Key Aspects of India's 2019 Union Budget
The 2019 Union Budget outlined significant policy changes across various sectors in India. Key announcements included updates to direct taxation, such as increased home loan deductions and new TDS provisions, alongside widespread reforms in infrastructure and education. The budget also introduced measures to support MSMEs, promote women's empowerment, and boost the electric vehicle sector through tax incentives.
The 2019 Union Budget introduced significant policy adjustments across various key sectors in India. This budget speech, delivered by Nirmala Sitharaman, presented a comprehensive overview of the government's economic vision and strategic initiatives.
Direct Taxation Measures in Budget 2019
Home loan interest deduction under Section 80EEA was raised by INR 1.5 lakh for self-occupied properties. This applied to loans taken by March 31, 2020, for houses costing up to INR 45 lakhs.Taxpayers gained flexibility with the interchangeability of PAN and Aadhaar, allowing income tax returns to be filed using either number.A 2% TDS (Tax Deducted at Source) was introduced under new Section 194N on cash withdrawals exceeding INR 1 crore annually from bank accounts, aiming to discourage large cash transactions.The surcharge for individuals with taxable income between INR 2 crore and INR 5 crore was increased to 25% for FY 2019-20.For individuals earning taxable income from INR 5 crore to INR 10 crore, the surcharge rose to 37% for FY 2019-20.A proposal was made to offer relief concerning the Securities Transaction Tax (STT) levy.The 25% corporate tax rate, previously for companies with an annual turnover of INR 250 crore, was extended to include companies with an annual turnover of up to INR 400 crore.Deductions under Section 35AD were expanded to cover investments in Li-ion battery manufacturing, semiconductor production, laptop components, fabrication units, and photovoltaic cells.An additional income tax deduction of up to INR 1.5 lakh was proposed on interest paid on loans specifically for purchasing electric vehicles, under Section 80EEB.A new system for faceless and anonymous income tax assessments was planned for phased implementation during the year.
Infrastructure Development Priorities
Significant investment was prioritized for infrastructure, national highways, and the aviation industry.The Bharat Mala project's second phase aimed at developing state highways.A thorough overhaul of national highways was slated for implementation.
Educational Sector Reforms
The new national education policy was set to introduce substantial reforms across secondary and higher education.The Swayam Initiative was highlighted for promoting digital education.Emphasis was placed on boosting research and development, with the National Research Foundation established to fund and advance research by consolidating and distributing grants from various ministries, thereby avoiding redundant projects.A new national educational policy was designed to revamp India's education system, particularly benefiting the youth.
Support for Startup Growth
The government announced plans to launch dedicated programs for startups, to be broadcast on DD News.
Household Welfare Initiatives
Goals included providing housing, electricity, clean cooking fuel, and safe, sufficient drinking water to all rural Indian households.The budget encouraged rainwater harvesting, groundwater replenishment, and the management of domestic wastewater for agricultural reuse.The "Har Ghar Jal" initiative aimed to ensure piped water supply to all rural households by 2024.Seven crore LPG connections had been provided to rural households.
Pension Scheme Enhancements
A pension benefit was proposed for three crore retail traders and shopkeepers with an annual turnover of up to INR 1.5 crore.
MSME Sector Support
INR 350 crore was allocated for a 2% interest subvention scheme benefiting all GST-registered Micro, Small, and Medium Enterprises (MSMEs) on new or additional loans.Extensive reforms were planned for MSMEs, including the creation of a government platform to facilitate their payments.MSMEs were promised loans up to INR 1 crore within 59 minutes, with INR 350 crore already disbursed.
Women Empowerment Initiatives
The Finance Minister announced the formation of a committee comprising public and private stakeholders to advance gender equality.Women belonging to Self-Help Groups (SHGs) with Jan Dhan accounts would be eligible for a INR 5,000 overdraft facility.Women entrepreneurs could avail loans up to INR 1 lakh under the Mudra Scheme.
Measures for Non-Resident Indians (NRIs)
A proposal was put forward for issuing Aadhaar cards to NRIs holding Indian passports immediately upon their arrival in India.NRIs with Indian passports could obtain an Aadhaar card after arriving in India.To boost NRI investment in the Indian capital market, a merger of the NRI portfolio scheme route and the Foreign Portfolio Investor (FPI) route was suggested.
Railway Sector Budget Highlights
The railway infrastructure was projected to require an investment of INR 50 lakh crore between 2018 and 2030.Public-Private Partnerships (PPPs) were to be leveraged for accelerating the development and delivery of both passenger and freight services.A program for modernizing railway stations was scheduled to begin during the year.Indian Railways was encouraged to increase investments in urban and suburban areas.Approximately 657 km of Metro Rail lines were operational across the nation.
Banking and Financial Sector Overview
Reforms were planned to enhance governance within Public Sector Banks.Non-Performing Assets (NPAs) of commercial banks decreased by more than INR 1 lakh crore compared to the previous year.A record recovery exceeding INR 4 lakh crore was achieved through the Insolvency and Bankruptcy Code (IBC).Commercial bank NPAs saw a reduction exceeding INR 1 lakh crore in the past year.Following the consolidation of Public Sector Banks, a capital infusion of INR 70,000 crore was provided to improve credit flow.The government successfully consolidated Public Sector Banks, reducing their total count by eight.Non-Banking Financial Companies (NBFCs) deemed financially robust were slated to receive government funding totaling INR 1 lakh crore during the current fiscal year.The regulatory powers of the Reserve Bank of India (RBI) over NBFCs were to be expanded.Proposals were made to reinforce RBI's regulatory authority over NBFCs, including the requirement to maintain a Debenture Redemption Reserve.A proposal was introduced to transfer regulatory authority over housing finance companies from the National Housing Bank (NHB) back to the RBI.
Electric Vehicle Promotion
The GST rate on electric vehicles was reduced from 12% to 5%. Additionally, an income tax deduction of INR 2.5 lakh was introduced on interest paid on loans for electric vehicle purchases.To further boost electric vehicle affordability, an income tax deduction of up to INR 1.5 lakh on interest paid on loans for buying EVs was highlighted.
Advancements in Technology
The Finance Minister announced that solar storage batteries and chargers would be eligible for deduction under Section 35AD.A large-scale program for LED bulb distribution resulted in approximately 35 crore LED bulbs being disseminated.Machines and robots were planned for deployment in sanitation and waste management.Training for youth in Virtual Reality (VR), Artificial Intelligence (AI), and Robotics was emphasized to align India with global technological advancements.
Common Questions
When did Section 194N become effective?
Section 194N came into effect on July 1, 2020.
What modifications were made to individual surcharge rates in the 2019 Union Budget?
The 2019 Union Budget increased surcharge rates for individuals: a 25% surcharge for those with taxable income between INR 2 crore and INR 5 crore (FY 2019-20), and a 37% surcharge for individuals with taxable income ranging from INR 5 crore to INR 10 crore (FY 2019-20).