10 Major Takeaways From FM Nirmala Sitharaman's Maiden Union Budget

On July 5, 2019, Finance Minister Nirmala Sitharaman presented her maiden Union Budget on behalf of the NDA-2 government.

Sitharaman kicked off this year's Budget announcement by stating that India is to become a $3 trillion economy by FY20, and expected to rise to $5 trillion by 2024.

Here are 10 major takeaways from this year's Union Budget announcement

1. Taxation

• Personal Tax: no changes in the tax slabs - those with income under Rs. 5 lakh pay no tax
• Super Rich: Increase in surcharges by 7% for those earning between Rs. 2 crore and Rs. 5 crore, and 3% for those earning above Rs. 5 crore, annually
• Corporate Tax: Lower rate of 25% corporate tax applicable to corporations having annual turnover of Rs. 250 crore has now been expanded to cover those having a turnover of Rs. 400 crore
• Special Excise duty and Road and Infrastructure Cess increases on petrol and diesel by ₹1 per litre each
• Aadhaar/Pan to be used interchangeably for the filing of tax returns

2. Public Finances

• Fiscal deficit reduced to 3.3% for FY 20, down from the 3.4% as the revised estimate of FY19
• Total budget of approximately ₹28 lakh crore
• The economy is worth $2.8 trillion, is estimated to reach $5 trillion in 5 years

3. Affordable Housing

• Pradhan Mantri Awas Yojana (Grameen): Proposal of setting up 1.95 crore houses equipped with toilets, electricity and LPG connections to eligible beneficiaries
• Pradhan Mantri Awas Yojana (Urban): 26 lakh houses have been completed, while 47 lakh houses are under construction
• Interest deduction for affordable housing, up to a value of Rs. 45 lakh, increased to Rs. 3.5 lakh from Rs. 2 lakh

4. Banks/PSUs

• Allocation of Rs 70,000 crore for PSU bank recapitalisation, of which ₹40,000 crore will go toward sustainable bank growth
• Government successful in the PSB consolidation, bringing the number down by 8
• Govt to re-initiate Air India disinvestment
• Loan recovery stands at ₹4 lakh crores in 4 years, and the disinvestment target stands at ₹1.05 crores for this year

5. MSMEs/Startups

• Pradhan Mantri Karam Yogi Man Dan Scheme: Extend pension benefit to 3 crore retail traders with an annual turnover of less than Rs. 1.5 crore
• Creation of payment platform for MSMEs for easy payment of bills
• Integrate traditional artisans and creative persons with the global market
• 10,000 new farmer producer organisations (FPOs) for ensuring market reach for farmers.
• Extended the period of exemption from capital gains from sale of startups
• Startups not required to justify fair market value of shares issued to investors in Category II Alternative Investments Funds
• Rs. 350 crore allocated for 2% interest subvention to all GST registered MSMEs on all fresh and incremental loans in current year.
• Launch of an exclusive TV channel for startups under Doordarshan bouquet to provide a platform for startups to disseminate information
• Expansion of self-help groups to all districts. Loan of upto Rs. 1 lakh to be provided to one woman in every self-help group under Mudra Yojana.

6. Public Infrastructure

• Railway station modernisation programme - to be launched this year
• Railways:
  • Encourage to invest more in suburban rail network through special purpose vehicles
  • Enhance metro rail network through public-private partnerships
• Roads: Carry out comprehensive restructuring of National Highway programme
• 1,25,000 km of roads to be upgraded under Pradhan Gram Sadak Yojana under Phase III for an estimated cost of Rs. 80,250

7. Education

• National Research Foundation (NRF) to fund, coordinate and to promote research in the country
• NRF to assimilate research grants given by various ministries
• A focus on training new age skills like AI, VR, robotics, 3D printing
• Allocation of Rs. 400 crore for world-class higher education institutions in FY20
• Study in India programme to attract foreign students

8. Green Tech/ Renewable Energy

• GST rate for electric vehicles reduced from 12% to 5%
• Incentive on purchase of charging infrastructure
• Additional income tax deduction of Rs. 1.5 lakh on interest paid on loans taken to buy electric vehicles
• Tax benefits for manufacturers of products like lithium batteries and solar chargers

9. Investment

• Liberalise FDI in aviation, media animation and insurance intermediaries
• Hike statutory limits for foreign investments in certain companies
• Creation of social stock exchange under SEBI to help organisations raise capital through equity, debt or a unit of mutual fund
• Centre proposes tax benefits to incentivise investments in GIFT City

10. Space

• New Space India (NSIL) has been incorporated as commercial arm of ISRO to harness India's space ability commercially