Nirmala Sitharaman presented the Budget for 2019-2020 and proposed several reforms in various sectors including public sector banks, corporate tax and railways. The Centre hiked taxes on petrol and diesel, raised import duty on gold, levied an additional surcharge on the income of super-rich and brought a tax on high-value cash withdrawals.
The Finance Minister sought to spur growth with a reduction in corporate tax and sops to affordable housing, startups and electric vehicles.
Here is how the industry reacted to the Union Budget 2019:
* “The new government’s first Union Budget has perfectly balanced all the essential parameters of our economic dynamics, including infrastructure enhancement, skill development, job creation, and technological advancement. This has been done while also creating a favourable environment for businesses, especially, tech-centric startups,” Atul Rai, CEO and Co-founder of Staqu, said.
* On the government’s proposal to relax foreign direct investment (FDI) norms to attract foreign firms in a single brand retail, Rajesh Thakkar, Partner/Transaction Tax, Tax & Regulatory Services at BDO India said, “Increasing FDI limits in sectors like aviation and insurance is a huge positive since these sectors are highly capital-intensive and have been a constant request by India Inc.”
* On the government’s plans to invest in job creation in small and medium enterprises, Sampad Swain, CEO & Co-Founder of Instamojo, said, “With India set to become a $3 trillion economy this year, the first union budget by the Modi 2.0 government has introduced several benefits for the MSME sector. Over the years, MSMEs have been battling to get loans, given their inability to produce relevant assets as evidence.”
“In fact, the current gap between the demand and credit supply within the Indian MSME sector is about $230 billion. The introduction of the 1 crore – 59 minute MSME loan brings great relief to small business owners, making easier accessibility and processing of loans through a single portal,” he added.
* Taking into account the role of non-banking financial companies (NBFCs) in capital formation, the government has suggested providing a one-time partial credit guarantee to PSBs to buy high-rated pooled assets of financially sound NBFC. To this, Jiger Saiya, Partner, Tax & Regulatory Services at BDO India said, “The government’s decision to provide a guarantee to PSBs for the purchase of high-rated pooled assets of financially sound NBFCs will be a boost to NBFCs who are currently reeling under bad loan pressure.”
* On the recovery of Rs 4 lakh crore under the Insolvency and Bankruptcy Code, 2016, Sundaresh Bhat, Partner and Leader at Business Restructuring Services, BDO India said, “The recovery of Rs four lakh crores under the IBC vindicates our faith in one of the key reforms India has seen in recent times.”
* “The standardisation of laws subsequent to the streamlining into four labour codes is expected to reduce litigation and disputes,” Jiger Saiya, Partner, Tax & Regulatory Services, at BDO India said on the idea to streamline multiple labour laws into a set of four labour codes.
* The ministry also said the regulation of housing finance companies has been moved to the Reserve Bank of India (RBI) from the NHB. “Ex-boss returns for the housing finance sector,” said Harry Parikh, Associate Partner/Transaction Tax, Tax & Regulatory Services.
* Companies having an annual turnover of Rs 400 crore, Sitharaman said, will be required to pay 25 per cent of their income as tax. Reacting to this announcement, Harry Parikh, Associate Partner/Transaction Tax, Tax & Regulatory Services at BDO India, said, “The threshold for the applicability of 25% corporate tax rate racked up to Rs 400 crore from Rs 250 crore. It will effectively cover over 99% of the Indian companies.”
* On steps to remove angel tax woes of start-ups, Sohrab Bararia, Associate Partner/ Indirect Tax at BDO India said, “Start-ups to witness tax planning, investment opportunities and regulatory discussions via TV channels set-up specifically for this sector. This will bolster new entrepreneurs to understand the tax and regulatory framework in India along with the possible fundraising opportunities.”
‘Custom duty hike will encourage smuggling’
* “Two positives in the budget: the first one is there will be no charges on digital payments for both consumer and business establishments with an annual turnover of up to Rs 50 crores. The second is the corporate tax of 25 per cent being extended for companies having an annual turnover of Rs 400 crores. But in regard to the hike in the customs duty on gold and precious metals from 10% to 12.5 per cent, the industry is totally disappointed. It will encourage more smuggling. They have to roll it back immediately. The minister had brought it to the notice in the pre-budget discussion in Parliament. She had said that as commerce minister, she recommended lowering of customs duty. We were very positive. But unfortunately, what happened in between, we don’t know. They hiked customs duty by 2.5 per cent and prices have gone up by Rs 800. Already, the gold prices are very high and in the last 15 days, the business has been affected. Another increase of Rs 80 per gram will keep customers away from the store. Demand will go down by 40 per cent,” said N. Ananthapadmanabhan, chairman, All India Gem and Jewellery Domestic Council.
* “Except for the announcement of setting up 10,000 new-farmer producer organisations, there was no major boost to the agriculture sector in the budget 2019-20. However, I must say that a slew of measures, including MSP hiking of around 17 crops and farmers pension, have already been taken for the development of farmers as well as farm sector days ahead of the budget. In totality, this year’s budget is significant as it has also announced to create 100 startup incubators, 80 livelihood and 20 tech incubators, to provide incubation support to 80,000 startups including agri startups for the progress and development of our country,” said Dr MJ Khan, Chairman, Indian Council of Food and Agriculture.