UNION BUDGET 2019 - 2020 (Highlights for Industry)

Address of Union Finance Minister 

Macro Vision

  • Indian economy currently valued at US $ 2.7 trillion, will grow to become US $ 3.0 trillion in 2019 - 2020; and is well within capacity to reach US $ 5.0 trillion by 2024 - 2025.
  • India is currently the sixth largest economy of the world.
  • Ten-point VISION of Government of India –
    • Building physical and social infrastructure.
    • Digital India.
    • Pollution-free India through ‘Mother Earth’ and ‘Blue Skies’.
    • “Make in India” – emphasis on MSMEs; defence manufacturing; automobiles; electronics, fabs and batteries; medical devices
    • Water and water management.
    • Blue economy
    • Space programmes – “Gaganyan”; “Chandrayan” and satellite programmes.
    • Self-sufficiency and export of agricultural produce.
    • Healthy society – “Ayushman Bharat”, well-nourished women & children; safety of citizens.
    • Team India – “Jan Bhagidari”; minimum-government-maximum governance.

 

Auto Industry

  • 500 crore budgetary allocation in 2019 - 2020 for Faster Adoption and Manufacturing of Electric (and Hybrid) Vehicles in India {FAME Scheme}.
  • Only advanced battery and registered e-vehicles to incentivised under Phase - II of FAME Scheme – by way of offering upfront incentive on purchase of electric vehicles (EVs). 
  • Inclusion of solar storage batteries and charging infrastructure as part of Phase - II FAME Scheme to boost focus on EVs.
  • Proposal by Union Government to GST Council to lower GST rate on EVs to 5 %, from existing 12 %.
  • Union Government to provide additional Income Tax deduction of Rs. 1,50,000 on interest paid on loans taken to purchase EVs – amounts to benefit of Rs. 2,50,000 over the loan period to taxpayers.
  • Exemption of Customs Duty on certain parts of EVs – by way of further incentivising e-mobility.

 

Infrastructure Sector

  •  Suitable policy interventions for development of maintenance, repair and overhaul (MRO) industry of India’s aviation sector.
  • Incorporation of New Space India Limited – new commercial arm of Department of Space to tap benefits of research and development (R&D) by Indian Space Research Organisation.
  • Establishment of ‘Expert Committee’ for augmentation of Rs. 100 Lakh crores investment in infrastructure in next five years.
    ‘Expert Committee’ to study current situation relating to long-term finance recommend the structure and required flow of funds through development finance institutions.

 

Industry Focus, including MSMEs 

  • National Research Foundation (NRF) to fund, coordinate and promote research and develop a research eco-system in India.
    NRF to assimilate and integrate research grants by various Ministries; and would be adequately supplemented with additional funds.
  • 350 crores budgetary allocation in 2019 - 2020 for two per cent interest subvention Scheme for all GST-registered MSMEs – on fresh or incremental loans.
  • Union Government to create a ‘payment platform for MSMEs’ to enable filing of bills and payment thereof on platform itself – for ease of government payments to MSME suppliers.
  • Streamlining current multiple labour laws into set of four labour codes – for standardisation of registration and filing of returns process; for lesser disputes.
  • Proposed to increase threshold of minimum public shareholding in listed companies to 35 % from current 25 %.
  • Enhanced target of Rs. 1,05,000 crores for disinvestment receipts in 2019 - 2020 – through strategic sale of public sector undertakings.
  • Proposal to establish ‘Credit Guarantee Enhancement Corporation’ in 2019 - 2020 by Reserve Bank of India. 

 

Skilling & Education 

  • Focus on new-age skills like Artificial Intelligence (AI); Internet of Things; Big Data; 3D Printing; Virtual Reality and Robotics – valued highly both within and outside India, and which offer much higher remunerations.
  • New ‘National Education Policy’ to transform India’s higher education system to one of global best – major policy changes in school and higher education, better governance systems, and brings greater focus on research and innovation.
  • Augmentation of Global Initiative of Academic Networks (GIAN) programme in higher education
  • Augmentation of IMPRINT Scheme {IMPacting Research INnovation and Technology} – a Pan-IIT and Indian Institute of Science joint initiative to develop roadmap for research to solve major engineering and technology challenges.
  • 400 crores budgetary allocation in 2019 - 2020 for “World Class Institutions” – to promote higher education.
  • Comprehensive reform in regulatory systems of higher education to promote greater autonomy and focus on better academic outcomes
  • Draft legislation for setting up “Higher Education Commission of India”.

 

Taxation Measures

  •  Corporate Tax of 25 % now extended to all companies having annual turnover of up to Rs. 400 crores – to cover 99.3 per cent of all companies.
  • Proposal to move to an electronic GST invoice system by January 2020 – eventually be used to prefill taxpayer’s returns. Electronic invoice system to significantly reduce compliance burden.
  • Levy of 2 % tax deduction at source (TDS) on cash withdrawal exceeding Rs. one crore in a year from a bank account.
  • Customs Duty exemption on certain capital goods required for manufacture of specified electronic goods.
  • Business establishments with annual turnover more than Rs. 50 crores to offer low-cost digital modes of payment to their customers and no charges or merchant discount rate. RBI and Banks to absorb these costs from savings that will accrue on account of handling less cash.
  • Enhancement of surcharge on individuals having taxable income
    • to 3 % on incomes between Rs. two to five crores.
    • to 7 % on incomes above five crores.
  • Pre-filled tax returns to be made available to taxpayers – containing details of salary income, capital gains from securities, bank interests, and dividends etc. and tax deductions.
    To significantly reduce time taken to file tax return and ensure accuracy of reporting of income and taxes.
    Information of these incomes to be collected from concerned sources such as Banks, Stock exchanges, mutual funds, EPFO, State Registration Departments etc.
  • Phased launch of Scheme of faceless assessment in electronic mode – involving no human interface.
    Such e-assessments to be carried out in cases requiring verification of certain specified transactions or discrepancies.
  • Proposal for interchangeability of PAN and Aadhar – for ease of filing of returns.

 

Misc. Announcements

  • Quantum increase in direct tax revenue to Rs. 11.37 Lakh crores in 2018 - 2019 from Rs. 6.38 Lakh crores in 2013 - 2014 – marking increase of 78 %.
  • India’s sovereign external debt to GDP at less than five per cent – amongst the lowest globally.
  • Fiscal deficit for 2019 - 2020 estimated at Rs. 7,03,760 crores – amounting to 3.3 % of GDPas against Rs. 6,34,398 crores in 2018 - 2019, which amounted to 3.4 % of GDP.
  • Revenue deficit for 2019 - 2020 estimated at Rs. 4,85,019 crores – amounting to 2.3 % of GDP.
  • Union Government contemplating an annual “Global Investors Meet in India” – using National Infrastructure Investment Fund as anchor.

 

Customs Duty Notifications

  • Customs Duty exemption on “machinery, fixtures, gauges, tools and jigs used in parts, sub-parts, inputs in manufacture of AK-203 rifle”.
    {Notification No. 19 / 2019 - Customs} – dated 06 July 2019
  • Customs Duty exemption on “plasma cleaner falling under tariff item 84569090 or 85437099” – for manufacture of LCD module of mobile handset.
    {Notification No. 22 / 2019 - Customs} – dated 06 July 2019

 

Key Budgetary Allocations

  • 110 crores budgetary allocation in 2019 - 2020 for Scheme for “Enhancement of Competitiveness in the Indian Capital Goods Sector” under Department of Heavy Industry (DHI), Government of India.
  • 259 crores budgetary allocation in 2019 - 2020 for National Automotive Testing & Development Infrastructure Project (NATRIP) under DHI.
  • 19 crores budgetary allocation in 2019 - 2020 for Central Manufacturing Technology Institute under DHI.
  • 884 crores capital outlay in 2019 - 2020 for Indian Ordnance Factories under Ministry of Defence – 10 % increase in outlay in comparison to 2018 - 2019.
    includes Rs. 475 crores outlay in 2019 - 2020 for ‘Renewal and Replacement’ {capital goods} by Indian Ordnance Factories under Ministry of Defence – same outlay in comparison to 2018 - 2019.
  • 1,03,394 crores capital outlay in 2019 - 2020 for the Defence sector under Ministry of Defence.
  • 670 crores outlay in 2019 - 2020 for machinery and plant in Indian Railways under Ministry of Railways – 51 % increase in outlay in comparison to 2018 - 2019.
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