In a relief to taxpayers, she provided for an additional deduction of Rs 1.5 lakh on interest paid on loans borrowed up to March 31, 2020
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Finance Minister Nirmala Sitharaman on Friday hiked tax on petrol and diesel, raised import duty on gold, levied an additional surcharge on super rich and brought a tax on high-value cash withdrawals as she sought to spur growth with a reduction in corporate tax and sops to the housing sector, startups and electric vehicles.
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Presenting the maiden budget of Modi 2.0 government in Lok Sabha, Sitharaman, the first full-time woman Finance Minister, proposed measures to ease liquidity crisis facing shadow banking sector (NBFCs) and providing Rs 70,000 crore capital to public sector banks while seeking to raise additional resources through privatisation of some PSUs.
In a relief to taxpayers, she provided for an additional deduction of Rs 1.5 lakh on interest paid on loans borrowed up to March 31, 2020, on purchase of a house up to Rs 45 lakh. Corporate tax on companies with turnover of up to Rs 400 crore has been slashed to 25 per cent from the current 30 per cent. Presently, the lower tax rate is applicable to companies having a turnover of up to Rs 250 crore.
Sitharaman said the reduced tax rate would cover 99.3 per cent of corporates in the country. To boost the use of electric vehicles, an additional income tax deduction of Rs 1.5 lakh on interest paid on loans taken to purchase EVs has been proposed.
While delivering the budget speech in Parliament on Friday, Union Minister of Finance and Corporate Affairs Nirmala Sitharaman said that the Indian economy has added one trillion dollar in the last five years due to the various initiatives and reforms undertaken by the government, and is poised to grow to be a 3 trillion dollar economy in the current year.
Finance Minister Nirmala Sitharaman: It is also proposed to increase custom duty on gold & other precious metals from 10% to 12.5%. #Budget2019 pic.twitter.com/b3aS6GHBHO
— ANI (@ANI) July 5, 2019
A mechanism of e-verification will be put in place and with this, the funds raised by startups will not require any tax scrutiny. She raised special additional excise duty and road cess on petrol and diesel by Re 1 per litre each, saying lower crude oil prices provide her with an opportunity to review taxes on the sector.
Also, customs duty on gold and precious metals was raised from 10 per cent to 12.5 per cent to mobilise resources. Basic customs duty was raised on an array of products including tiles, cashew kernels, vinyl flooring, auto parts, some synthetic rubber, digital and video recorder and CCTV camera.
Excise duty of Rs 5 per 1000 has been imposed on cigarettes of length exceeding 65 mm, while 0.5 per cent duty has been levied on chewing tobacco, zarda and tobacco extracts and essence.
"I propose to levy TDS of 2 per cent on cash withdrawal exceeding Rs 1 crore in a year from a bank account," she said. She also announced a surcharge on individuals having taxable income of Rs 2 crore to Rs 5 crore and for those above Rs 5 crore which will hike their effective tax rate by 3 per cent and 7 per cent respectively.
Sitharaman also proposed to make Aadhaar and PAN interchangeable for the purpose of filing Income Tax returns. To boost FDI inflow into the country, the government will examine further liberalisation of sectoral investment caps in aviation, media, animation and insurance.
To boost the cash-less economy, she said business establishments with an annual turnover of Rs 50 crore will have to use BHIM, UPI, Aadhaar Pay, NEFT, RTGS modes of payments with no charges or merchant discount rates will be imposed on customers or merchants.
RBI and banks will absorb these costs, she said. The Securities Transaction Tax or STT is proposed to be restricted to the difference between settlement and strike price of options, she said.
She proposed an additional income tax deduction of Rs 1.5 lakh on interest paid on loans taken to buy electric vehicles. This will lead to a benefit of Rs 2.5 lakh crore over the tax period of the loan for the payer.
Talking about the importance of programmes like Pradhan Mantri Gram Sadak Yojana, Industrial Corridors, Dedicated Freight Corridors, Bhartamala, Sagarmala, Jal Marg Vikas and UDAN for enhancing physical connectivity through various modes, the Finance Minister said these initiatives will improve logistics, reduce the cost of transportation and increase the competitiveness of domestically produced goods.
In the civil aviation sector, the Minister said that the Government will implement the essential elements of a regulatory roadmap for making India a hub for aircraft financing and leasing activities.
FM Nirmala Sitharaman: I propose to increase special additional excise duty and road and infrastructure cess each one by 1 rupee a litre on petrol and diesel pic.twitter.com/y9DoC5IGIX
— ANI (@ANI) July 5, 2019
She said the government will spend Rs 100 lakh crores for infrastructure in the next five years. The disinvestment target for FY20 has raised to Rs 1.05 lakh crore from Rs 90,000 crore set in the interim budget and government will continue with disinvestment of PSUs in the non-financial space as well.
Regulation of housing finance companies has been moved to the Reserve Bank of India (RBI) from the NHB. The government proposed to allocate Rs 70,000 crore for PSU Bank recapitalisation.
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Edited by mid-day online desk with inputs from Agencies
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