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India
A A R K – IndiaAssurance | Tax | Risk Advisory | Outsourcing
2019
Mumbai | Delhi | Gurugram| Pune | Amritsar | Chandigarh
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Co
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Section 1 Executive summary
Section 2 Other Reforms
Section 3 Sector wise Analysis – post budget scenarios
Section 4 Direct taxes
Section 5 Contact us
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India
Interim Finance Minister Sh. Piyush Goyal presented the Union Interim Budget-2019 before the Lok Sabha and people of India on
February 1, 2019.
The said budget was widely focused on development of Agriculture sector, Small and Medium Industries and Middle Class
families.
The said budget also gave an opportunity to the government to introspect its performance of the last five years and to keep facts
and figures in front of the citizens of the country.
Undermentioned are some key facts and initiatives presented in the Budget-2019:
1. Fiscal deficit has been kept at 3.4% of the GDP in 2018-19 and CAD at 2.5% of GDP.
2. Average Inflation has been controlled at 4.6%.
3. On account of liberalized policies a total of Rs. 239 Billion dollars have been brought in as FDI in the country.
4. Pradhan Mantri – KIsan SAmman Nidhi (PM-KISAN) has been proposed to provide all the small farmers having cultivable
land up to 2 hectares with Rs. 6,000 per year as assured income support. This shall be provided directly into the bank
accounts of such farmers in 3 equal installment of Rs. 2,000 each. GOI shall fund the same in entirety, retrospectively from
December 1, 2018.
5. A separate Department of Fisheries has been proposed.
6. Subsidy on interest of up to 5% shall be provided to those farmers to take loan through Kisan Credit Card scheme and repay
the same on time.
7. Recommendations of 7th Central Pay Commission has been implemented immediately.
8. Pension scheme for Unorganized sector has been announced with an introductory budget of Rs. 500 crores.
9. Department of Industrial Policy and Promotion shall be renamed to Department for promotion of Industries and Internal Trade
which shall provide support to domestic trade & services as well.
10. Defense Budget to cross Rs. 3 Lac crore for the first time ever.
11. Maximum commodities of daily use consumed by poor and middle class are in the GST slab of 0-5%.
12. Average monthly collection under GST in the current FY is Rs. 97,100 crore per month despite major reductions in rates and
relaxation of policies.
13. To promote ‘Make in India’ initiative, custom duties on 36 capital goods have been abolished.
14. Entertainment industry’s Indian filmmakers shall now have a single window clearance for ease of shooting films in India.
15. Streamlined system for collection of Stamp Duty on financial securities has been proposed. Stamp duty shall be levied on one
instrument relating to one transaction, collected at one place through Stock exchanges which shall be shared with the state
government based on buyer’s domicile.
Executive Summary
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Benefits for MSME & SME:
❑ Scheme to sanction loan of up to Rs. 1 crore in 59 minutes has
been launched.
❑ GST Registered SME to get 2% interest rebate on incremental
loan of Rs. 1 crore.
❑ Government enterprises are required to source 25% of their
material requirement from SMEs and at-least 3% of the same
should be from women owned SMEs.
❑ Government e-Marketplace (GeM) has become a platform for
MSME to trade their goods with over Rs. 17,500 crore
transactions already taken place in last 2 years since its
introduction.
Implemented recommendations of 7th Central
Pay Commission:
❑ New Pension Scheme being liberalized with employee
contribution at 10% and that of Government increased to 14%.
❑ Maximum pay being increased to Rs. 21,000 from Rs. 10,000
per month.
❑ Maximum ceiling of bonus to laborers increased from Rs. 3,500
to Rs. 7,000 per month.
❑ Ceiling of payment of gratuity being increased to Rs. 20 Lacs.
❑ ESI eligibility limit has been increased to Rs. 21,000 from
Rs. 15,000.
❑ Minimum pension for every laborer has been fixed at Rs. 1,000
per month.
❑ Compensation to be paid by EPFO in the event of death of
laborer while on service is now Rs. 6 Lacs.
Simplified Direct Tax System:
❑ In FY 2017-18, 99.54% of the income tax returns for all type of
assesses were accepted as those were filed without much
scrutiny.
❑ All returns shall be processed in 24 hours and refund to be
issued simultaneously.
❑ Within next 2 years, no personal interface between taxpayers
and officials for the returns selected for scrutiny. All processing
to be done electronically through anonymized back office.
❑ Threshold limit for presumptive taxation of business being
raised from Rs. 1 crore to Rs. 2 crore.
❑ Threshold limit for presumptive taxation for professionals being
RS. 50 Lacs.
❑ Presumptive tax rate has been reduced to 6% from 8%.
❑ Companies with turnover of up to Rs. 250 Crore were already
taxed at 25% as announced in the previous budget.
❑ The said rate also applicable on new manufacturing companies
without any turnover limit.
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Other Reforms
India
Sector wise Analysis – post budget scenarios
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Automotive
Agriculture, Allied & Farm Equipment
Banking & Financial Services
Cement & Construction
Chemicals
Conglomerates
Consumer Durables
e-Commerce
Engineering & Capital Goods
Food & Beverages
Information Technology
Manufacturing
Mutual Funds & Asset Management Companies
Metal & Mining
Media & Entertainment
Oil & Gas
Infrastructure, Airlines, Road, Railways
Pharmaceuticals
Real Estate
Services
Telecommunications
Tobacco
Utilities
India
Income from Salary:
Amendment: Standard deduction on Salary u/s 16 of the Income Tax
Act, 1961 (“the Act”) which was introduced in previous budget has now
been increased from Rs. 40,000 to Rs. 50,000
Impact: Relief to salaried taxpayers
Income from house-property rent:
Amendment 1: The limit of house properties as self-occupied for the
purpose of claiming annual lettable value as NIL u/s 23 of the Act has
now been increased from one house to two houses
Amendment 2: The benefit of extending income tax relief on notional
rent chargeable on house property held as stock-in-trade u/s 23 of the
Act has been extended from one year to two years from the end of
financial year in which certificate of completion of construction is
received
Amendment 3: Supplementary provision has also been inserted in
Section 24 of the Act stating that the limit of deduction on interest
payable on housing loan shall also be available in case of more than
one self-occupied house properties
Impact: Relief to taxpayers having income from two self occupied
houses.
Exemption from Capital Gain
Amendment: A taxpayer can now make investment in purchase /
construction of two residential houses (from earlier limit of one house)
for claiming exemption from tax on sale of residential house u/s 54 of
the Act in case the amount of capital gain doesn’t exceed Rs. 2 crores.
Such option can only be exercised once in a life time of the said
assesse.
Impact: Relief to taxpayers wishing to buy more than one house
property.
Deductions under Chapter VI-A
Amendment: The scheme of providing 100% exemption on profits
earned from the business of developing and building house projects
u/s 80-IBA of the Act has been extended from March 31, 2019 to
March 31, 2020.
Impact: Relief to public at large for having affordable houses owing to
tax benefits extended to the builders
Rebates and reliefs
Amendment: The relief provided u/s 87A of the Act has been entirely
revamped with following changes:
1. The limit of total income for claiming exemption has been
enhanced from Rs. 3,50,000 to Rs. 5,00,000 per annum
2. The maximum amount of rebate has also been increased from
Rs. 2,500 to Rs. 12,500
Impact: There shall be no tax liability on persons having net taxable
income up-to Rs. 5,00,000 per annum.
Provisions on Tax Deducted at Sources
Amendment 1: Ceiling limit of exemption of interest income from
deduction of tax u/s 194A has been increased from Rs. 10,000 to Rs.
40,000
Amendment 2: Ceiling limit of exemption of rental income from
deduction of tax u/s 194I has been increased from Rs. 1,80,000 to Rs.
2,40,000
Impact: Relief to middle class individuals having sources of income
from investments in bank / property.
Surcharge on capital gain u/s 112A
Amendment: Tax levied on long term capital gain on specified listed
shares and equity-oriented fund exceeding 1 lakh rupees has now
been covered in the ambit of applicability of Surcharge
Impact: This is only a supplementary provision since this Section was
introduced in last budget only.
These amendments will take effect from Financial Year
2019-20.
Direct Taxes
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Notes
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