CHENNAI ■ MADURAI ■ VIJAYAWADA BENGALURU ■ KOCHI ■ HYDERABAD ■ VISAKHAPATNAM ■ COIMBATORE ■ KOZHIKODE ■ THIRUVANANTHAPURAM ■ BELAGAVI ■ BHUBANESWAR ■ SHIVAMOGGA ■ MANGALURU ■ TIRUPATI ■ TIRUCHY ■ TIRUNELVELI ■ SAMBALPUR ■ HUBBALLI ■ DHARMAPURI ■ KOTTAYAM ■ KANNUR ■ VILLUPURAM ■ KOLLAM ■ WARANGAL ■ TADEPALLIGUDEM ■ NAGAPATTINAM ■ THRISSUR ■ KALABURAGI ■ AMIT BANDRE ■ CHENNAI l SUNDAY l FEBRUARY 02, 2020 l `6.00 l PAGES 30 l LATE CITY EDITION TA K E AWAYS MAJOR REFORMS TO EASE STRESS DDT out No dividend distribution tax (DDT) on companies; levy shifted to recipients. Currently, companies pay DDT at 15% along with surcharge and cess Deposit cover Bank deposit insurance cover enhanced from `1 lakh to `5 lakh per depositor. The current cover is just `1 lakh regardless of the deposit amount if the bank is liquidated Nominal GDP Nominal GDP growth rate pegged at 10% in next fiscal; capital expenditure up by 21%. The nominal GDP for 2019-20 is estimated at 7.5%. Nominal GDP is calculated at current market prices 4.83 lakh DISINVESTMENT Disinvestment target set at a record `2.10 lakh crore, half of which is expected from LIC listing, IDBI stake sale. The rest will come from divestment in PSU banks and financial institutions I-T RATE CUT MADE OPTIONAL FISCAL DEFICIT TARGET 3.5% TOTAL EXPENDITURE UP BY 9% DIRECT TAX PAYERS WHOSE CASES ARE PENDING AT VARIOUS FORUMS GET AMNESTY SCHEME Tax rates at a glance Govt has cut tax rates with the caveat that exemptions should be foregone, claiming the new tax regime would give `40,000 crore relief to tax payers SLABS IN NEW PROPOSAL Income *New Income to Old slab slab rate from rate H2,50,000 H5,00,000 5 0 H5,00,000 H7,50,000 20% 10% H7,50,000 H10,00,000 20% 15% H10,00,000 H12,50,000 30% 20% H12,50,000 H15,00,000 30% 25% H15,00,000+ 30% 30% *Under the proposed new tax structure, the individual will not be able to claim specified deductions and exemptions J AYA N TA R O Y C H O W D H U R Y & ANURADHA SHUKLA FINANCE Minister Nirmala Sitharaman’s much-awaited Budget succeeded in disappointing the stock markets, economic pundits and the common man as it neither delivered the reforms to revive the economy nor put money in the pockets of the masses. Economists had been urging the government to spend big on social, rural and infrastructure sectors to create jobs and demand for goods, which could in turn bolster the slowing economy . However, the Budget shows the governmen’s total expenditure will go up only a modest 9% in 2020-21. The increase ranges from 2.14% to 6% for vital growth sectors such as agriculture, rural development to social welfare. With retail inflation ranging over 7% in December, this could mean a negative growth in outlay in many sectors. “What we find is a Budget long on speech and short on substance,” said M Govinda Rao, former member, PM’s Economic Advisory Council. “We do not see either consumption or investment demand reviving with this Budget,” he added. Low consumer demand has seen India’s factories idle away more than a quarter of their production capacities. Annual bank The new reforms will work to accelerate the economy, financially empower every citizen Narendra Modi, PM A lot of repetition, a lot of rambling, nothing concrete.... The country is suffering Rahul Gandhi, Cong leader It has been prepared to benefit all sections of the society without imposing tax burden Edappadi K Palaniswami, Chief Minister of Tamil Nadu Tax breaks are welcome but growth stimulus is missing | P10 Budget for billions, not billionaires, needed, says Prabhu Chawla | P10 credit growth, too, has moderated from 12.9% in April 2019 to just 7.1% as on December 20, 2019. “The Budget doesn’t seem to have a clear vision to resolve the economic crisis. While we need a capital spending of `25 lakh crore a year, the government’s capital outlay is just `4.12 lakh crore,” said Arun Kumar, Malcolm Adiseshiah Chair, Institute of Social Sciences, New Delhi. Although the gover nment promised an optional new per- Longest Budget speech FM Nirmala Sitharaman on Saturday cut short her Budget speech in the Lok Sabha that had already gone on for a record 160 minutes, as she felt unwell. Two pages of her speech were left unread. She broke her own record of 137 minutes set in the July 2019 budget speech sonal income tax regime, which could notionally cost it `40,000 crore by way of forgone taxes, analysts said most tax-payers may prefer the older tax structure. The re-jigged tax slabs and seemingly reduced taxes in the new voluntary tax regime come with caveats that make taxpayers ineligible for a long list of exemptions including standard deduc- Revenue receipts 19,62,761 Tax revenue 16,49,582 15,04,587 16,35,909 -0.83% 18,50,101 20,20,926 2.96% Total expenditure 27,86,349 26,98,552 30,42,230 9.18% Fiscal deficit 7,03,760 (3.3%) 7,66,846 (3.8%) 7,96,337 (3.5%) Allocations to major sectors (In Rs cr) Agriculture Education 1,51,518 Note: Adjusting 94,854 for inflation, real Health 64,999 growth in allocations Rural development 1,40,762 may remain Defence 3,05,296 or flat marginal MGNREGS 60,000 for certain sectors Social Welfare 50,850 EVAC DONE, BUT CHINA STOPS 6 WITH FEVER China stopped six Indians from boarding Air India’s first special flight at Wuhan for evacuation because they had high fever. The flight returned to Delhi with 324 from Wuhan, the epicentre of the coronavirus outbreak WITH THIS ISSUE CONTAGION CRISIS PLUS 12 PAGES 1,54,775 2.14% 99,312 4.69% 67,484 3.82% 1,44,817 2.88% 3,23,053 5.81% 61,500 2.5% 53,876 5.95% Had assessee not sought any exemption under old regime, tax payable would have been `2.73L. Source: Deloitte E X P R E S S N E W S S E R V I C E @ Hyderabad EXEMPTIONS YOU CAN’T AVAIL UNDER THE NEW REGIME Section 80C (investments in PF, National Pension Scheme, life insurance premium) Section 80D (medical insurance premium), tax breaks on HRA and on interest paid on housing loan Tax breaks for the disabled and for charitable donations Standard deduction of `50,000 currently available to all salaried tax payers Leave travel allowance WHAT THEY SOUGHT, WHAT THEY GOT FINANCE Minister Nirmala Sitharaman’s budget proposal to list the Life Insurance Corporation of India (LIC) could well be the sleeper of the season. The world’s largest life insurer by number of policies at over 300 million is fully owned by government and a public listing will increase transparency accountabil, ity and governance. However, it’s currently a proposal and the government is yet to decide on the quantum of stake sale or by when it will hit the markets. For policyholders, as long as the sovereign guarantee on maturity proceeds and sum assured continues, there won’t be a risk. However, returns on schemes to policyholders may have to be moderated to increase profitability and to boost the technical reserves while facing shareholder and analyst scrutiny says Joydeep K Roy part, , ner & leader, insurance at PWC, adding that another state-run insurer, GIC Re, where government offloaded part stake, saw improved transparency . For the government, the move will imply generous returns. The proposed IPO, when it comes, will probably be the biggest listing and is dubbed as India’s Aramco. Its assets under management stand at over `31.11 lakh crore. The government has to amend the LIC Act before taking the insurer, which enjoys over 68% market share, public. Considered the government’s cash cow, it often comes to the sovereign’s rescue, the most recent being bailing out IDBI Bank. “The listing of LIC would help bridge a gap in the fiscal deficit for FY21,” said Jaideep Hansraj, MD and CEO, Kotak Securities. LIC is also the largest investor in government securities; it invests over `50,000 crore in markets every year. SOME INTERESTING IDEAS, NO BIG BANG STATEMENT HOW THEY MATCH UP Snapshot of budget arithmatic (in Rs cr) Estimate Revised Estimate % change 2019-20 2019-20 2020-21 tion and tax set-offs for long term savings, insurance, etc. Analysts believe this could mean taxpayers would, in most cases, lose out by migrating to the new regime. This, despite the FM promising at the beginning of her speech that the Budget is to boost people’s income and enhance their purchasing power. While the government promised to raise the insurance cover on bank deposits from `1 lakh to `5 lakh, it might not impress many as it comes amid coop bank collapses. Top officials pointed out that Sitharaman was possibly constrained by the fact that India’s public debt has been rising, putting pressure on public finances by way of increased interest payment, slated to go up from `5.82 lakh crore in 2018-19 to `7.08 lakh crore in 2020-21. “Even with these figures, the fiscal deficit is being relaxed by half-a-per cent to 3.5% of GDP said the officials, adding ,” “More relaxations beyond the FRBM Act could reduce India’s sovereign debt rating globally”. The government also doubled its disinvestment target to `2.1 lakh crore by promising to sell shares of the state-run Life Insurance Corporation. Many analysts believe even the relaxed fiscal deficit target is difficult to meet given the continuing trend of shortfalls in tax and other revenue streams. CASE STUDY Explainer on how the tax of a salaried individual with annual income of `15 lakh will be calculated Old regime New regime Salary income H15 lakh H15 lakh Standard deduction H50,000 -House property loss H2 lakh -Deduction under H1.5 lakh -Chapter VI-A Taxable income H11 lakh H15 lakh Health and H7,500 education cess @ 4% H5,700 Total tax payable H1,48,200 H1,95,000 LIC listing on stock market creates buzz S U N I T H A N AT T I DURING downturns, budgets can be a potent tool that can run or ruin an economy . It was presumed Finance Minister Nirmala Sitharaman would go for the whole shebang, infuse rare energy if not , money and boost economic sen, timent, if not growth. But, Budget 2020 wasn’t a big bang nor was it an elevating fireworks display With feeling, . Sitharaman announced a new personal tax regime taking tax slabs to seven. Taxpayers can either stay with old rates and claim exemptions or switch to lower rates without deductions. The ink was barely dry, but the proposal has come off the boil as the new rates increase total tax outgo. This is regressive, but the FM reasoned that in the long run exemptions are going to go anyway Still, none . would consider switching to pay more, yet the budget math calculates the tax relief to cost the exchequer `40,000 crore. As for dividend distribution tax, the spoils went for companies, and tax liability to investors — reason enough to irk Sensex to shed over 1,000 points in protest. Adding to markets’ ire, Sitharaman gave long terms capital gains tax, a royal miss. That said, the budget wasn’t entirely a downbeat statement. While listing of LIC is the sleeper of the season, the tax amnesty scheme to clear a staggering 4.83 lakh pending cases is yet another champion. Un- 15 persons convicted in Ayanavaram child sexual assualt case under POCSO EXPRESS NEWS SERVICE @ Chennai A Special Court for trial of cases under POCSO (Protection of Children from Sexual Offences) Act here on Saturday convicted 15 persons, out of the total 17 accused, in a case of a child sexual assault at Ayanavaram in 2018. One of the accused was acquitted by Judge RN Manjula, citing lack of evidence while another died during the trial. The punishment will be pronounced on February 3. The in-camera proceedings on Saturday went on for more than three hours. The incident came to light on July 13, 2018, when the victim informed her elder sister that she was suffering from acute stomach pain. She also informed her sister that she was raped, sometimes even gang-raped, by men working in the apartment they lived in. Subsequently, her sister informed the parents who complained to Ayanavaram All Women Police Station. On Saturday, amidst high security all 16 were brought to , the court from Central Prison, Puzhal to the Special Court. Special Public Prosecutor (SPP) N Ramesh said, “ The judge read out the charges through which we inferred the sentences against the accused and the entire quantum of sentence will be pronounced in detail on Monday”. He said one of the accused Gunasekaran, a gardener in the apartment, who was arrested in the case, was acquitted for lack of evidence and an appeal will be filed soon after consultation. P6 like past schemes, this one levies no punishing penalties or high rates. Just pay the outstanding and get over with it. The treasury’s top mandarin also wore the britches to end anxiety over safety of bank deposits and raised deposit insur- ance to `5 lakh from `1 lakh. A `8,000 crore was allocated for quantum computing in perhaps the first step into the new world. And to insulate household budgets, the FM proposed a price stabilisation fund to control prices of onions and tomatoes. In line with tradition, agriculture got its fair share, followed by a sizeable outlay for education and health. The FM extolled national security was a priority, but the mere 6 per cent increase in defence allocation is bacon bits. As suspected, FY20 fiscal deficit target will be breached to settle at 3.8 per cent of GDP for FY20, but will return to 3.5 per cent in FY21. Lower tax collections this fiscal forced the government to spend `80,000 crore less and though tax revenue is estimated to grow at 12 per cent, considering the `3 lakh crore shortfall this fiscal, the projected increase amounts to a hill of beans. The upshot was nominal GDP projection of 10 per cent in FY21, which reaffirms that the prevailing economic slowdown amounts to a bruise and not a broken bone (no reces- Another shooting, this time at Shaheen Bagh EXPRESS NEWS SERVICE @ New Delhi TWO days after a youth fired a countrymade revolver at protesting Jamia Millia Islamia students near the university anoth, er man fired two rounds in the air on Saturday at Shaheen Bagh, where protests against the new citizenship law have been going on for close to two months. The police identified him as Kapil Gujjar of Dallupura area in East Delhi. No one was injured in the shooting. In videos on social media while being arrested by the police, he is heard shouting: “Sirf Hinduon ki chalegi (Only Hindus will have their way).” “The man resorted to aerial firing. The police immediately ove r p owe re d a n d caught him,” said DCP Chinmay Biswal. Locals, however, said he was caught by the protesters and handed over to the police. Gujjar, a Class XII dropout, denied association with any group. sionary trend). These are extraordinary times but bleak revenue collections don’t give the FM enough leverage. It needs to be taken. If the idea was to rekindle animal spirits, one would have cut Sitharaman enough slack even if she favoured a runaway spending. But the FM being FM, chose to be conservative with the nation’s finances. Her speech was replete with poetic and patriotic fervour, but lacked a decisive action plan on economic recovery, weak or strong. By resorting to rudimentary principles and living within the means, Sitharaman’s Budget 2020’s intellectual search for growth somewhat seemingly runs in the opposite direction than what’s ideally desired. EXPRESS READ Dalit labourer found dead in police station Vellore: A 55-year-old Dalit labourer, who was taken into police custody for interrogation in connection with a gold coin cheating case, allegedly committed suicide by hanging himself in a toilet at Gudiyatham police station on Saturday | P3 Centre files appeal in Nirbhaya convicts case New Delhi: The Centre challenged the indefinite stay on the execution of convicts in the Nirbhaya gang-rape and murder case before the Delhi High Court on Saturday. The HC sought response of the four convicts and will hear the matter on Sunday
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