New Delhi: India’s first full-time woman Union Finance Minister, Nirmala Sitharaman, on Friday presented the full-fledged Union Budget for the current financial year in which she proposed reforms in several sectors, including PSBs, tax returns and railways. She said that India will become a $3-trillion economy this year.
"It is now the sixth-largest economy; five years ago, it was the 11th largest,” she said.
Prime Minister Narendra Modi's second government, she said, had set the ball rolling for new India. Public-private partnership (PPP) for railways, in order to strengthen infrastructure, was among the highlights of her speech.
Sitharaman proposed a Re 1 per litre cess on petrol and diesel prices and hiked customs duty on gold and precious metals to 12.5% from 10%.
Here are the key takeaways from the Budget speech.
For economy
- Targets to become a $3-trillion economy in financial year 2020, $5 trillion in a few years
- Proposes changes to kick-start domestic and foreign investment
- Will create blueprint for gas, water grids and regional airports
- Government proposes to expand Swachch Bharat to include solid waste management in every village
- Setting up enhanced disinvestment target of Rs 1,05,000 crore in FY20 as against Rs 90,000 crore set in the Interim Budget
- A new series of coins of Re 1, Rs 2, Rs 5, Rs 10 and Rs 20 to be made available for public use shortly
- Proposes investment-linked tax benefit for manufacture of products like lithium batteries and solar chargers
- Government will start raising part of its gross borrowing programme in external markets in external currencies
- Import of defence equipment is being exempted from basic customs duty
- To set up digital repository to preserve tribal heritage
Labour reforms
- Govt to streamline multiple labour laws into a set of four labour codes
- To focus on training new age skills like AI, robotics, 3D printing
To boost investment
- To liberalise Foreign Direct Investment (FDI) in aviation, media, animation and insurance intermediaries
- To implement enabling measures to boost International Financial Service Centres (IFSCs)
- To set up a Credit Guarantee Enhancement Corporation
- To initiate steps for electronic fund raising programme for listing of social enterprises and voluntary organisations
- Considering whether government holding can go below 51% in certain CPSEs on case-to-case basis
- To hike statutory limits for foreign investments in some companies
- Expert committee to be set up to make recommendations on infrastructure finance
- With a view to incentivising investment in GIFT City, government proposes several tax benefits
Market reforms
- Asks SEBI to evaluate hiking minimum public shareholding to 25% from 35%
- Government will work with exchanges to allow AA bonds to be used as collateral
- Proposes rationalising and streamlining of KYC (know your customer) norms for Foreign Portfolio Investors (FPIs) to make it investor-friendly
- NRI portfolio route to be merged with FPI for seamless investment in stock markets
- Credit Guarantee Enhancement Corporation will be set up in 2019-20, action plan to deepen markets for long-term bonds with specific focus on infra sector to be put in place
- Will take up measures to make RBI and SEBI depositories inter-operable
- To allow FPIs/NRIs to subscribe to listed debt papers of REITs and InvITs
- To bring ETFs in line with equity-linked savings schemes of mutual funds to encourage retail investors
- Propose to give relief to Securities Transaction Tax (STT) on exercise of options will be cut to only profit
Banks
- State-run banks to get Rs 70,000 crore capital to boost credit
- To bring out a remedy against cash being deposited without knowledge of bank account holders
NBFCs
- Fundamentally sound NBFCs to keep getting funding from banks and mutual funds
- To allow FIIs and FPIs investment in debt securities issued by NBFCs
- Requirement of Debenture Reservation Reserve to be done away with for NBFCs
- One-time six-month partial credit guarantee to be given to PSU banks for purchase of high-rated pooled assets of financially sound NBFCs amounting to Rs 1 lakh crore in FY20
Agriculture/fisheries
- Government to invest widely in agriculture infrastructure
- Support private entrepreneurship in value addition in agriculture
- Proposes Pradhan Mantri Matsya Sampada Yojana to address critical infrastructure gap in fisheries sector
Transportation
- To carry out comprehensive restructuring of National Highway programme
- Cargo volume on Ganges to increase four times over the next four years
- In second phase of Bharatmala project, states will be helped to develop roadways
- 1,25,000 km of roads will be upgraded under Pradhan Gram Sadak Yojana under Phase III at estimated cost of Rs 80,250 crore
Aviation
- Time right for India to enter aircraft financing and leasing
- Will create congenial atmosphere for development of MRO services
- To harness India's space ability commercially, New Space India (NSIL) has been incorporated to tap the benefits of ISRO
- Will re-initiate privatisation of Air India
Power
- Package for power sector tariff and structural reforms to be unveiled soon
Retail
- Local sourcing norms to be eased for single-brand retail FDI
- No merchant discount rate (MDR) charges on digital transaction made at big establishments having annual turnover of more than Rs 50 crore
Insurance
Proposes to reduce net owned fund requirements to Rs 1,000 crore for on-shoring of international insurance companies
Real estate
- RBI to get regulation authority of housing finance sector
- Will finalise a model tenancy law and circulate to states; and propose steps for rental housing
- Proposes setting up 1.95 crore houses under Pradhan Mantari Awas Yojna (Rural)
- Offers additional tax deduction of Rs 1.50 lakh on interest paid on home loans taken up to March 2020
Small businesses/MSMEs
- To extend pension benefit to three crore retail traders with an annual turnover less than Rs 1.5 crore under Pradhan Mantri Karam Yogi Man Dan Scheme
- Centre will create a payment platform for MSMEs for payment of bills
- 100 new clusters will be set up in 2019-20 to enable 50,000 artisans to come into the economic value chain
- To launch mission to integrate traditional artisans and creative persons with global market; to obtain GI/patents for them
- Will set up 10,000 new farmer producer organisations
- To start television programme exclusively for start-ups
- 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
- Start-ups that provide details in returns will have no scrutiny in respect of valuation of share premium
- Period of exemption from capital gains from sale of start-ups extended
- Start-ups will not be required to justify fair market value of shares issued to investors in Category II Alternative Investment Funds
Railways
- Railways to be encouraged to invest more in suburban rail network via special purpose vehicles (SPVs) and enhance metro rail network through public-private partnerships
- Railway station modernisation programme will be launched this year
Education
- Will bring in new education policy to propose changes in school, higher education
- Propose to set up a national research foundation to fund, coordinate and promote research in the country
- National Research Foundation will assimilate research grants by ministries
- A Gandhi-pedia is being developed to sensitise youth about Mahatma Gandhi's ideas
- A draft legislation for higher education commission of India to be presented
- Proposes Study in India programme to attract foreign students
- National Sports Education Board to be set up under Khelo India scheme
- Allocate Rs 400 crore for world-class higher education institutions in FY20
- 5% customs duty imposed on imported books
For NRIs
- Aadhaar cards to be issued to non-residents Indians (NRIs) with Indian passports after arrival in India without waiting for 180 days
Personal taxation
- NPS Trust will be separated from Pension Fund Regulatory and Development Authority (PFRDA)
- PAN and Aadhaar made interchangeable, allowing those who do not have PAN to file returns
- Pre-filled tax returns to contain information from salaries, bank interest, capital gain and dividend income to be made available
- Surcharge on individuals having taxable income of Rs 2 crore to Rs 5 crore, and Rs 5 crore and more raised
Tourism
- To build 17 iconic sites to encourage arrival of tourists in India
Taxation
- Lower 25% corporate tax will apply on companies with up to Rs 400 crore turnover, covering 99.3% of corporate India
- Simplified return form for GST registered businesses in the offing
- Basic customs duty on auto parts, optical fibres, digital camera, cashew, certain synthetic rubber, vinyl flooring hiked
- Customs duty exempted on components of specified electronic goods
- Customs duty on certain parts of electric vehicles removed
- Cess on petrol, diesel raised by Re 1 per litre; customs duty on gold raised to 12.5% from 10%
- A nominal basic excise duty imposed on tobacco- Proposes Legacy Dispute Resolution scheme to solve litigation in service tax and excise
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