The much-awaited Budget 2019 has finally been announced by Nirmala Sitharaman, Minister of Finance and Minister of Corporate Affairs. While a lot was being expected from the NDA government, and industry reactions on the Budget 2019 have started to pour in, it is still early to state if or not the expectations of the IT industry have been met.
“The people of India have validated their two goals for our country’s future: national security and economic growth. Between 2014 and 2019, we provided rejuvenated centre-state dynamic, cooperative federalism, GST Council and a strident commitment to fiscal discipline; set the ball rolling for New India,” said the finance minister.
“We need to invest heavily in digital India and create jobs in medium and small industries. We are focusing on Make in India, MSME and manufacturing. We are on our way to becoming a $3 trillion economy this year itself. Will become $5 trillion economy in a few years” she added.
Nirmala Sitharaman also said that the government is committed to simplify procedures, reduce red tape and make the best use of technology.
Initiatives for the IT Industry in Budget 2019
- Baharatmala: More investments to be encouraged for logistics systems to bridge the rural and urban divide.
- FAME II: Faster adopting of electric vehicles by providing upfront incentives, and charging infrastructure will be improved. Only advanced battery and registered E-vehicles will be incentivized.
- India’s first indigenous payment ecosystem for transport based on National Common Mobility Card was launched PM in March 2019, enabling people to pay multiple types of transport charges.
- For MSMEs, the government has introduced loans up to Rs 1 crore within 59 minutes. Rs 350 crore has been allocated for this in 2019-2020. 2% interest rate on fresh or incremental loans.
- Payment platform for MSMEs to be created
- KYC to be made friendlier. Existing Know Your Customer norms for Foreign Portfolio Investors to be rationalized and simplified, to make it more investor-friendly
- Pradhan Mantri Karam Yogi Man Dhan Scheme: Pension benefit extended to retail traders and SMEs. Pension benefit to be extended to around 3 crore retail traders and shopkeepers with an annual turnover of less than 1.5 crores
- To open up FDIs in various sectors. The government will invite suggestions for further opening up of FDI in the aviation sector, media, animation AVGC and insurance sectors in consultation with all stakeholders. 100% FDI will be permitted for insurance intermediaries.
- Social enterprises and voluntary organisations should be listed thus allowing them to raise capital. Electronic Fundraising Platform, a social stock exchange, to be set up to list social enterprises and voluntary organizations working for social welfare objectives.
- Credit Guarantee Enhancement Corporation will be set up in 2019-20, an action plan to deepen markets for long-term bonds with a specific focus on the infra sector to be put in place.
- To deepen the corporate tri-party repo market in corporate debt securities, the government will work with regulators RBI and SEBI to enable stock exchanges to allow AA rated bonds as collaterals.
- User friendliness of trading platforms for corporate bonds will be reviewed, including issues arising out of capping of International Securities Identification Number.
- Annual Global Investors’ Meet to be organized in India, using NIIF as the anchor to get key sets of global players to come and invest in India.
- Will support private entrepreneurship to benefit farmers.
- India has emerged as a space power. To harness India’s space ability commercially, a public sector enterprise, New Space India Limited (NSIL) has been incorporated to tap the benefits of New Space India Limited to commercialize various space products and tap the benefits of R&D for ISRO.
- Local sourcing norms for FDI to be eased for the single-brand retailing sector.
- 80 Livelihood business incubators and 20 technology business incubators to be set up in 2019-20 under ASPIRE to develop 75,000 skilled entrepreneurs in agro-rural industries.
- To focus on skilling youth in new age technologies like artificial intelligence, big data, robotics 3D printing, IoT and so onto help them get jobs within India and outside.
- Standup India scheme to be continued from 2020 to 2025.
- Under Pradhan Mantri Grameen Digital Saksharata Abhiyan, Bharat Net is targeting internet connectivity in local bodies in every panchayat in the country; this will be speeded under Universal Service Obligation Fund.
- National Research Foundation to be set up for the promotion of research study in India. Rs 400 Cr has been allocated for the institutes falling under the category of ‘World Class Institution’.
- TV Channels exclusively for startups to start. This television programme will be designed and executed by startups themselves. This shall serve as platform for promoting startups, matchmaking with venture capitalists, discussing issues that affect their growth, and for funding/tax planning.
- Special emphasis being paid to promote women entrepreneurship. One woman in every SHG will be made eligible for a loan of ₹100000 under Mudhra scheme. Women with Jandhan Account will be allowed Rs 5,000 as an overdraft.
- The government is proposing to streamline multiple labour laws into a set of four labour codes. This would ease the compliance requirements of companies thereby indirectly benefiting staffing companies.
- Issuance of Aadhaar cards for NRIs with Indian passports without having to wait for 180 days after arriving in India.
- Public sector banks are proposed to be provided with a capital of Rs 70,000 crore to boost capital and improve credit. Public sector banks will use technology, enabling customers of one PSB to access service across all PSBs as well.
- For purchase of high-rated pooled assets of financially sound non-banking finance companies amounting to 1 lakh crore rupees during 2019-20, a one-time six-month partial credit guarantee to be given to PSBs.
- Corporate income tax rate reduced to 25% for companies with turnover not exceeding 400 crores. This will cover 99.3% of all companies. Direct Tax collection increased from 3.8 lakh crore in 13-14 to 11.37 lakh crore in 2018-19. Collection growing at double-digit every year. Currently, the lower rate of 25% applies to firms with an annual turnover of Rs 250 crore.
- Income tax deduction of Rs. 1.5 lakh in interest payment for a loan taken to purchase electric vehicles.
- Angel tax issue relief for startups soon. Funds raised by Startups to be exempted from scrutiny by the IT department.
- Usage of Aadhaar card instead of PAN will be allowed while filing tax returns.
- To discourage the practice of making business payments in cash, TDS of 2 percent to be levied on cash withdrawal of more than 1 crore.
- Business establishments with an annual turnover of Rs 50 crore will offer a low-cost digital mode of payments to customers and no charges or merchant discount rates shall be imposed on customers as well as merchants.
- Fully automated GST Refund module shall be implemented; multiple tax ledgers to be replaced by one; invoice details to be captured in a central system.
- Surcharge on individuals having taxable income from 2 crore – 5 crore and 5 crores and above to be enhanced, so that effective tax rate will increase by around 3% and 7% respectively.