The cat is out of the bag – the Indian Union Budget for 2019-20. For the last several weeks, many have painted almost every possible pictur♑e of its likely shape. Let us look at what does it mean for most of us? Does it have some goodies? Are there hidden landmines?
Good News:
Fiscal discipline supersedes showmanship: The excess of expenditure over 𓆉receipts have been kept under reasonable control. It is targeted at 3.3% of gross domestic product for next year from 3.4%. This is good news as inflationary pressures should🍸 remain under control. If you recollect that during the recent elections, political parties squeaked to offer numerous sops. Good sense prevailed in overlooking such populist announcements.
Wide range goods may get cheaper – GST rate reduction:
Several items made cheaper: Contrary to expectations, the Budget has laid down a host of items, where the GST rates will reduce. For instance, soaps and𓆏 shampoos from 28% to 18%, unbranded ayurvedic and homeopathy medicines from 12% to 5%.
Diamonds are forever: Diamonds and precio🎉us stones can now be gifted to your valentine – GST rate reduced from 3% to 0.25%.
Many exempted: A great move to exempt several items from GST, and inclu💧des the muꦛch awaited - sanitary napkins.
Small is beautiful:
MSME needs money – cheaper and quicker. Both the concerns are addres🙈sed. There is a 2% interest reduction on all fresh loans taken by GST-registered firms. And a portal will advance loans upto Rs 1 crore within 1 hour.
Women entrepreneurs to be supported: Every verified wo🌸men Self Help Groups having a Jan Dhan Bank Account will get an overdraft of Rs 5,000. One woman in every SHG will also be eligible for a loan of up to Rs 1 lakh.
Startups: No more 🐈Income Tax bickering on ‘valuation’ when they would buy and sell businesses at an early stage.
Ease of living:
Pen♒sion to small traders: Small traders and 👍retailers having turnover below Rs 1.5 crores, will receive a pension. About 3 crores people will benefit from the move.
Helping affordableꦐ housing: Rs 3.5 lakhs tax-calculation deduction will be allowed on in🌌terest on loans taken to buy houses upto Rs 45 lakhs.
PSU bank account flexibility: If you have an account in any one PSU bank, you will soon be able to access all other PSU banks for doorstep banking suppor💯t and online perso♐nal loans.
Peaceful rental: Current Rental Laws are archaic as they do not address the relationship between the Lessor and the Lessee realistically. A Model Tenancy Law will ♑be finalised to 🐷make life simpler for both.
Ease of doing business:
Tax rates reduced to 25%: For companies with turnover less than Rs 400 crores, which is almost 99% of all enterprises, will now pay lower corporate tax of 25% (against 30%). This extra money in corporate’s h🐈ands should enhance further generatioﷺn of economic wealth.
Borrowings to get better: Many banks have become sick due to non-recovery of large qu♌antum of loans disbursed earlier. The government plans to strengthen the capital of many PSU banks by infusing Rs 70,000 croreꦇs. This will boost credit and also make NBFCs access more funding.
Connectivity is lifeblood: The budget also has provisions to boost infrastructure bꦺy building roads, railways, waterways, airways and ports. This will not only help employment but should reduce logistics cost for businesses.
Ease of enjoyment:
Entertainment gets cheaper: GST ꦯrate♉s are reduced on cinema tickets to 18% from 28% for tickets above Rs 100.
Enjoy better holidays: 17 iconic tourism sites will be developed into world class tourist destinations. You will now be able🍸 to enjoy great holidays without going ab⛎road!
Your new car, to be EV:
Electric Vehicle is one of the flavour of this Budget – and rightly so to ꦆsave the country of some obnoxious gases from petroleum burn and high import bill. When you buy your next EV car, not only you pay lower GST at 5%, you will get an incentive and receive tax benefit of Rs 1.5 lakhs on interest paid when bought with borrowed mo♊ney. What more do you want for your next car?
Divestment to bring in good cash:
Most government compཧanies do not generate fair returns. They need to be sold. Government rightly decides to sell and rꦑecover Rs 1.05 lakh crores. This is getting good dough to spend on some good cause.
Not So Good News:
Not a word on our bravehearts: There is no mention of defence. So much was made out before the elections on border skirmishes and our armed forces battling fearlessl🎃y, but not to find any mention in the budget speech, is a big let-down.
Go after the super rich: Individuals having taxable income of Rs 2 to 5 Crores will pay 3% more tax, ♊and for income over Rs 5 crores, additional tax of 7%. While taxing the rich looks logical, it may encourage many successful entrepreneurs to leave India and seek refuge in low tax regimes - a trﷺend seen globally.
Jewellery duty higher, may encourage smuggling: Customs duty is enhanced from 10% to 12.5% on gold and silveꦆr imp🌼orts. This will encourage smuggling. In fact, there was a case to reduce duty, to discourage illegal imports.
Not all import duty increases are good: Customs duty on various items have been enhanced presumably keeping Make-in-India in mind. But it seems some increases are more out of lobbying than sane sense. For instance, duty on PVC enhanced from 7.5% to 10%. Only half of India’s PVC consumption is manufactured indigenou꧋sly. Logically, it’s a bad move to enhance cost of the economy when imports are a must.
Any exercise of the magnitude of the Union Budget is bound to have pros and cons. National budgeting exercise is like trying to make a new shape out of a blown-balloon. More you work on it, more the shape keeps going awry. The demands are too many, resources are scarce and options are limited. Even if three-fourth of the Budget vision statements are implemented, India would be a lovely💖 country.
(Robin Banerjee is the Managing Director, Caprihans I Ltd. and the author of Who Cheats and How? Views expressed are personal.)
