Key takeaways from Budget-19

By Himanshu Goyal, Manager Asha Impact

The newly-appointed Finance Minister, Nirmala Sitharaman has delivered her maiden budget on July 5, 2019. The ruling party has promised plenty of startup and social friendly initiatives in its manifesto. Here are a few Key takeaways from the Budget-19.

• Start-ups won’t be subject to scrutiny on angel tax. “The startups and investors who file requisite declarations will not be subjected to any kind of scrutiny in respect of valuation of share premium. A mechanism of e-verification will be put in place and with this, the funds raised by startups will not require any tax scrutiny.”
• Period of exemption for capital gains arising from the sale of house for investment in startups to be extended to March 31, 2021.
• To start an exclusive TV channel for startups to provide a platform for startups to disseminate information in the industry.
• Additional ₹1.5 lakh income tax deduction on home loan interest paid for buyers of affordable homes till March 2020.
• Reserve Bank of India (RBI) will now regulate the housing finance companies (HFCs), a power so long vested in the National Housing Bank (NHB).
• No PAN is not a problem anymore for the IT Department. PAN and Aadhaar to be interchangeable, and to allow those without PAN to file income tax by using Aadhaar number.
• To curb the practices relating to corruption and taxpayer harassment, faceless and anonymous assessment system for income tax being rolled out this year in phases.
• TDS of 2% on cash withdrawals exceeding ₹1 crore from bank accounts, to discourage business payments in cash. And proposed No Charge on customer for digital payments.
• Lower rate of 25% so far only applicable to companies with a turnover of ₹250 crore. Propose to increase this limit to companies with an annual turnover of ₹400 crore. This will cover 99.3% of companies.
• Those earning more than Rs. 2 crore annually will have to pay a higher surcharge rate that will increase the effective income tax rate by 3 %. And those earning more than Rs. 5 crore annually will have to pay a surcharge that will increase their effective tax rate by 7%.
• Additional income tax deduction of ₹1.5 lakh to buyers of electric vehicles. And the GST rate on electric vehicles already proposed to be lowered to 5%.
• Swachh Bharat Mission 2.0 to focus on rural solid waste management.

In line with the Economic Survey 2019’s findings, India needs a “Virtuous cycle” of saving, investment and export to make the country a 5 trillion-dollar economy by 2024. This budget is a stepping stone in the right direction.