The major focus areas of the Union Budget
Strengthening
MSMEs,
Lowering
Corporate Tax
Make
in India, with particular emphasis on Micro, Small and Medium Enterprises, is
one of the major focus areas of the Union Budget this year. Delivering her
budget speech in Parliament today, Union Minister of Finance and Corporate
Affairs Smt. Nirmala Sitharaman announced various proposals aimed at
strengthening the sector.
For
ease of access to credit for MSMEs, Government has introduced scheme for
providing of loans upto Rs. 1 crore within 59 minutes through a dedicated
online portal. Under the Interest Subvention Scheme, Rs. 350 crore has been
allocated for FY 2019-20 for 2% interest subvention for all GST registered
MSMEs, on fresh or incremental loans.
The
Finance Minister also announced the Government’s intent to create a payment
platform for MSMEs to enable filing of bills and payment on the platform itself
to eliminate delays in government payments.
The
Finance Minister further informed that the Government has decided to extend
pension benefit to about three crore retail traders and small shopkeepers whose
annual turnover is less than Rs.1.5 crore under a new scheme named Pradhan
Mantri Karam Yogi Maandhan Scheme. Enrolment into the Scheme will be kept
simple requiring only Aadhaar and a bank account and rest will be on
self-declaration.
The
Finance Minister also announced that under the Scheme of Fund for Upgradation
and Regeneration of Traditional Industries’ (SFURTI) 100 new clusters will be
set up during 2019-20 enabling 50,000 artisans to join the economic value
chain. SFURTI aims to set up Common Facility Centres (CFCs) to facilitate
cluster based development to make traditional industries more productive,
profitable and capable for generating sustained employment opportunities.
Focused sectors are Bamboo, Honey and Khadi clusters.
The
Minister further announced that the Scheme for Promotion of Innovation, Rural
Industry and Entrepreneurship’ (ASPIRE) would be consolidated for setting up of
80 Livelihood Business Incubators (LBIs) and 20 Technology Business Incubators
(TBIs)in 2019-20 to develop 75,000 skilled entrepreneurs in agro-rural industry
sectors.
The
Budget says that the Government will support private entrepreneurships in
driving value-addition to farmers’ produce from the field and for those from
allied activities. Dairying through cooperatives will be encouraged by creating
infrastructure for cattle feed manufacturing, mild procurement, processing and
marketing.
The
Union Budget has also made proposals under indirect taxes to promote Make in
India that may also benefit the MSME sector.
Lower Corporate Tax extended up to Rs400crore:
The
Union Budget 2019-20 has proposed to extend the lower rate of 25 % Corporate
Tax to all companies with annual turnover up to Rs. 400 crore. Currently, this rate is only applicable to
companies having annual turnover up to Rs. 250 crore. Presenting the General
Budget 2019-20 in the Parliament today, the Union Minister of Finance and
Corporate Affairs, Smt. Nirmala Sitharaman said, “This will cover 99.3 percent
of the companies. Now only 0.7 percent of companies will remain outside this
rate”.
PAN – Adhaar Interchangeability proposed:
The
Budget also proposes to make PAN and Aadhaar interchangeable and allow those
who do not have PAN to file Income Tax Returns by simply quoting their Aadhaar
number and also use it wherever they are required to quote PAN. The Finance
Minister said that more than 120 crore Indians now have Aadhaar and the
proposal aims at ease and convenience of tax payers.
Pre-filling of Income-tax Returns: The Finance
Minister said that pre-filled tax returns will be made available to taxpayers
which will contain details of salary income, capital gains from securities,
bank interests, and dividends etc. and tax deductions. She further said that
Information regarding these incomes will be collected from the concerned
sources such as Banks, Stock exchanges, mutual funds, EPFO, State Registration
Departments etc. “This will not only significantly reduce the time taken to
file a tax return, but will also ensure accuracy of reporting of income and
taxes”, the Minister added.
Faceless e-assessment to eliminate
undesirable practices: In her speech, the Finance Minister said that the
existing system of scrutiny assessments in the Income-tax Department involves a
high level of personal interaction between the taxpayer and the Department,
which leads to certain undesirable practices on the part of tax officials. To
eliminate such instances, and to give shape to the vision of the Prime
Minister, the FM said that a scheme of faceless assessment in electronic mode
involving no human interface is being launched this year in a phased manner. To
start with, such e-assessments shall be carried out in cases requiring
verification of certain specified transactions or discrepancies, she added.
The
Finance Minister further said that the cases selected for scrutiny shall be
allocated to assessment units in a random manner and notices shall be issued
electronically by a Central Cell, without disclosing the name, designation or
location of the Assessing Officer. “The Central Cell shall be the single point
of contact between the taxpayer and the Department. This new scheme of
assessment will represent a paradigm shift in the functioning of the Income Tax
Department”, she said in her speech.
Slew of Measures to Encourage Digital
Payments: The
Budget also proposes to levy TDS of 2 percent on cash withdrawal exceeding Rs.
1 crore in a year from a bank account. This is in continuation of a number of
initiatives taken in the recent past for the promotion of digital payments and
less cash economy, and to promote digital payments further, said the Minister.
The
low-cost digital modes of payment such as BHIM UPI, UPI-QR Code, Aadhaar Pay,
certain Debit cards, NEFT, RTGS etc. will promote less cash economy. The
Finance Minister proposed that the business establishments with annual turnover
more than Rs. 50 crore shall offer such low cost digital modes of payment to
their customers and no charges or Merchant Discount Rate (MDR) shall be imposed
on customers as well as merchants. She added, “RBI and Banks will absorb these
costs from the savings that will accrue to them on account of handling less
cash as people move to these digital modes of payment”.
Simplification and Ease of Living: Noting that
India’s Ease of Doing Business ranking under the category of ‘paying taxes’
showed a significant jump from 172 in 2017 to 121 in the 2019, the Finance
Minister said above measures will leverage technology to make compliance easier
for the taxpayers.
The
Budget also proposes to simplify the tax law to reduce genuine hardships to
taxpayers which include enhancing threshold of tax for launching prosecution
for non-filing of returns from Rs. 3,000 to Rs. 10,000, for proceeding against
a person and exempting appropriate class of persons from the anti-abuse
provisions of section 50CA and section 56 of the Income Tax Act.
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