Highlights:
FY21 ESTIMATES
- Fiscal deficit seen at 3.5% of GDP
- Net market borrowing pegged at 5.36 trln rupees
- Gross market borrowing at 7.8 trin rupees
- Pegs nominal GDP growth at 10%
- Receipts seen at 22.46 trln rupees
- Total spending seen at 30.42 trln rupees
- ETNow: Pegs divestment target at 2.1 trln rupees
FY20 REVISED
- Net market borrowing pegged at 4.99 trln rupees
- Fiscal deficit seen at 3.8% of GDP
- Receipts 19.32 trln rupees
- Spending revised to 26.99 trln rupees
FISC HEALTH
- Expected tax buoyancy will take time
- Good part of govt borrowing to be used for capex
- Fully provided for all flagship schemes of govt
- To activate FRBM Act escape clause on structural reforms
- Fundamentals of economy strong
- Centre’s debt down to 48.7% of GDP Mar 2019 vs 52.2% Mar 2014
GROWTH, INFLATION
- India now 5th largest economy in the world
- FY14-19 average GDP growth 7.4%
- Financial structure must keep evolving to become $5-trln economy
- Stable, predictable business environment a key objective
- Reliable, robust, clean financial sector critical for economy
DIRECT TAX
- Looking at inverted duty structure under GST
- Introducing Aadhaar-based verification for indirect taxes
- Instant allotment of PAN on basis of Aadhaar
- To amend Income Tax Act to help merged PSU banks to absorb losses
- To waive interest on tax disputes if amount paid by Mar 31
- Propose scheme to settle old direct tax cases
- To amend laws to allow faceless tax appeals
- Propose to abolish dividend distribution tax
- Dividend to be taxed only in hands of recipient
- Revenue forgone on dividend distribution tax 250 bln rupees
- To review, rationalise tax exemptions over next few years
- New power cos to attract 15% corporate tax
- Cooperatives can be taxed at 22% without exemptions
- Concessional 4% withholding tax on bonds listed in GIFT City
- Proposes some tax sops on ESOPs of staff at startups
- Deferring tax payment on sale of ESOP for 5 yrs in start-ups
- Concessional 5% withholding tax extended to municipal bonds
- Can avail new tax rates if not availing some exemptions
- Tax holiday for affordable housing extended by 1 year
- Turnover threshold for audit of MSMEs hiked to 50 mln rupees
- Tax on income above 1.5 mln rupees at 30%
- Person with income of 1.5 mln rupees to get 78,000-rupee relief
- No tax on income below 500,000 rupees
- Cut tax on income of 1.25-1.50 mln rupees to 25%
- Cut tax on income of 1.00-1.25 mln rupees to 20%
- Cut tax on income of 750,000-1 mln rupees to 15%
- Cut tax on income of 500,000-750,000 rupees to 10%
- New direct tax scheme optional for taxpayers
- Large benefits for taxpayers under new direct tax regime
- Propose to significantly reduce income tax in new regime
- To bring simplified personal income tax regime
- Tax proposals to bring ease of compliance, reduce litigation
- Tax proposals focused on simulating growth
- Want to enshrine taxpayers’ charter into statute
- Tax harassment can’t be tolerated
- 100% tax exemption on sovereign wealth funds’ infra investment
- Removed 70 of 100 income tax exemptions in new regime
- Revenue foregone on income tax cut at 400 bln rupees/year
INDIRECT TAX
- Propose nominal health cess on import of medical devices
- Customs duty on footwear, furniture raised
- To review remaining customs duty exemptions
- Some customs duty exemptions being withdrawn
- To review rules of origin for imports under free trade deal
- Amending laws to ensure no undue gains for imports under FTA
- To transfer FY17, FY18 cess balance to GST compensation fund
- GST compensation to states to be limited to cess collection
- GST helped add 6 mln tax payers in 4 years
- Average household saves 4% of monthly spend due to GST
- Effective tax for all commodities came down due to GST
- GST did face certain challenges
- Turnaround time for trucks cut by 20% due to GST
- Inspector Raj has vanished due to GST
- GST has resulted in efficiency gains
- GST has been gradually maturing
- GST h
News Edit by KVRaman