s. 194DA.

Transfer of Immovable Property
Scope of the term ‘consideration’ on
which tax is being deducted u/s. 194-IA is
proposed widened.

34

Deemed accrual of gift to NR

Existing:
Income accrues outside India if
deed executed outside India.

Proposed:
Income deemed to accrue in
India u/s. 9 if such gift is
situated in India.

35

Miscellaneous

Mandatory Filing of ITR

• Deposit in bank / Co-op bank exceeding INR 1 Cr
in a year

• Foreign Travel Expenditure exceeding INR 2 lakh
• Electricity bill exceeding INR 1 lakh
• Rollover benefits from Capital Gain

Interchangeability of PAN and Aadhar

• Aadhar to be used in place of PAN under the IT
Act.

• Linking to be mandatorised.

Specified Financial Transactions
Reporting

• Threshold of INR 50,000 to be removed.

36

Measures for promoting less
cash economy

37

Broadening scope of e-payments

Certain provisions in the Act prohibit cash
transactions and encourage payment or receipt
through account payee cheque, account payee draft
or electronic clearing system through a bank account.

It is proposed to amend these sections
by including ‘Other electronic modes
as may be prescribed’.

38

Mandating acceptance of payments
through prescribed electronic modes

Sec.269SU

If the total sales, T/O or gross receipts in business
exceeds Rs. 50 crore during immediately preceding
previous year

Then

It shall provide facility for accepting payment
through the prescribed electronic modes in
addition to other electronic modes.

Failing the above compliance shall attract
penalty of a sum of Rs. 5,000 for every day

during which such failure continues

39

Tax Incentives

40

S. 47: Exemption from capital gain in IFSC as
applicable to NRs to be extended to Category III
AIF if all unit holders are NRs.

S. 10: Interest received by NRs from units located in
IFSC to be exempt in respect of loans given to the
said units on or after 01.09.2019.

S. 115-O: Complete exemption from DDT

41

S. 115R: Mutual Fund or Specified company in IFSC
to not pay additional income tax in respect of
income distributed to unit holders, all of whom are
non –residents. (w.e.f. 01.09.2019)
S. 80LA: Profit linked deduction made more
flexible as the units in IFSC can claim 100%
deduction for any 10 consecutive assessment years
out of the first 15 years. (w.e.f. 01.04.2020)
S. 115A – 80LA deduction shall now apply to
foreign companies( Eg. Branch, or office) located
in IFSC. ( w.e.f. 01.04.2020)

42

Non-Banking Finance Companies (NBFC)

S. 43D – Income from NPAs
Relief on taxation of interest income from bad or
doubtful debts as granted to public FIs to be extended
to certain NBFCs.
S. 43B – Deduction on payment basis
It is proposed to include interest payment to the above
category of NBFCs under the existing provision.

43

Encouraging Electric Vehicles

New S. 80EEB:
Deduction in respect of interest on loan taken for
purchase of an electric vehicle up to INR 1.5 Lakh
per year subject to following conditions. (w.e.f.
01.04.2020)
Conditions:
• Loan borrowed from FIs incl. NBFC during

01.04.2019 to 31.03.2023; and
• Assessee does not hold any e-vehicle on the

date of sanction of loan;

44

Exemption to Non - Residents

S. 194LC – No TDS to be made on interest paid to
non – residents in respect of monies borrowed by
issue of rupee denominated bonds.
S. 10 – Amended to provide exemption for the
same.

New S. 80EEA
To provide a deduction in respect of interest on housing
loan for residential house property (RHP), up to
Rs.1,50,000 per year subject to following conditions.

Conditions:
• Loan sanctioned during 01.04.2019 to 31.03.2020;
• SD Value < 45 lakh; and
• No other RHP on the date of sanction.

Rationalised modifications to S. 80-IBA

46

National Pension System

S. 10 – Exemption on amount withdrawn at the time of
closure / opting out of the scheme increased from 40%
to 60%
S. 80CCD – Pension percentage in terms of salary
increased from 10% to 14% for CG employees.
S. 80C – Deduction allowed to CG Employees for any
amount contributed to Tier – II account of pension
scheme.

47

Conditions for set off and C/F of losses

• In addition to the existing condition of retaining the
shareholders, Start-ups can also opt for
maintaining 51% threshold of voting power.

Benefit u/s. 54GB

• Relaxation of conditions and extension of time for
transfer of residential property.
• Sun set date for transfer of residential property
for Inv in Start-ups extended from 31.03.19 to
31.03.21
• Minimum shareholding reduced to 25% from 50%
• Restriction on transfer of new asset from 5 years
to 3 years.

48

Facilitating Resolutions of
Distressed Companies

49

Set-off and Carry Forward of losses

Existing conditions w.r.t. shareholding not to apply
to a company, their subsidiary and subsidiary of
such subsidiary, where:

NCLT on an application + Resolution
moved by the CG has approved by
suspended Board of NCLT
Directors and appointed
new directors

w.e.f. 1-Apr-2020

Yes

50