PARVEEN NEGI NIRMALA’S MAIDEN PROPOSALS INCOME TAX CHENNAI SATURDAY JULY 06, 2019 `5.00 PAGES 28 LATE CITY EDITION `5 lakh The Budget has confirmed the promise made in the interim Budget to offer full tax rebate for individuals with net taxable income up to `5 lakh `1.5 lakh Additional tax benefits include `1.5 lakh on interest repaid on loans taken to buy electric car and `1.5 lakh additional benefit on housing loan to buy an affordable house PAN pain eases No PAN needed to file tax returns, quoting Aadhaar number will suffice Tax payers will get pre-filled ITR-1 with details of salary income, capital gains from securities, and dividends A3.18L cr DIGITAL ECONOMY No Merchant Discount Rate (MDR) on customers or merchants with annual turnover above `50 crore for transaction using BHIM UPI, Aadhaar Pay, NEFT, RTGS ALLOCATED FOR DEFENCE SPENDING, NO CHANGE FROM FEBRUARY’S INTERIM BUDGET NO CHANGE IN I-T SLABS IN BUDGET CORP TAX CUT FOR 99% OF BUSINESSES NON-TAX AVENUES TO RAISE MONEY ANGEL TAX HARASSMENT ENDS PLAYING IT SAFE LABOUR LAWS Govt will streamline multiple labour laws into a set of four labour codes To address labour shortage, govt will focus on training new-age skills such as artificial intelligence, robotics, 3D printing PRICEY GOLD 12.5% Customs duty on gold increased from 10% REAL E S TAT E 19.5 mn rural homes to be built by 2022 COSTLIER Petrol and diesel Cigarettes, hookah & chewing tobacco Gold and silver Fully-imported cars Split ACs Loudspeakers Digital video recorders Imported books CCTV cameras Cashew Kernels Imported plastics Vinyl flooring, tiles Optical fibre Ceramic/wall tiles Imported stainless S U N I T H A N AT T I FINANCE Minister Nirmala Sitharaman’s maiden Budget presented on Friday appears to be a case of bread and circuses. To put it mildly, it’s a play-safe, please-all act. Having inherited constipated coffers, Sitharaman tried to live up to the expectations with her ‘New India’ dream, and the promise of structural reforms. The two-hour speech saw headline-grabbing initiatives such as pension benefit scheme for small retailers, reheat of past proposals like raising tax exemption to `5 lakh, and social welfare measures including 1.95 crore houses, Har Ghar Jal, Ease of Living for farmers, power, and gas connections for households. There were usual concomitants, too, like roads, railways and agriculture. But, they all need cash — and lots of it. But the FM vowed to stick to the 3.3% fiscal deficit target, winning admirers including rating agencies. Much depends on tax revenue, particularly GST, which is unlikely to start its star performance until FY22. In order not to crowd out domestic markets, Sitharaman discovered an unexplored area to dig in for funds and will start raising cash from external markets through sovereign dollar bonds. The move triggered a mini bond market rally though equity mar, kets remained unmoved with the Sensex closing over 300 points lower. While the middle-class got tax breaks with increased tax exemption on housing loans, the axe fell on the super rich, with surcharge for income above `2 crore. Sitharaman was brave enough to tell them they can’t have it all and that taxation isn’t to raise revenue but to distribute income evenly Just as she began her tax . proposals, she narrated a story in Tamil about how an elephant’s greed can trample food grains quantity. That brought the first and only genuine lighter moment of the day . The 25% corporate tax slab was extended to 99% of the businesses. For large enterprises — the holy grail of corporate taxes — Sitharaman remained spectacularly tin eared. Sectors like aviation, insurance, media and real estate are opened up for FDI, while a social stock exchange will help social entities raise capital via equity, debt or units like mutual funds, but authorities haven’t yet got around to writing it. Labour laws will Pay over `2 more per litre of fuel steel products E X P R E S S N E W S S E R V I C E @ New Delhi parts RETAIL fuel prices across the country are set to rise by around `2.50 per litre for petrol and `2.30 per litre for diesel after Finance Minister Nirmala Sitharaman announced in her maiden budget that the government will hike special additional excise duty and infrastructure cess by `1 each per litre. “Crude prices have softened from their highs. This gives me a room to review excise duty and cess on petrol and diesel. I propose to increase Special Additional Excise duty and Road and Infrastructure Cess each by one rupee a litre on petrol and diesel,” she said. This will result in an effective hike of a little over `2 per litre on the two motor fuels, depending on the quantum of local sales taxes and Value Added Tax (VAT) in respective states. Both these levies are charged after factoring in the additional excise duty hike. Customs duty of `1 per tonne on crude oil import has also been imposed. CHENNAI The hike will further cripple the transport sector, said Bal Malkit Singh, chairman of core PrePostOil committee, All-India Motor Transport Congress. Budget Budget “The transport sector is cash-based and has Petrol J73.19 J75.69 already been reeling under many other issues,” Diesel J67.96 J70.26 he said. Imported auto Newsprint and paper for newspaper / magazines Marble slabs Mountings for furniture CHEAPER Electric vehicle components Camera module and charger of mobile phones Set top box Import of defence equipment that are not manufactured in India KIND OF R-DAY PARADE IN U.S. SALUTE TO AMERICA Held for the first time in decades, the parade was President Donald Trump’s brainchild. In his Salute to America address, he paid tribute to the armed forces as part of the US Independence Day celebrations before the Lincoln Memorial in Washington IMPRESSIVE FLYPAST Abrams tanks rumbled and fighter aircraft, including a B-2 bomber and F-35s roared overhead as Trump spoke | P16 We will always be the people who defeated a tyrant, crossed a continent, harnessed science, took to the skies, and soared into the heavens ESTIMATED It was not a typical Trump speech as it was hardly polarising despite opponents saying he was politicising a non-partisan celebration be rationalised, though she didn’t exactly say when. The Modi Sarkar-1’s economics sleepwalked us into a slowdown, yet Sitharaman refrained from bold moves, settling for a `27.8 lakh crore expenditure budget. The shortfall in tax revenue, she believes, can be met with disinvestement proceeds, pegged at `1.05 lakh crore. In other words, PSUs are the answer to book balance our finances, as opposed to the problem bleeding our finances. There are chronic under-performing entities, in which government stake will now be offloaded over 49%. The mention of Air India divestment — a non-starter for years — was but a whimper. While affordable housing got its due, archaic rental laws will be replaced by a model tenancy law. As for startups, the FM decided to end the angel tax uncertainty once and for all. In the past five years, $1 trillion is added to the economy — no different from what the UPA did. So the NDA government, to paraphrase Sitharaman’s words, now wants to deploy Naari shakti to do what no man has done before: add $2 trillion in just about the same time. High on rhetoric but pragmatic? Doesn’t sound so. INSIDE Credit guarantee to non-banking financial companies will give liquidity support | P8 Robin Hood super tax on Richie Rich J AYA N TA R O Y C H O W D H U R Y @ New Delhi Affordable housing sector, start-ups get major boost To keep its Housing for All scheme running at full steam, the government has offered additional incentives for the sector ` HOUSING BANKING NGOs First-time buy of a house costing not more than `45 lakh will get an additional deduction of `1.5 lakh towards interest paid on housing loan. This is over and above the `2 lakh deduction available till now The government will pump in `70,000 crore to boost publicsector banks’ lending capacity. Recapitalisation would be done through the recap bonds. Govt plans to reduce the number of PSU banks by eight Social enterprises and bodies working for social welfare to be listed in Social Stock Exchange under Sebi’s guidance. Social Stock Exchanges already exist in the UK, Canada, Singapore, South Africa, Brazil etc S TA R T- U P S WOMEN S PAC E To resolve the ‘angel tax’ issue, start-ups and their investors who file requisite declarations and provide information in their returns will not be subjected to any kind of scrutiny in respect of valuations of share premiums Every verified woman SHG member having a Jan Dhan Bank account will be eligible for an overdraft of `5,000. Plus, one woman in every SHG will be made eligible for a loan up to `1 lakh under the MUDRA scheme The financial outlay for the Department of Space (DoS) raised to `11,177.46 crore. The DoS will also form a commercial arm, New Space India Limited (NSIL), to commercialise various space products developed by ISRO Customs waiver to boost domestic players, made in India products | P8 Govt to infuse `70,000 crore into public banks in FY20 | P8 Tall on Gaon, short on jobs, but some longterm thinking | P10 Focus on infrastructure, mixed bag for the middle class | P10 Agri and allied sectors get big push with 78% budget hike | P11 Labour laws planned to be streamlined | P11 Modi 2.0 budget skips some important economic issues | P12 Tax on HNIs, public holding limit hike dampen markets | P17 Boost for EVS; oil cess to hit auto sector | P17 With this Budget, the poor will be strengthened and youth will get a better tomorrow. The middle class will progress Every Indian would want India to become a $5 tn economy... but it requires an annual GDP growth rate of 14% The budget has several new goals to boost the development of our country. I welcome the FM’s announcements Narendra Modi, Prime Minister Anand Sharma, Congress Edappadi K Palaniswami, CM Convicted, Vaiko’s RS dream may be at stake H A R I S H M U R A L I @ Chennai MDMK chief Vaiko has been sentenced to one year simple imprisonment on charges of sedition, for a speech he made a decade ago at a book release function in support of the banned outfit LTTE. Vaiko had attacked the Centre and State governments for supporting the Sri Lankan government in the war against LTTE. The conviction, coming at a time when Vaiko is planning to contest Rajya Sabha polls, has raised doubts about his eligibility . Former Madras High Court judge TN Vallinayagam says conviction in a sedition case could hurt Vaiko’s chances. “Only the operation of the sentence is stayed, not the conviction.” Though law disqualifies an elected representatives only if they are sentenced for two years or more, Vallinayagam says since the charge is sedition, the Election Commission may reject his nomination. “A third party may also raise objections,” he said. GIVE ME MAXIMUM PUNISHMENT, VAIKO TO JUDGE: P2 F inance Minister Nirmala Sitharaman decided to play Robin Hood on India’s few declared high net worth individual (HNI) taxpayers by squeezing additional tax out of them to rake in about `12,000 crore more for her gigantic `27.86 lakh crore budget. She enhanced the surcharge on those earning between `2 crore and `5 crore to 25 per cent, so the effective tax rate on them went up by 3 per cent. The surcharge on those earning over `5 crore was raised by 37 per cent, increasing the effective tax on them by 7 per cent. “The budget imposed a heavy income tax liability on HNIs having income of over `2 crore. For an HNI who earns over `5 crore, the effective rate of taxation would now be 42.74 per cent, while for those in the `2 crore to `5 crore bracket, it would be 39 per cent,” said Swapan Sarkar, president of the Indo-American Chamber of Commerce. India has a very narrow base of 4.6 crore taxpayers, of which just 14,011 are in the super-rich category as they declare an income of over `5 crore per annum. However, the super-rich account for 34.25 per cent of the total tax mop-up, according to data with the Central Board of Direct Taxes, which is what prompted the idea of a Robin Hood tax. However, officials admit that tax administrators could have instead tried to widen the base rather than impose pain on those who honestly declare income. Some six years ago, C Rangarajan, the then chairman of the prime minister’s economic advisory council, had argued in favour of taxing the rich at a higher rate, which had prompted the government of the day to come up with a ‘rich’ tax surcharge on those earning more than `50 lakh a year. In the US, more than a dozen prominent billionaires, including financier George Soros and Facebook co-founder Chris Hughes, recently wrote to US Presidential candidates for 2020 seeking a new government tax on extreme wealth to help combat income inequality . EXPRESS READ Govt curtails tenure of Nageswar Rao New Delhi: The Prime Minister-led Appointments Committee of the Cabinet Friday “curtailed the tenure” of CBI Additional Director M Nageswar Rao and transferred him to the Home Ministry as Director General Fire Services, Civil Defence and Home Guard 1 killed in Madurai building collapse One construction labourer died and six others were injured when an unapproved under-construction building collapsed in Checkanurani on Friday. Few persons are feared to be trapped in the rubble but officials could not confirm the same. Rescue works are on | P4
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