Budget 2019-20: No Changes in Income Tax (I-T) except for Taxpayers with Income of Rs2 Crore and above
Contrary to expectations, especially those of middle-class tax payers, Union finance minister Nirmala Sitharaman made no changes in the income tax (I-T) slabs while increasing the taxes for those with taxable income of over Rs2 crore. 
 
Some tinkering with securities transaction tax (STT) and a relief on purchase of electric vehicles and affordable homes is more or less the only relief for middle-class Indians. This has triggered several memes and jokes on social media by disappointed taxpayers, who were expecting the finance minister to do something more than merely thank them for their contribution. 
 
Those with taxable income of Rs2 crore and Rs5 crore have been dealt a blow with a hike in surcharge, increasing their effective tax rate by about 3% and 7%, respectively. 
 
“In view of rising income levels, those in the highest income bracket need to contribute more to the Nation’s development,” the finance minister said, while thanking taxpayers for playing a major role in nation building. 
 
Referring to several measures taken in the past to alleviate the tax burden on small and medium income earners, Ms Sitharaman said, “Those having annual income of up to Rs5 lakh are not required to pay any income tax.” 
 
This includes self-employed as well as small traders, salary earners, and senior citizens, she added.
 
 
Relief in Levy of Securities Transaction Tax
In her speech, the finance minister proposed a relief in levy of STT by restricting it only to the difference between settlement and strike price in case of exercise of options. However, since the budget was widely expected to scrap the STT, this meagre relief has disappointed investors. 
 
Additional Deduction of Interest for Affordable Housing
In order to provide a further impetus to affordable housing, Ms Sitharaman decided to allow an additional deduction of up to Rs1.50 lakh for interest paid on loans borrowed up to 31 March 2020 for buying an affordable house valued up to Rs45 lakh. 
 
This means, a person purchasing an affordable house will now get an enhanced interest deduction up to Rs3.5 lakh. This will translate into a benefit of around Rs7 lakh to the middle-class home-buyers over their loan repayment tenure of 15 years.
 
For realisation of the goal of ‘housing for all’ and affordable housing, a tax holiday has already been provided on the profits earned by developers of affordable housing. Also, interest paid on housing loans is allowed as a deduction to the extent of Rs2 lakh in respect of self-occupied property.
 
I-T Deductions for Buying Electric Vehicles
 
 
To encourage the switch to electric vehicles and to make them more affordable to consumers, the government will provide additional income tax deduction of Rs1.5 lakh on the interest paid on loans taken to purchase electric vehicles. 
 
This amounts to a benefit of around Rs2.5 lakh over the loan period to the taxpayers who take loans to purchase electric vehicle. 
 
Considering India’s large consumer base, the finance minister stated, “We aim to leapfrog and envision India as a global hub of manufacturing of electric vehicles. Inclusion of solar storage batteries and charging infrastructure in the above scheme will boost our efforts.” 
 
The government has already moved goods and services tax (GST) council to reduce GST rate on electric vehicles to 5% from 12%, she added.
 
Mandatory Filing of Return on Spending Rs2 Lakh on Foreign Travel, Rs1 Lakh on Electricity 
Budget 2019-20 proposes to make it mandatory to file tax returns by persons, who have deposited more than Rs1 crore in a current account in a given year, or who have spent more than Rs2 lakh on foreign travel, or more than Rs1 lakh on their electricity bill in a year in order to trap possible tax-evaders.
 
It is also proposed that a person whose income drops to lower than maximum amount not chargeable to tax due, shall also be required to furnish a return to claim of rollover benefit of capital gains.
 
Level Playing Field for Non-Banking Financial Companies (NBFCs)
Recognising the increasingly important role of NBFCs in India’s financial system and to provide a level playing field, the finance minister has proposed to tax interest on bad or doubtful debts in the year in which it is actually received. 
 
Presently, this is allowed for scheduled banks, public financial institutions, state financial corporations, state industrial investment corporations, cooperative banks and certain public companies like housing finance companies.
 

 

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    COMMENTS

    P M Ravindran

    2 months ago

    I was hoping that citizens having only salary incomes would be exempted from paying income tax. It is actually a waste of effort, for both employers and tax payers to first pay the employee and then recover part of it as tax. Also in the matter of interest income, it would have been better if the tax was only for the inflation adjusted interest income, rather than a flat rate.

    SuchindranathAiyerS

    2 months ago

    India is doomed. There are no fundamental changes but only cosmetic more of the same and the Modi (Nehru 3.0) Sarkar of the Bharathiya Jhumla Party has continued to dig India into the grave it has been digging for itself since 1947.
    https://www.quora.com/What-are-some-famous-budgets-presented-in-Indian-history-that-changed-India/answer/Suchindranath-Aiyer?prompt_topic_bio=1

    REPLY

    AAR

    In Reply to SuchindranathAiyerS 2 months ago

    1 billion plus people have to eat, dress, get entertained, travel and sleep under a roof. That itself will keep Indian economy moving. Government role is either to increase the movement or slow it down.

    FM announces excise duty hike, petrol, diesel to go up
    Petrol and diesel prices are set to increase from Friday midnight as Finance Minister Nirmala Sitharaman announced an additional special excise duty (SAED) of Re 1 and a road and infrastructure cess of Re 1 per litre on both the transport fuel while presenting the Union Budget 2019-20.
     
    Currently, an SAED of Rs 7 per litre is charged on both branded and un-branded petrol and Re 1 per litre on diesel. Also, road and infrastructure cess of Rs 8 per litre is being charged on both the fuel. 
     
    The previous Budget of 2018-19 had cut basic excise duty on petrol and diesel by Rs 2 per litre. However, the move was offset by an additional levy of Rs 8 per litre under the levy of road and infrastructure cess on both petrol and diesel. 
     
    Domestic fuel prices vary in tandem with global crude and product prices on a daily basis. Last year, fuel prices surged to record levels and the Centre and states faced severe criticism over high excise duty and state levies.
     
    In October, the government had cut excise duty to moderate the effect of rising oil prices. But this cut came after the government had raised excise duty on petrol and diesel on nine occasions, almost doubling its revenue from the oil sector.
     
    On Friday, petrol and diesel prices in the national capital are currently Rs 70.51 and Rs 64.33 per litre, respectively.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    GST Council extends return filing dates, refers rate cut for EVs to a panel
    In a major relief to trade and businesses, the all-powerful GST Council in its first meeting after the Modi government came back to power extended the cut-off date for filing annual returns for FY18 by two months to August, 2019.
     
    Easing the enrollment process for new firms, the Council decided to allow the use of 12-digit Aadhaar number for getting GST registration.A In order to check tax evasion, the Council made it now mandatory for registered multiplexes to issue e-tickets. The electronic invoicing system would be rolled out in a phase-wise manner for B2B transactions.
     
    The proposal to slash GST on electric vehicles (EVs) from 12% to 5% has been sent to a rate fitment committee and the issue would be taken up in the next GST Council meeting. The issue related to valuation of goods and services in a solar power generating system and wind turbine would also be taken up first by the panel of officers.
     
    The Council chaired by Union Finance Minister Nirmala Sitharaman extended the tenure of National Anti-Profiteering Authority (NAA) by two more years to ensure companies pass on the benefits of lower GST rates to consumers.
     
    Addressing press conference after the meeting, Revenue secretary Ajay Bhushan Pandey termed the decision as consumer-friendly.
     
    "In order to ensure GST rates cuts are actually passed on to customers and no anti-profiteering takes place the current provision is that only the penalty of Rs 25,000 will be imposed in addition to the profiteered amount. So, the change approved by the Council is that now if profiteered amount is not deposited within 30 days, then the penalty to the extent of 10 per cent of the profiteered amount will be imposed on the company," Pandey said.
     
    The Council also took a decision regarding location of the State and the Area Benches for the Goods and Services Tax Appellate Tribunal (GSTAT) for various states and Union Territories with legislature.
     
    "It has been decided to have a common State Bench for the States of Sikkim, Nagaland, Manipur and Arunachal Pradesh," a finance ministry statement said.
     
    Hectic lobbying by cement companies and builders, however, failed to convince the apex indirect tax body to cut GST on cement from 28 per cent to 18 per cent. The automobile sector also did not get any relief from the GST Council.
     
    Industry body Ficci welcomed various GST Council decisions saying it will ease compliance burden.
     
    "The thought process laid by the Government regarding its endeavor to bring more items in the ambit of GST regime including simplification of GST Rules and rationalization of rates is indeed a step in the right direction and would pave the way for simplification and stability under the GST regime," it noted.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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