Today our finance minister, Nirmala Sitharaman has presented maiden Budget 2019-2020. There are several sectors that would get benefited with this Budget 2019. If you are an investor or employee or businessmen, these highlights would help you know about how Indian economy is expected to move. What are the key takeaways from Budget Presented for 2019-2020? What are some of the tax related highlights in Budget 2019 which you should be aware of?
Also Read: Post Office Interest Rates July 2019
Key Takeaways from Budget 2019-2020
We have segregated key budget takeaways segment wise.
Budget Highlights 2019 from Taxation and Pension perspective
While there is no income tax slab changes for this year, if your income is upto Rs 5 Lakhs, you do not have income tax liability.
Budget proposes to separate NPS trust from PFRDA.
Deduction of Interest on self occupied home loan enhanced from Rs 2 Lakhs to Rs 3.5 Lakhs, however it would be applicable only for affordable house valued up to Rs 45 Lakhs and loans taken between 1st April, 2019 to 31st March, 2020 (u/s 80EEE).
Budget proposes income tax benefit upto Rs 1.5 Lakhs per annum on the interest of loans taken to buy electric vehicles.
Earlier, we had option to file ITR only with PAN card. Now PAN and Aadhaar card are interchangeable.
Exemption of capital gains profits from selling the house property and investments done in in start-ups. This is applicable upto 31st March, 2021.
Now income tax returns would be pre-filled with Form-16 (salaries), Bank interest, capital gains and dividend. These are easily traceable through PAN card, however income tax payers had to manually collect and file the returns. With this move, all info would be at one place and the tax payer has to just verify them before submitting their IT Returns.
If your income is Rs 2-5 Crore or Rs 5+ Crore, you need to pay more surcharge for this year for 3% and 7% respectively.
Earlier, lower corporate tax of 25% was applicable for companies which had turnover upto Rs 250 Crores. Now the turnover limit is increased to Rs 400 Crores and they need to pay only 25% lowest corporate tax.
Govt introduced 2% TDS on cash withdrawals of Rs 1 Crore and above to discourage cash payments.
Key Takeaways from Budget 2019 that would Boost investments and Market reforms
Government to liberalize FDI in sectors like Aviation, Media, Animation and Insurance intermediaries. Such sectors would see good inflow of investments now. .
It Would set-up credit guarantee Enhancement corporation in India.
Govt would set-up a social stock exchange for social and voluntary organizations so that they can raise equity capital and debt.
Investment by FDI and FIIs to be allowed in debt securities and infrastructure debt funds.
Requested SEBI to hike minimum public shareholding of 25% to 35%. Stock Markets reacted negatively after this change was announced.
KYC norms for Foreign Portfolio Investors (FPIs) to be made friendlier.
Allow NRI and FPIs to subscribe to the listed debt papers of REITs and InvITs.
Govt would focus on brining ETFs in line with ELSS Mutual Funds to encourage retail investors. Means it can float ETFs like CPSE ETF and you can get tax exemptions u/s 80C the way you are getting for ELSS Funds.
Key Takeaways from Budget 2019 that would impact Banking & NBFC
PSU Banks would get Rs 70,000 Crores capital to boost credit. This would boost banking sector. We have highlighted that this sector would continue to boom in coming years and recommended to invest in the banking sector mutual fund. We even recommended ICICI Prudential Banking ETF recently.
Govt re-iterates that fundamentally sound NBFC companies would continue to get funding from banks and mutual fund companies. However, I feel, NBFC companies which were defaulting payments in the last 1 year were so called “fundamentally strong NBFCs” only. Mutual Fund investors need to continue to be cautious with their debt mutual fund schemes.
FPIs and FIIs were not allowed to invest in debt securities (e.g. NCDs) of NBFCs earlier. In this budget, Govt would now allow them to invest in such debt securities.
Key Takeaways from Budget 2019 that would effect Agriculture Sector
Govt of India has decided to heavily invest in Agriculture infrastructure.
Budget proposed to address critical infra gaps in the fisheries sector under Pradhan Manthri Matsya Sampada Yojana.
Key Takeaways from Budget 2019 for Insurance Sector
Budget proposes to reduce net owned fund requirements to Rs. 1,000 crore for onshoring of international insurance companies.
Key Takeaways would Small impact Business Enterprises
Govt to extend pension benefits to 3 crore retail traders with an yearly turnover of less than Rs 1.5 crore under Pradhan Mantri Karam Yogi Man Dan Scheme.
100 new clusters will be set up in 2019-20 to enable 50,000 artisans to come into the economic value chain.
Proposes to expand self-help groups to all districts; one woman in every SHG to get a loan up to Rs 1 lakh under Mudra Yojana
Company Startups that provide details in the Income Tax returns will have no scrutiny in respect of valuation of share premium.
Startups will not be required to justify their fair market value (FMP) of shares issued to investors in Category II Alternative Investment Funds.
The above steps would benefit small businesses.
Key Takeaways from Budget 2019 that would impact Education Sector
Budget allocates Rs 400 crore for world-class higher education institutions for the year 2019-2020.
Imposes 5% customs duty on imported books.
Key Takeaways from Budget 2019 that benefits NRIs
NRIs had to wait for 180 days after their arrival to India for Aadhaar Card. Now this can be issued immediately without any waiting period.
We would continue to deep dive into specific benefits from budget highlights and provide recommendations in next few days.
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Key Takeaways from Budget 2019-2020
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