interim unionbudget rn MARWAH & CO.llp Chartered Accountants

Size: px

Start display at page:

Download "interim unionbudget rn MARWAH & CO.llp Chartered Accountants"

Barrie Osborne
5 years ago
Views:

1 interim unionbudget rn MARWAH & CO.llp Chartered Accountants 2019

2 contents Personal Tax 7 interim union budget 2019 rnm alert budget Special Issue February 2019 R.N. Marwah & Co. LLP Chartered Accountants Established 1946 Corporate Tax 8 Indirect Tax 12 Industry Wise Impact 14 Others 17

RNM Interim Budget Highlights Indian Union Budget 05 February 2019 special issue new delhi india Foreword There was emotion for the Farmer by way of PM-KISAN Scheme, a major vote bank which seemed to

There was drama in the form of the unexpected tax rebate granted to all individuals earning not more than Rupee Five Hundred Thousand, to attract the youth and middle class.

And lastly there was the dream sequence, with the vision to become a Ten Trillion Dollar economy within the next thirteen years for the Indian economy being elucidated.

3 RNM Interim Budget Highlights Indian Union Budget 05 February 2019 special issue new delhi india Foreword There was emotion for the Farmer by way of PM-KISAN Scheme, a major vote bank which seemed to be moving away from the fold of the NDA attracted by Mr. Rahul Gandhi s farm waiver schemes. There was drama in the form of the unexpected tax rebate granted to all individuals earning not more than Rupee Five Hundred Thousand, to attract the youth and middle class. There was action by way of the announcement of the Vande Bharat Express indigenously developed semi high-speed train which will be operationalized in the coming days. And lastly there was the dream sequence, with the vision to become a Ten Trillion Dollar economy within the next thirteen years for the Indian economy being elucidated. Revenue Receipts Tax Revenue (Net to Centre) Non Tax Revenue Capital Receipts ¹ to maintain, helped along the way by lower crude oil prices and a global economy which seems to favouring India, with the China USA trade war slowing down the Chinese economy and impending Brexit adverse impact on Europe Actuals Budget Estimates revised Estimates Budget Estimates An analysis of the Budget numbers gives a good insight on the fiscal prudence path that the Modi Government has been able Recovery of Loans Other Receipts Borrowings and Other Liabilities² Total Receipts (1+4) Total Expenditure (10+13) An analysis of the Budget numbers gives a good insight on the fiscal prudence path that the Modi Government has been able to maintain On Revenue Account of which Interest Payments Grants in Aid for creation of capital assests On Capital Account Revenue Deficit (10-1) (2.6) (2.2) (2.2) (2.2) Effective Revenue Deficit(14-12) (1.5) (1.2) (1.1) (1.3) rnm alert budget R.N. Marwah & Co. LLP Chartered Accountants Established 1946 Fiscal Deficit [9-(1+5+6)] (3.5) (3.3) (3.4) (3.4) Primary Deficit (16-11) 62112(0.4) 48481(0.3) 46828(0.2) 38938(0.2) 04 February 2019 special issue new delhi india

07 February 2019 special issue new delhi india As against the Fiscal Deficit target of 3.3% of GDP for FY 2018-19 announced in the last Budget, the revised Fiscal Deficit has come in at 3.

The total expenditure has increased year on year by 13.30% which is good considering the low inflation.

10% of the GDP which however, remains much lower than the USA and other OECD countries where it is in the range of 20-30% of GDP.

The positive feel good factor that is associated with the entertainment industry is being utilized strategically by the Modi Government to encourage portrayal of stories of valour and inspiration to

4 07 February 2019 special issue new delhi india As against the Fiscal Deficit target of 3.3% of GDP for FY announced in the last Budget, the revised Fiscal Deficit has come in at 3.4% and the new Target for FY has been kept at 3.4% of GDP. The revised Fiscal Deficit number at 3.4% is in line with the street expectation. The total expenditure has increased year on year by 13.30% which is good considering the low inflation. The trend in tax receipts continues its positive trajectory with a Budget Estimate for of 12.10% of the GDP which however, remains much lower than the USA and other OECD countries where it is in the range of 20-30% of GDP. Team RNM has selected the Bollywood theme for this Budget highlights with concessions of Single Window Clearance being given to domestic film production houses. The positive feel good factor that is associated with the entertainment industry is being utilized strategically by the Modi Government to encourage portrayal of stories of valour and inspiration to the youth in an election year. Overall, we feel that the Budget gets a thumbs up from the market, CFO s as well as India Inc. and most of all we feel that it has done enough to cheer up the electorate. personal tax Tax Rates/Slabs Tax impact of the same can be summarized as under: INDIVIDUALS SENIOR CITIZENS VERY SENIOR CITIZEN Upto INR 2,50,000 INR 2,50,001 to INR 5,00,000 INR 5,00,001 to INR 10,00,000 Above INR 10,00,000 Upto INR 3,00,000 INR 3,00,001 to INR 5,00,000 INR 5,00,001 to INR 10,00,000 Above INR 10,00,000 Upto INR 5,00,000 INR 5,00,001 to INR 10,00,000 Above INR 10,00,000 5% 20% 30% 5% 20% 30% 20% 30% 5% 20% 30% 5% 20% 30% 20% 30% CA Raghu Marwah Managing Partner India is still in the wake of the challenges faced by every new reform that has been brought in rnm alert budget R.N. Marwah & Co. LLP Chartered Accountants Established 1946 There is no change in the existing rate. Surcharge: There is no change in existing rate applicable till AY if net income is more than INR 50 Lakh but not more than INR 1Cr 15% if net income exceeds INR 1Cr. Cess: There is no change in existing rate applicable till AY of 4% (E.C 1% + SHEC 2%+ HC 1%). 06 February 2019 special issue new delhi india

09 February 2019 special issue new delhi india Corporate tax remains unchanged at 40% (plus applicable surcharge and education cess)

94% CORPORATE TAX Tax Rates Domestic Companies There is no change in the existing corporate tax rate of 25% if the turnover or

Effective rate of tax is depicted as under: Foreign Company Corporate tax remains unchanged at 40% (plus applicable surcharge and

5 09 February 2019 special issue new delhi india Corporate tax remains unchanged at 40% (plus applicable surcharge and education cess) Tax Rate Surcharge Tax + Surcharge Cess thereon Effective Tax Rate 30.00% 7.00% 32.10% 4.00% 33.38% 30.00% 12.00% 33.60% 4.00% 34.94% CORPORATE TAX Tax Rates Domestic Companies There is no change in the existing corporate tax rate of 25% if the turnover or receipt in the previous year does not exceed INR 250 Crore. Effective rate of tax is depicted as under: Foreign Company Corporate tax remains unchanged at 40% (plus applicable surcharge and education cess) Tax Rate Surcharge Tax + Surcharge Cess thereon Effective Tax Rate 25.00% 7.00% 26.75% 4.00% 27.82% 25.00% 12.00% 28.00% 4.00% 29.12% MAT Rate There is no change in the existing MAT Rates Tax Rate Surcharge Tax + Surcharge Cess thereon Effective Tax Rate 40.00% 2.00% 40.80% 4.00% 42.43% 40.00% 5.00% 42.00% 4.00% 43.68% A domestic company is taxable at 30% if not covered in above. Effective rate of tax is depicted as under: 08 February 2019 special issue new delhi india

11 February 2019 special issue new delhi india India is still in the wake of the challenges faced by every new reform that has been brought in rnm alert budget R.N. Marwah & Co.

individual whose net income does not exceed INR 3.

rebate up to 100% of tax payable or INR 12,500/- whichever is less Proposed amendment shall lead to nil tax liability in case of individual having net taxable income up to INR 5 lacs.

Benefit u/s 80IBA has increased by one more year i.e. Assessment Year 2020-2021 The existing deduction available under section 80IBA to real-estate developer for the business of developing and

6 11 February 2019 special issue new delhi india India is still in the wake of the challenges faced by every new reform that has been brought in rnm alert budget R.N. Marwah & Co. LLP Chartered Accountants Established 1946 DEDUCTIONS: Rebate Under Section 87A: Existing limit of Rebate under section 87A is revised as summarized as under: AY AY A resident individual whose net income does not exceed INR 3.5 Lakh shall be eligible to avail rebate up to 100% of tax payable or INR 2,500/- whichever is less A resident individual whose taxable income does not exceed INR 5 Lakh shall be eligible to avail rebate up to 100% of tax payable or INR 12,500/- whichever is less Proposed amendment shall lead to nil tax liability in case of individual having net taxable income up to INR 5 lacs. In case income(after deductions like 8OC, etc) exceeds INR 5 lacs, no rebate under section 87A shall be available and hence tax liability shall be determined as per aforementioned tax slab rates. Benefit u/s 80IBA has increased by one more year i.e. Assessment Year The existing deduction available under section 80IBA to real-estate developer for the business of developing and building affordable housing projects is proposed to be amended by extending the time limit from 31st March 2019 to 31st March 2020 for obtaining approvals for the Housing Projects. INCOME FROM SALARY: Standard Deduction to Salaried Persons [Section 16] It is proposed to increase the existing limit of standard deduction from INR 40,000/- to INR 50,000/- or the amount of salary received, whichever is less. INCOME FROM HOUSE PROPERTY: No notional rental income on second self-occupied house [Section 23] It is propose to amend section 23 of the Income-tax Act so as to provide relief to the taxpayer by allowing nil annual value in respect of any two houses, declared as self-occupied, instead of one self occupied house as currently provided. No notional rental on unsold inventory for two years. [Section 23] It further seeks to provide relief to the taxpayers that tax on notional rent shall not be charged in respect of unsold inventory for a period up to two assessment years, instead of existing one assessment year, from the end of the financial year in which the certificate of completion is obtained from the competent authority. Benefit of deduction for interest on borrowed capital [Section 24] The existing monetary limit of deduction on account of interest payable on borrowed capital of INR 2 Lakh shall continue to apply in aggregate in case of more than one self-occupied house property. CAPITAL GAINS Capital Gain Tax Benefit increased from investment in one residential house to two residential houses. [Section 54] It is proposed to amend section 54 of the Income-tax Act to provide relief to the taxpayers having long-term capital gains up to INR 2 Cr., arising from transfer of a residential house, by affording the assessee a one-time opportunity, at his option, to utilise the said amount for the purchase or construction of two residential houses in India instead of one residential house as currently provided. TAX DEDUCTION AT SOURCE (TDS): TDS on Interest other than interest on securities [Section 194A] It is proposed to amend section 194A of the Income-tax Act to increase the threshold limit from INR 10,000 to INR 40,000 for deduction of tax at source on interest income, other than interest on securities, paid by a banking company, co-operative society or a post office. TDS on Rent [Section 194I] It is proposed to amend section 194-I of the Income-tax Act to increase the threshold limit from INR 1.80 Lakh to INR 2.40 Lakh. All the a forementioned proposed amendments shall be applicable for the AY February 2019 special issue new delhi india

13 February 2019 special issue new delhi india indirect tax Highlights of Indirect Tax in Budget 2019-20 Particular Existing Post Budget Movement Threshold limit for GST Registration of small

7 13 February 2019 special issue new delhi india indirect tax Highlights of Indirect Tax in Budget Particular Existing Post Budget Movement Threshold limit for GST Registration of small businesses Composition scheme for Small businesses with turnover upto Rs.1.5 Crore Small service provider with turnover upto Rs. 50 Lakh opting for composition Rs. 20,00,000 1% (turnover upto 1cr) 18% Rs.40,00,000 1% (turnover upto 1.5 Cr.) 6% Highlights of Indirect Tax in Budget Highlights in Customs as per Budget A revised system of importing duty free capital goods and inputs for manufacture and export has been introduced, along with introduction of single point of approval. 2. Indian Customs is introducing full and comprehensive digitalization of export/import transactions. Benefit to GST registered MSME on incremental loan upto 1 Crore NA 2% interest rebate Indian Customs is introducing full and comprehensive digitalization of export/import transactions. rnm alert budget R.N. Marwah & Co. LLP Chartered Accountants Established February 2019 special issue new delhi india

8 06 15 February 2019 special issue new delhi india Industry Wise Impact IMAPCT OF INTERIM BUDGET ON VARIOUS SEGMENTS Segments Particulars Winner/ Loser Segments Particulars Winner/ Loser Farmers Tax payers Rural India Workers As expected, Modi s administration has come out with a massive spending plan for the country s farmers: A 750 billion-rupee ($10.5 billion) farm income support program. Farmers with less than two hectares of land will receive 6,000 rupees ($84) each year. That s likely to assist about 120 million small and marginal farmers, the government said. Income tax payers earning up to Rs 500,000 will get a full tax rebate, while those earning up to 650,000 rupees will not need to pay tax if they invest in the country s provident funds and prescribed equities. Goyal said this could benefit as many as 30 million middle class taxpayers. Anyone earning more will be taxed at the prevailing rates. Increased spending on the animal husbandry and fisheries sectors and an interest subvention plan for small-and-medium-sized businesses could benefit companies with exposure to rural India. A second big announcement in the budget was for a mega pension program for India s informal sector workers with income below Rs 15,000. The vast majority of the country s workers are employed in small enterprises, often with little job security and no social security benefits. Rs.40,00,000 Winner 1% (turnover upto 1.5 Cr.) 6% Winner 2% interest rebate Winner Winner Real Estate Stock Market The Bombay Stock Exchange s real estate index climbed as the government reiterated its push for affordable housing and announced new measures that could boost home-buying. Goyal promised a home for every person in India, a country of 1.3 billion people, and proposed to allow investments of as much as Rs 20 million from capital gains for buying two residential houses, compared with only one at present. He also proposed waiving tax on the notional rent payable on a second selfoccupied house. From a capital markets perspective, the Union- Interim Budget did not have much to offer except the announcement related to the manner in which stamp duty would be levied on securities transactions. While presenting the Budget, Interim Finance Minister Piyush Goyal said stamp duty would be levied at a single point through the stock exchange mechanism and thereafter it would be shared with the particular State based on the buyer s domicile. The single charge at point of first transaction is a very important step in the right direction. It brought a lot of comfort, not only in terms of bringing down the cascading effect of the Winner Winner February 2019 special issue new delhi india

17 February 2019 special issue new delhi india Industry Wise Impact IMAPCT OF INTERIM BUDGET 2019-2020 ON VARIOUS SEGMENTS Segments Particulars Winner/ Loser Bond holders Farm laborers duty but also

Bond holders could get hit if Moody s or S&P downgrade the country s credit rating. Moody s has already said the government s budget includes no new policies to increase revenues.

These workers are often already desperately poor, while most state-initiated plans to boost prosperity in the countryside tend to focus on land-owning farmers.

LLP Chartered Accountants Established 1946 Defence In dollar terms, India s defense spending is less than it was last year because of depreciation. This year s budget allocates about Rs 3.

9 17 February 2019 special issue new delhi india Industry Wise Impact IMAPCT OF INTERIM BUDGET ON VARIOUS SEGMENTS Segments Particulars Winner/ Loser Bond holders Farm laborers duty but also in terms of ease of compliance. Modi s government will breach its fiscal deficit target for a second year, with the budget gap estimated at 3.4 percent. Bond holders could get hit if Moody s or S&P downgrade the country s credit rating. Moody s has already said the government s budget includes no new policies to increase revenues. Rural laborers who toil on farms but don t actually own any land will not benefit from the government s big spending plan for farmers. These workers are often already desperately poor, while most state-initiated plans to boost prosperity in the countryside tend to focus on land-owning farmers. Loser Loser the Budget gets a thumbs up from the market, CFO s as well as India Inc. and most of all we feel that it has done enough to cheer up the electorate. rnm alert budget R.N. Marwah & Co. LLP Chartered Accountants Established 1946 Defence In dollar terms, India s defense spending is less than it was last year because of depreciation. This year s budget allocates about Rs 3.05 lakh crore ($43 billion) for defense spending, most of which is eaten up by recurring costs that squeezes the money available for new arms purchases. Loser others The Prevention of Money-Laundering Act, 2002 It is proposed to amend sub-section (3) of section 8 of the Prevention of Money-laundering Act, 2002 so as to extend the time limit of ninety days for which the attachment shall remain valid during the period of investigation to three hundred and sixty-five days and also to provide that in computing the period of three hundred and sixty-five days, the period during which the investigation is stayed by any court shall be excluded. 16 February 2019 special issue new delhi india 06 February 2019 special issue new delhi india

others Interim Finance Minister Piyush Goyal, presenting the Interim budget for Narendra Modi government before elections due this announced that the stamp duty regime for financial securities

The fine print of Finance Bill 2019 seeks to, among other things, Insert definitions for securities including debentures, under the Stamp Act, and Stock exchanges/ Depository as the case may be are

Such collection will be transferred to the respective state government within the prescribed time. The amendments also propose changes to the rates of duties. Impose 0.

10 others Interim Finance Minister Piyush Goyal, presenting the Interim budget for Narendra Modi government before elections due this announced that the stamp duty regime for financial securities transactions will be amended in order to usher in a streamlined system. The fine print of Finance Bill 2019 seeks to, among other things, Insert definitions for securities including debentures, under the Stamp Act, and Stock exchanges/ Depository as the case may be are being authorised to collect stamp duty and distribute it to the states as per the domicile of the investor. Such collection will be transferred to the respective state government within the prescribed time. The amendments also propose changes to the rates of duties. Impose percent stamp duty on the issue of securities other than debentures and of percent on transfer thereof, on delivery basis. (1) (2) The first Interim Budget by the Hon ble Interim Finance Minister (FM) had all the Josh of a Bollywood blockbuster emotion, drama & action! February 2019 special issue new delhi india Albeit an additional burden, such compliance would stop leakages and end ambiguity about the applicable state rates, and where the stamp duty has to be deposited. The stock exchanges have customers details and can easily credit the stamp duty to the concerned state. With stamp duty being kept out of the GST ambit, these proposals showcase the government s efforts to increase ease of doing business February 2019 special issue new delhi india

21 February 2019 special issue new delhi india HEAD OFFICE: Mr. U. N. Marwah, Managing Partner 4/80, Janpath New Delhi 110 001 (India) Tel: +91-11-4319 2000 Fax: +91-11-4319 2021 E-mail: rnm@rnm.

11 21 February 2019 special issue new delhi india HEAD OFFICE: Mr. U. N. Marwah, Managing Partner 4/80, Janpath New Delhi (India) Tel: Fax: BRANCH OFFICE: Banglore Mr. Raghu Marwah 813 Oxford Towers, 139 Airport Road, Banglore Gurgaon Mr. Sovan Singh Unit No. 613, 6 th Floor, Suncity Business Tower, Golf Course Road, Gurgaon sovan.s@rnm.in Indian Customs is introducing full and comprehensive digitalization of export/import transactions. AFFILIATE OFFICIES: Mumbai Mr. Ashish Bairagra, F 11, 3 rd Floor, Manek Mahal, 90 Veer Nariman Road, Church Gate, Mumbai Tel: Fax: ashish@rnm.in Coimbatore Mr. D. Purushothoman Kaanchan, No. 6, North Hozur Road, Coimbatore Tel: Fax: purush@rnm.in Chennai Mr. Ashok Deora, SF 6, Golden Enclave, Road, Chennai Tel: , Fax: ashok@rnm.in Mauritius Mr. Kamal Hawabhay, 365 Royal Rose Hill, Mauritius Tel: Fax: kamal@rnm.in Hong Kong Mr. Raymond Chori 3705 Bank of America Tower 12 Harcourt Road, Central Hong Kong Tel: Fax: Raymond@rnm.in Disclaimer: R.N. Marwah & Company LLP (hereafter referred as RNM) has taken due care and caution in compilation and presenting factually correct data contained herein above. While RNM made every effort to ensure that the information/data being provided is accurate, RNM does not guarantee the accuracy, adequacy or completeness of any data/information in this newsletter and same is meant for the recipient and not for the circulation. Readers are advised to satisfy themselves about the merits and details of each article and the information contained therein, before taking any decision. RNM does not hold themselves liable for ant consequences, legal or otherwise arising out of the use of ant such information/data and further states that it has no financial liability whatsoever to the recipient /readers of this news letter. RNM nor any of its partners/employees/ representatives do not accept any liability for any direct or consequential loss arising from the use of information /data contained in this newsletter or any information/data generated from this newsletter. Any dispute arising in future shall be, subject to the court(s) at Delhi. rnm alert budget R.N. Marwah & Co. LLP Chartered Accountants Established February 2019 special issue new delhi india

12 2019

INTERIM UNION BUDGET 2019

Lunawat & Co. INTERIM UNION BUDGET 2019 2Lunawat & Co. DIRECT TAX Income-Tax Slab Rates There is no change in income-tax slab rates Relief to tax payers Section 87A is being amended to provide relief to