The new finance minister of India, Ms Nirmala Sitharaman presented the budget 2019 with no major relief for the common man
With Financial Minister of India – Nirmala Sitharaman presenting her maiden Union Budget of 2019, here are the key takeaways:
- The Government will work in easing the fund raising for Non Banking Financial Companies (NBFCs). It will do away with the Debenture Redemption Reserve (DRR) requirement for NBFCs who wish to raise funds. Currently, NBFCs planning to raise public funds must set aside 25% of the proceeds as DRR.
- The budget aims at bringing the State-run banks at par with the modern private sector banks, in terms of technology and funding required for upgrading to that level. The banks will be empowered to leverage technology to offer online personal loans and doorstep banking.
- With Industrial Development Bank of India (IDBI) and Industrial Credit and Investment Bank of India (ICICI) ending their role as Development Finance Institutions (DFI), the Centre has proposed to set up an expert committee to study the situation relating to long-term finance. The committee will examine the structure and required flow of funds through DFIs to achieve investing Rs. 100 lakh crores in infra over the next 5 years.
- There will be increased efforts in boosting the participation of retail investors in Government bonds.
- As Savings from Insurance are concerned, the new budget proposes to impose Tax Deductible at Source (TDS) at 5% on net proceeds, i.e., sum received minus premium paid by policyholders against 1% on gross pay-outs at present.
- The centre has also raised the Foreign Institutional Investors (FIIs) limit in insurance intermediaries to 100% from 49%. The Government is also reducing net owned fund requirement for reinsurers to Rs. 1,000 crores from Rs. 5,000 crores.
What it means for the taxpayers?
The surcharge stands increased from 15% to 25% for those with taxable income of Rs. 2-5 crores, implying an effective tax rate of 39% as opposed to 35.9%. For instance, a person with taxable income of Rs. 2.50 crores will now pay income tax in tune of Rs. 95.06 lakh as against Rs. 87.45 lakh earlier. For taxpayers with a taxable income of up to Rs 2 crores, there is no significant change. However, the steep increase in surcharge will ensure that millionaires and billionaires will have to shell out more.
S. No. Income New Rate Previous Rate
1 Upto Rs. 5 Lacs NIL NIL
2 Rs. 5 Lacs – Rs. 10 Lacs 20.8% 20.8%
3 Rs. 10 Lacs – Rs. 50 Lacs 31.2% 31.2%
4 Rs. 50 Lacs – Rs. 1 Crore 34.3% 34.3%
5 Rs. 1 Crore – Rs. 2 Crores 35.9% 35.9%
6 Rs. 2 Crores – Rs. 5 Crores 35.9% 39%
7 More than Rs. 5 Crores 35.9% 42.7%
Decoding what it means for consumers:
- The increase in taxes will increase the price of petrol and diesel between Rs. 2.3 to 3 per litre, across India.
- Import duty on marble slabs has been increased by 20%, making the Italian marble dearer. The backlit Italian Onyx marble costing Rs. 2,500 per sq. ft. will now cost Rs. 3,000 per sq. ft.
- The custom duty on gold, silver and platinum bars has been increased by 2.5%. A 10 gm Swiss gold coin will now cost Rs. 900/- more.
- Consumer durables, especially air conditioners will become expensive.
- Import duty will also be levied on books. For instance, if a book costs Rs. 300, the consumer will have to shell out Rs. 315 to 320/-
- Maintenance of luxury cars has gone up. Changing windscreen wipers costing Rs. 2,300 will now cost Rs. 100 more.
- An imported CP Plus CCTV camera costing Rs 5,899 will now come at Rs. 6,175.
- The cost of imported music systems and loudspeakers has also been increased.
- A major boost has been given to “Make in India” initiative. Import duty on capital goods used for manufacturing electronic goods
such as cameras, mobile phones, set-top boxes have been reduced to nil.
