Final Union Budget 2019 – PAN, Aadhaar Interchangeable for Filing ITR

Finance Minister Nirmala Sitharaman has presented the Union Budget 2019 on the floors of Parliament. Let’s take a look at the announcements she has made in her maiden budget speech in Modi 2.0 regime.

Union Budget 2019 Updates

The Finance Minister made a slew of announcements with regards to income tax, GST, bond market, etc. We have segregated her announcements into different parts to help you understand budget better.

Income Tax Related Announcements

  • Income tax exemption for individuals having an annual income of ₹5 lakh
  • Surcharge enhanced for those having annual income of ₹2-5 crore and above₹5 crore by 3% and 7%, respectively
  • PAN and Aadhaar are interchangeable for filing income tax return (ITR)
  • Pre-filled tax returns will be made available showing salary, capital gains, dividend received
  • The government proposes an additional deduction of ₹1,50,000  on interest on loans taken till March 31, 2020 to boost affordable housing segment. This is an addition to the ₹2 lakh deduction that is already available.
  • Lower corporate tax rate of 25% is applicable to companies with annual turnover of up to ₹400 crores, covering 99.3% of all companies

GST Related Announcements

  • GST lowered on electric vehicles from 12% to 5%. Additional income tax deduction of ₹1.5 lakh on interest paid on loans taken to buy electric vehicles. This leads to a benefit of ₹2.5 lakh crore over the tax period of the loan for the borrower.
  • GST rates have been eased with a relief of Rs 92,000 crore provided during the year. Further measures are being worked out to ease filing returns and tax compliance. A simplified single monthly return is now being ruled out. Taxpayers with an annual turnover of less than ₹5 crore will have to file only quarterly returns.

Custom Duty Related Announcements

  • Customs duty being exempted on certain parts of electric vehicles
  • Custom duty on gold increased by 2.5%
  • Propose to increase special additional duty and road and infrastructure cess on diesel and petrol by Re 1
  • Defence sector needs modernization. Import of defence equipment is being exempted from basic customs duty

Housing Related Announcements

  • Nearly 1.95 crore houses are proposed to be provided to eligible beneficiaries under the Pradhan Mantri Awas Yojana (Rural) by 2021
  • Under Pradhan Mantri Awas Yojna – Urban, over 80 lakh houses have been sanctioned
  • The completion of houses that required 314 days in 2015-16, it has now come down to 114 days since 2017
  • It is proposed that several reform measures will be taken up to promote rental housing
  • The government proposes to extend period of exemption of capital gains arising from sale of residential house for investment in startups to 31-3-2021.

Banking Related Announcements

  • The government has smoothly carried out consolidation reducing the number of public sector banks by 8. The government has enabled 6 public sector banks out of Prompt Corrective Action (PCA).
  • Public sector banks are proposed a ₹70,000 crore to boost their credit growth
  • For purchase of high-rated pooled assets of financially sound NBFCs amounting to a total of ₹1 lakh crore, government will provide a one-time six-month partial credit guarantee to PSBs for first loss up to 10%
  • Regulation of Housing Finance Companies (HFCs) to move to the Reserve Bank of India (RBI) from National Housing Bank (NHB)
  • The government is setting an enhanced target of ₹1,05,000 crore for disinvestment during FY20 and will continue with disinvestment of PSUs in the non-financial space as well

 Announcements to Promote Cashless Economy

  • The government proposes to levy a 2% TDS on cash withdrawal exceeding 1 crore in a year from a bank account as a tool to discourage the practice of making business payments in cash
  • BHIM, UPI, Aadhaar Pay, NEFT, RTGS can be used to promote less cash economy. Business establishments with annual turnover of Rs 50 crore will have to use these modes of payments with no charges or merchant discount rates will be imposed on customers or merchants.
  • Govt will create a payment platform for MSMEs to enable filing of bills and payment on the platform itself
  • National Common Mobility Card was launched by PM Modi in March this year. This will enable people to pay multiple transport charges across India. This card runs on RuPay card and allows users to pay bus charges, parking charges, etc.
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Announcements Related to Economy

  • In PPP terms, India is the third largest economy already after China and US
  • Fiscal deficit is brought down to 3.3% from 3.4%
  • Indian economy will reach $3 tn in the current year
  • India’s sovereign external debt to GDP is among the lowest globally at less than 5%, she points out. A new series of coins including for ₹20 will be made available for public use shortly
  • ₹100 lakh crore proposed for infrastructure development over the next 5 years
  • Zero-budget Farming model needs to be replicated to double the income of farmers by 2022

Announcements Pertaining to Bond Market, FDI

  • The govt proposes a number of measures to further deepen the corporate bond market. To deepen the market in corporate debt security govt will work with regulators RBI and SEBI to allow AA corpoarate bonds as collateral. There is also a proposal to increase minimum public shareholding in companies to 30 percent from 25 percent.
  • As key source of capital to Indian economy, it is important to ensure hassle-free experience to foreign portfolio investors. The government plans to streamline KYC to make it more investor-friendly
  • 100% FDI will be permitted for insurance intermediary
  • FDI inflows have remained robust despite global headwinds. India’s FDI inflows remained strong despite global slippages. India saw a 6% y-o-y growth in foreign investment
  • Social Stock Exchange under SEBI proposed
  • NRI investment in Indian capital market is less. I propose to merge the NRI portfolio investment scheme route with FPI route

Announcements Made with Regards to Social Sector

  • The government will work to make a platform for listing social enterprises and voluntary organisations to raise capital as equity, debt or units like mutual fund
  • Pension benefits will be offered to 3 crore shopowners with annual turnover of less than ₹ 1.5 crore under new scheme called Pradhan Mantri Man dhan Scheme.
  • Interest subvention scheme for women entrepreneurs expanded to across all states of India. Loan of ₹1 lakh to every women in every Self-help Group (SHG) under Mudra Scheme.
  • 35 crore LED bulbs distributed under the Ujjwala scheme, leading to a cost saving of ₹ 18,341 crore annually

Infrastructure Related Announcements

  • The ambitious project of Bharatmala will enhance road connectivity and Sagarmala will help port and waterways connectivity. These along with other such initiatives such as Udaan scheme will improve India’s infrastructure and enable connectivity and bridge the rural and urban divide
  • New metro rail projects have been approved during 2018-19. Also, during 2019, 210km of metro lines have been operationalized
  • Railway infra would need an investment of ₹50 lakh crore between 2018 and 2030
  • Public-Private partnership proposed to unleash faster development
  • Nearly 1,25,000 km of roads will be upgraded under Pradhan Mantri Gram Sadak Yojana at estimated cost of nearly ₹80,200 crore

Other Announcements

  • By 2022, power and LPG will be provided to all households
  • The department of fisheries will address critical gaps in the value chain, including production, quality control, post-harvest management, etc
  • The government seeks to provide water to all rural households under ‘har ghar jal’
  • The government proposes to establish a National Research Foundation to fund and coordinate research in India
  • The government proposes ‘Study in India’ to allow foreign students pursue higher studies in India
  • The government is proposing to streamline multiple labour laws into a set of 4 labour codes. This will ensure the process of registration and filing of returns gets standardized.
  • Massive program for railway station modernization to be launched this year
  • The government proposes to improve skills in industry-relavant technologies such as Big Data, Artificial intelligence, Internet of Things (IoT)
  • Aadhaar card proposed for NRIs with Indian passports after their arrival in India without making them wait for 180 days

 What Happened in the Interim Budget 2019?

Piyush Goyal, who took over the charge of the Finance Ministry in the absence of Arun Jaitley, delivered the Union Budget 2019 speech on the floors of Lok Sabha. Take a look at the announcements made in the interim budget.

Interim Budget 2019 Announcements

The budget speech enlists several tax breaks, support for affordable housing projects, pension scheme for unorganized sector workers, besides a plethora of relief measures for farmers. Let’s take a quick look at the announcements made with respect to different segments separately.

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Salaried Class

  • Individual taxpayers with annual income of up to ₹5 lakhs will get full tax rebate
  • Standard deduction has been increased to ₹50,000 from ₹40,000
  • Individuals with gross income up to ₹6.5 lakhs won’t need to pay any tax if they make investments in provident funds and prescribed equities

You must be gung-ho after checking above that individuals earning up to ₹5 lakhs can get full tax rebate. Well, individuals with income of up to ₹5 lakhs post all the deductions including standard deduction, deductions under Section 80C of the Income Tax Act, would receive the full tax rebate. Amount more than ₹5 lakhs post deductions would attract tax as per the slabs an individual come under.

Income Tax Slabs
Up to 2,50,000NIL
2,50,000 - 5,00,0005%
5,00,000 - 10,00,00020% + 4% Education Cess
Above 10,00,00030% + 4% Education Cess

Bank & Post Office Depositors

  • TDS threshold on bank and post office deposits raised to ₹40,000 from ₹10,000. For senior citizens, the limit is hiked to ₹50,000.
  • The deposits would include savings account, fixed deposits and several other deposits held in banks and post offices.

Previously, if the interest earned on deposits exceed ₹10,000 a year, a 10% TDS used to be deducted over and above the threshold limit. Now that the limit is hiked, a great proportion of interest income would be saved from tax. Let’s take an example to understand the tax maths better.

Example – Ravi Bhasin, 30-year old engineer in an infrastructure firm, earns an interest income of ₹70,000 on his bank fixed deposits a year. Now, how much tax will he be able to save with the latest hike in the TDS limit? Let’s find out in the table below.

Pre-budget 2019Post-budget 2019
Interest Income - 70,000Interest Income - 70,000
TDS Limit - 10,000TDS Limit - 40,000
Taxable Interest Income - 60,000Taxable Interest Income - 30,000
TDS at 10% - 6,000 (10% of 60,000)TDS at 10% - 3,000 (10% of 30,000)
Interest Income Post TDS - 64,000Interest Income Post TDS - 67,000

As you can see Ravi saves ₹3,000 of TDS as per the rollout of the hike in the limit.

Relief Measures for Homeowners

  • TDS threshold on rental income raised from ₹1,80,000 to ₹2,40,000
  • Income tax relief on notional rent from unsold houses extended to 2 years
  • Benefits under Sec 80(i)BA being extended for one more year, for all housing projects approved till end of 2019-2020
  • Benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to ₹2 crore, can be exercised once in a lifetime.

TDS Bonanza on Rental Income

The increase in the TDS threshold on rental income from ₹1,80,000 to ₹2,40,000 serves well for all those earning from letting out their homes. So, if the annual rental income remains ₹2,40,000 or below, you won’t need to pay any TDS.

No Income Tax on Notional Rent on Second Self-occupied House

The proposal to waive off tax on notional rent on second self-occupied home would encourage many to invest in second property. Before the announcement, the tax was applicable on notional rent.

Income Tax Relief on Notional Rent from Unsold Houses

The government proposed to increase the tax relief on notional rent from unsold houses from 1 year to 2 years would be a boon to property developers struggling with a massive pile of unsold inventory.

Capital Gain Tax Exemption Increased to 2 Properties

Further adding to the tax reliefs for homeowners, the government announced to extend the exemption of capital gain tax on the sale of 2 residential properties from 1. This would further prompt individuals to buy more than one property and reflect in the growth of India’s real estate sector.

Bonanza for Gratuity Beneficiaries & Unorganized Sector Workers

  • The government has increased tax-free gratuity from ₹10 lakhs to ₹30 lakhs
  • The government proposes to launch a mega pension yojna. Beneficiaries will be provided assured pension of ₹3,000 per month.
  • The scheme, called Pradhan Mantri Shram Yogi Mandhan, will provide assured monthly pension of ₹3,000 with contribution of ₹100 per month for workers in unorganized sector after 60 years of age.
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Relief Measures for Farmers

  • The government will provide ₹6,000 per annum to farmers holding land of up to 2 hectares. The amount will be transferred in three installments of ₹2,000 directly to the farmers. Around 12 crore farmers will directly benefit from this scheme.
  • The initiative will benefit crores of small and marginal farmers, at an estimated cost of ₹75,000 crore. This would most likely help farmers live a good life.

Other Announcements

  • ₹56,619 crore made in budget estimate 2018-19 for welfare of SCs and STs, increased to Rs 62,474 crore in revised estimate 2018-19 has been further increased to Rs 76,800 crore in budget estimate 2019-20.
  • The government allocates ₹60,000 crores for MNREGA this year
  • Capital support for Railways at ₹64,587 crore for FY20

Economy Growth Projection, Tax Collections Data

  • India is poised to become $5 trillion economy in the next five years and aspire to become a $10 trillion economy in the next 8 years.
  • Fiscal deficit in proportion to GDP to be 3.4% for FY20
  • Tax collections have increased significantly. The number of returns filed have also risen.
  • 99.54 percent of all I-T returns last year were accepted immediately.
  • The government implemented the GST, which is undoubtedly the biggest taxation reform since Independence
  • In a relief for common man, most daily-use items are now under 0-5% tax slab under GST
  • The GST council will take steps to reduce tax burden on home-buyers
  • January GST collection could breach the Rs 1 lakh crore mark
  • Average monthly tax collection in current year under GST is ₹97,000 crore per month
  • GST has been continuously reduced resulting in relief of ₹80,000 crore rupees to the consumers|
  • High growth and formalization of economy have resulted in increased EPFO membership by 2 crore in last two years
  • We aim to build a Digital India that reaches every citizen by creating innumerable startups and jobs
  • The government has abolished taxes on 36 capital goods to promote Make in India initiative
  • Anti-black money measures taken by us in the last year have brought undisclosed income of Rs 1.3 lakh crore back in circulation
  • Inflation in December 2018 was just 2.1%
  • Fiscal deficit has been brought down to 3.4% in the revised estimate of 2018-19
  • India attracted a massive amount of FDI in the past five years
  • We have set the stage for decades of high growth with path-breaking structural reforms such as the GST, says FM Piyush Goyal
  • India attracted $239 billion FDI in the past five years
  • Close to ₹3 lakh crore already recovered in favour of banks and creditors, big defaulters too not spared by our government
  • RERA has helped bring transparency in the real estate sector
  • Confident that given the pace of reforms in banking sector, other banks too will recover
  • Our government earmarked ₹1.7 lakh crore in 2018-19 to ensure food for all
  • Oceans and coastlines is the sixth dimension of government’s vision for 2030
  • The seventh dimension is the aim to become launchpad of the world, placing an Indian astronaut in space by 2022
  • Self-sufficiency in food and improving agricultural productivity with emphasis on organic food forms the eighth dimension of the government’s vision
  • The government also aims to create a healthy India, with distress-free and comprehensive wellness system for all
  • The tenth dimension is Minimum Government Maximum Governance – a proactive, responsible and friendly bureaucracy
  • The government delivered 6 crore free LPG connections under Ujjawala scheme
  • Defence budget enhanced beyond ₹3 lakh crore
  • Already disbursed ₹35,000 crore for our soldiers under OROP, substantial hike in military service pay has been announced
  • The government’s commitment to promote renewable energy is reflected in our initiative to set up International Solar Alliance; installed solar generation capacity has increased 10 times in last five years; lakhs of new jobs being created by the sector.
  • Cost of data and voice calls in India is now possibly the lowest in the world; mobile and mobile part manufacturing companies have increased from 2 to 268

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