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A A R K – IndiaAssurance | Tax | Risk Advisory | Outsourcing

2019

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India

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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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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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