Following the increase in surcharge in the Budget, the effective income tax rate for individuals with taxable income of Rs 2-5 crore went up to 39 per cent from 35.88 per cent and for those above Rs 5 crore to 42.7 per cent. However, withdrawal has been made for surcharge on only capital gains on equity. “
having business income would still be affected,” said Amit Maheshwary, partner at Ashok Maheshwary and Associates, LLP said.
Sitharaman also announced withdrawing “angel tax” provisions for the start-ups registered with the Department of Department for Promotion of Industry and Internal Trade (DPIIT) to mitigate their and investors’ genuine difficulties. Besides, a dedicated cell under a member of the Central Board for Direct Taxes (CBDT), too, will be set up for addressing the problems of start-ups.
Vikas Vasal, partner at Grant Thornton India, said, “Removal of the ‘angel tax’ will go a long way in building trust and confidence in the start-ups and the investors, and shows the government’s resolve towards ease of doing business and encouraging entrepreneurship.”
The minister also unveiled steps that would make loans for home, vehicles and consumption goods cheaper and widely available through banking and non-banking finance companies.
One of such steps was an announcement of upfront capital infusion of Rs 70,000 crore into public sector banks.
The move is expected to generate an additional lending and liquidity in the financial system to the tune of Rs 5 trillion, said the FM.
Sitharaman said banks will launch repo rate- and external benchmark-linked loan products that will lead to reduced easy monthly instalments for housing, vehicle and other retail loans. “Working capital loans for the industry will also become cheaper,” the minister said.
The FM said to reduce harassment and bring in greater efficiency, public sector banks
will ensure mandated return of loan documents within 15 days of loan closure. “This will benefit borrowers who have mortgaged assets,” she added. The minister also announced additional liquidity support of Rs 20,000 crore to housing finance companies (HFCs) by the National Housing Bank (NHB), thereby increasing the total support to Rs 30,000 crore.
She also said repayment notices issued to non-banking finance companies (NBFCs) will be monitored by banks. NBFCs will be permitted to use Aadhaar-authenticated bank KYC to avoid repeated processes. The government has decided to make necessary changes in the Prevention of Money Laundering Act rules and Aadhaar regulations to ease the lending process.
In a bid to address slowdown in the auto sector, she said BS IV vehicles purchased up to March 2020 will remain operational for the entire period of registration. Also she announced lifting of ban on purchase of vehicles by government departments, and allowing additional 15 per cent depreciation on vehicles acquired from now till March 2020. She also said the Centre will lift the ban on purchase of new vehicles for replacing all old vehicles by government departments, and consider various measures including scrappage policy. Besides, both electric vehicles (EVs) and Internal Combustion Vehicles (ICV) will continue to be registered.
The government will also allow an additional 15 per cent depreciation, taking it to 30 per cent, on all vehicles acquired from now till March 2020. The revision of one-time registration fees has been deferred till June 2020, she added.
“Based on the pace at which implementation of these announcements takes place, we could expect a modest boost to growth in H2 of 2019-20,” Aditi Nayar, chief economist at ICRA said.
For MSME sector, she announced that all their pending GST
refunds will be paid within 30 days. Also, in future, all GST
refunds of this sector will be paid within 60 days from the date of application.
The minister also said the decision on recommendations of the U K Sinha Committee regarding ease of credit, marketing, technology and delayed payments to MSMEs will be taken within 30 days. The government would also consider amendment to the MSME Act to move towards a single definition. The MSME sector, which accounts for about 29 per cent of the gross domestic product (GDP), is one of the largest job creators in the country.