Important Highlights of Union Budget 2019-2020 – Free Material PDF

Constitutional Provisions

The term ‘budget’ has nowhere been used in the Constitution. It is the popular name for the ‘Annual Financial Statement’ that has been dealt with in Article 112 of the Constitution.

The budget is a statement of the estimated receipts and expenditure of the Government of India in a financial year (FY), which begins on April 1 and ends on March 31 of the following year.

In addition to the estimates of receipts and expenditure, the budget contains certain other elements. Overall, the budget contains the following:

Estimates of revenue and capital receipts;

Ways and means to raise revenue;

Estimates of expenditure;

Details of the actual receipts and expenditure of the closing financial year and the reasons for any deficit or surplus in that year; and

Economic and financial policy of the coming year, that is, taxation proposals, prospects of revenue, spending programme and introduction of new schemes/projects.

The Railway Budget was separated from the General Budget in 1921 on the recommendations of the Acworth Committee. In August 2016, the Central Government decided to merge the railway budget into the general budget.

Important Highlights of Union Budget 2019-2020

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Union budget for the Financial year 2019-20 was presented by Finance Minister SMT. Nirmala Sitharaman. She is the first full time female Finance Minister.

The Overall size of Budget 2019 -20 is estimated to be Rs.27,86,349 Crore.

Fiscal deficit in FY 19 has been set at 3.3% of the GDP.

The Budget stated that India is set to become $ 3 trillion economy by this financial year and also laid the roadmap for a $5 trillion economy by 2024.

India is now the 6th largest economy in the world.

Indian Economy is globally the 3rd largest in Purchasing Power Parity (PPP) terms.

The Finance Minister flagged ten points of the Government’s “Vision for the Decade”.

These 10 Points are mentioned below:

Building Physical and Social Infrastructure.

Digital India reaching every sector of the Economy.

Achieving Pollution free India with Green Mother Earth and Blue Skies .

Emphasis on Make in India with particular emphasis on MSMEs, Start-ups, Defence manufacturing, automobiles, electronics, fabs and batteries, and medical devices .

Water, Water Management, Clean Rivers.


Blue Economy

Space programmes: Gaganyan, Chandrayan and Satellite programmes .

Achieving Self-sufficiency and Export of food-grains, pulses, oilseeds, fruits and vegetables.

Achieving Healthy Society – Ayushman Bharat, Well-nourished Women & Children, Safety of Citizens .

Building Team India with Jan Bhagidari: Minimum Government Maximum Governance.


Agriculture & Farmers Welfare

Gaon, Garib and Kisan are the focus of the government.

10, 000 New Farmer Producer Organizations (FPO) to be formed to ensure economies of scale for farmers.

Dairying through cooperatives to be encouraged by creating infrastructure for cattle feed manufacturing, milk procurement, processing & marketing.

Union Government to work with State Governments to allow farmers to benefit from e-NAM (Electronic – National Agriculture Market).

Private Entrepreneurship to be supported in driving value-addition to farmers’ produce from the field and for those from allied activities

Zero-Budget farming is natural farming which is neither chemical-loaded nor organic with its reliance on manure.It’s a form of gardening as a self-sustainable practice with minimum external intervention. This concept of Zero Budget Natural Farming (ZBNF) was first propagated 25 years ago by Subhash Palekar as a movement for farmers who were in debt due to the Green Revolution and is now being used by a large number of farmers across the country.


Jal Shakti

New Jal Shakti Mantralaya to look at the management of our water resources and water supply in an integrated and holistic manner . Minister : Gajendra Singh Shekhawat

This was formed by merging of two ministries; Ministry of Water Resources, River Development & Ganga Rejuvenation and Ministry of Drinking Water and Sanitation

Jal Jeevan Mission to achieve Har Ghar Jal (piped water supply) to all rural households by 2024.

To focus on integrated demand and supply side management of water at the local level.

Convergence with other Central and State Government Schemes to achieve its objectives.

1592 critical and over exploited Blocks spread across 256 District being identified for the Jal Shakti Abhiyan.

Compensatory Afforestation Fund Management and Planning Authority (CAMPA) fund can be used for this purpose.


Transport Sector

Transport sector gets enhanced Budget Allocation of Rs 83, 000 crore as Union Budget proposes Development of Highways grid. The Central Road and Infrastructure Cess on petrol and diesel has also been raised by Re 1 per litre. This will give a boost to the development of Infrastructure.

India’s first Indigenously developed payment ecosystem for transport to be based on National Common Mobility Card (NCMC) standards, launched in March 2019.

Inter-operable transport card runs on RuPay card and would allow the holders to pay for bus travel, toll taxes, parking charges, retail shopping etc.

Comprehensive restructuring of National Highways Programme for creation of National Highways Grid.

A massive push given to all forms of physical connectivity through –

(i) Pradhan Mantri Gram Sadak Yojana

(ii) Industrial Corridors, Dedicated Freight Corridors

(iii) Bhartamala and Sagarmala projects, Jal Marg Vikas and UDAN Schemes.

Pradhan Mantri Gram Sadak Yojana (PMGSY)

Target of connecting the eligible and feasible habitations advanced from 2022 to 2019 with 97% of such habitations already being provided with all-weather connectivity.

30, 000 kilo meters of PMGSY roads have been built using Green Technology, Waste Plastic and Cold Mix Technology, thereby reducing carbon footprint.

1, 25, 000 kilo meters of road length to be upgraded over the next five years under PMGSY III with an estimated cost of Rs. 80,250 Crore.

State road networks to be developed in second phase of Bharat mala project.

The Union Budget has also outlined various proposals for giving a boost to manufacturing of electric vehicles and developing India as a global hub for the E vehicles.

FAME II scheme aims to encourage faster adoption of electric vehicles through the right incentives and charging infrastructure. An outlay of Rs. 10, 000 crores for 3 years approved for Phase-II of FAME Scheme.

Only advanced-battery-operated and registered e-vehicles to be incentivized under FAME Scheme.

Customs duty on certain parts of electric vehicles being exempted to promote e-mobility

Government has already moved GST council to lower the GST rate on electric vehicles (EV) from 12% to 5%.

Government will provide Rs 1.5 lakh income tax deduction on interest payments on loan take for purchase of electric vehicles.

Railway infrastructure will need an investment of Rs 50 lakh crore between 2018 and 2030.

Public-Private-Partnership proposed for development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services

Railways to be encouraged to invest more in suburban rail network via Special Purpose Vehicles.

657 KM of Metro Rail network has become operational across the country.

Government envisions using rivers for cargo transport to decongest roads and railways.

Jal Marg Vikas Project, Navigational capacity of Ganga to be enhanced via multi modal terminals at Sahibganj and Haldia and a navigational lock at Farakka by 2019-2020.

Policy interventions to be made for the development of Maintenance, Repair and Overhaul (MRO), to achieve self- reliance in aviation segment.

Regulatory roadmap for making India a hub for aircraft financing and leasing activities from Indian shores, to be laid by the Government.


Rural India

Ujjwala Yojana and Saubhagya Yojana have transformed the lives of every rural family, dramatically improving ease of their living.

Electricity and clean cooking facility to all willing rural families by 2022.

Pradhan Mantri Awas Yojana – Gramin (PMAY-G) aims to achieve “Housing for All” by 2022.

Eligible beneficiaries to be provided 1.95 crore houses with amenities like toilets, electricity and LPG connections during its second phase (2019-20 to 2021-22).


Pradhan Mantri Matsya Sampada Yojana (PMMSY)

A robust fisheries management framework through PMMSY to be established by the Department of Fisheries.

To address critical gaps in the value chain including infrastructure, modernization, traceability, production, productivity, post-harvest management, and quality control.


Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI)

Common Facility Centres (CFCs) to be setup to facilitate cluster-based development for making traditional industries more productive, profitable and capable for generating sustained employment opportunities.

100 new clusters to be setup during 2019-20 with special focus on Bamboo, Honey and Khadi, enabling 50, 000 artisans to join the economic value chain.


Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship’ (ASPIRE) consolidated.

80 Livelihood Business Incubators (LBIs) and 20 Technology Business Incubators (TBIs) to be setup in 2019-20.

75, 000 entrepreneurs to be skilled in agro-rural industry sectors.

Private entrepreneurships to be supported in driving value-addition to farmers’ produce from the field and for those from allied activities.

Dairying through cooperatives to be encouraged by creating infrastructure for cattle feed manufacturing, milk procurement, processing & marketing.


Urban India

Pradhan Mantri Awas Yojana – Urban (PMAY-Urban)

Over 81 lakh houses with an investment of about Rs. 4.83 lakh crore sanctioned of which construction started in about 47 lakh houses.

Over 26 lakh houses completed of which nearly 24 lakh houses delivered to the beneficiaries.

Over 13 lakh houses so far constructed using new technologies.

More than 95% of cities also declared Open Defecation Free (ODF).

Almost 1 crore citizens have downloaded Swachhata App.

Target of achieving Gandhiji’s resolve of Swachh Bharat to make India ODF by 2nd October 2019.

To mark this occasion, the Rashtriya Swachhta Kendra to be inaugurated at Gandhi Darshan, Rajghat on 2nd October 2019.

Gandhipedia being developed by National Council for Science Museums to sensitize youth and society about positive Gandhian values.


Youth

New National Education Policy to be brought which proposes

Major changes in both school and higher education

Better Governance systems

Greater focus on research and innovation.

National Research Foundation (NRF) proposed

To fund, coordinate and promote research in the country.

To assimilate independent research grants given by various Ministries.

To strengthen overall research eco-system in the country

This would be adequately supplemented with additional funds.

Rs. 400 crore provided for “World Class Institutions”, for FY 2019-20, more than three times the revised estimates for the previous year.

‘Study in India’ proposed to bring foreign students to study in Indian higher educational institutions.

Regulatory systems of higher education to be reformed comprehensively:

To promote greater autonomy.

To focus on better academic outcomes.

Draft legislation to set up Higher Education Commission of India (HECI), to be presented.


Women

Approach shift from women-centric-policy making to women-led initiatives and movements.

A Committee proposed with Government and private stakeholders for moving forward on Gender budgeting.


SHG

Nari tu Narayani: Women SHG Interest Subvention Programme to be expanded to all districts in India.

Overdraft of Rs. 5, 000 to be allowed for every verified women SHG member having a Jan Dhan Bank Account.

One woman per SHG to be eligible for a loan up to Rs. 1 lakh under MUDRA Scheme.


MSME

Pradhan Mantri Karam Yogi Maandhan Scheme

Pension benefits to about three crore retail traders & small shopkeepers with annual turnover less than Rs. 1.5 crore.

Enrolment to be kept simple, requiring only Aadhaar, bank account and a self-declaration.

Rs. 350 crore allocated for FY 2019-20 for 2% interest subvention (on fresh or incremental loans) to all GST-registered MSMEs, under the Interest Subvention Scheme for MSMEs.

Payment platform for MSMEs to be created to enable filing of bills and payment thereof, to eliminate delays in government payments.


Energy

Power to be made available at affordable rates to states ensured under “One Nation, One Grid”.

Blueprints to be made available for gas grids, water grids, i-ways, and regional airports.

Cross subsidy surcharges, undesirable duties on open access sales or captive generation for industrial and other bulk power consumers to be removed under Ujjwal DISCOM Assurance Yojana (UDAY).

High Level Empowered Committee (HLEC) recommendations to be implemented for the retirement of old & inefficient plants. Low utilization of gas plant capacity due to paucity of Natural Gas to be addressed.

National Highway Programme to be restructured to ensure a National Highway Grid using a financeable model.


Housing

Model Tenancy Law to be finalized and circulated to the states.

Joint development and concession mechanisms to be used for public infrastructure and affordable housing on land parcels held by the Central Government and CPSEs.

An additional deduction up to Rs. 1.5 lakhs for interest paid on loans borrowed up to 31st March 2020 for purchase of house valued up to Rs. 45 lakhs.

Overall benefit of around Rs. 7 lakhs over loan period of 15 years. Measures to enhance the sources of capital for infrastructure financing:

Credit Guarantee Enhancement Corporation to be set up in 2019-2020.

Action plan to be put in place to deepen the market for long term bonds with focus on infrastructure.

Proposed transfer/sale of investments by FIIs/FPIs (in debt securities issued by IDF-NBFCs) to any domestic investor within the specified lock-in period.


Measures to deepen bond markets:

Stock exchanges to be enabled to allow AA rated bonds as collaterals.

User-friendliness of trading platforms for corporate bonds to be reviewed.


Social Stock Exchange:

Electronic fund-raising platform under the regulatory ambit of SEBI.

Listing social enterprises and voluntary organizations.

To raise capital as equity, debt or as units like a mutual fund.

SEBI to consider raising the threshold for minimum public shareholding in the listed companies from 25% to 35%.

Know Your Customer (KYC) norms for Foreign Portfolio Investors to be made more investor friendly.

Government to supplement efforts by RBI to get retail investors to invest in government treasury bills and securities, with further institutional development using stock exchanges.


Measures to make India a more attractive FDI destination:

FDI in sectors like aviation, media (animation, AVGC) and insurance sectors can be opened further after multi-stakeholder examination.

Insurance Intermediaries to get 100% FDI.

Local sourcing norms to be eased for FDI in Single Brand Retail sector.

Government to organize an annual Global Investors Meet in India, using National Infrastructure Investment Fund (NIIF) as an anchor to get all three sets of global players (pension, insurance and sovereign wealth funds).

Statutory limit for FPI investment in a company is proposed to be increased from 24% to sectoral foreign investment limit. Option to be given to the concerned corporate to limit it to a lower threshold.

FPIs to be permitted to subscribe to listed debt securities issued by ReITs and InvITs.

NRI-Portfolio Investment Scheme Route is proposed to be merged with the Foreign Portfolio Investment Route.

Cumulative resources garnered through new financial instruments like Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs) as well as models like Toll-Operate-Transfer (ToT) exceed Rs. 24, 000 crore.


Direct Taxes

Tax rate reduced to 25% for companies with annual turnover up to Rs. 400 Crore

Surcharge increased on individuals having taxable income from Rs. 2 Crore to Rs. 5 crore and Rs. 5 crore and above.

India’s Ease of Doing Business ranking under the category of ‘paying taxes’ jumped from 172 in 2017 to 121 in the 2019.

Direct tax revenue increased by over 78% in past 5 years to Rs. 11.37 lakh crore

Tax Simplification and Ease of living – making compliance easier by leveraging technology:

Interchangeability of PAN and Aadhaar

Those who don’t have PAN can file tax returns using Aadhaar.

Aadhaar can be used wherever PAN is required.

Pre-filling of Income-tax Returns for faster, more accurate tax returns

Pre-filled tax returns with details of several incomes and deductions to be made available.

Information to be collected from Banks, Stock exchanges, mutual funds etc.


Faceless e-assessment

Faceless e-assessment with no human interface to be launched.

To be carried out initially in cases requiring verification of certain specified transactions or discrepancies.

Appropriate class of persons exempted from the anti-abuse provisions of Section 50CA and Section 56 of the Income Tax Act.


Start-ups

Capital gains exemptions from sale of residential house for investment in start-ups extended till Financial Year 2021.

‘Stand Up India’ Scheme to continue till 2025.

“Angel tax” issue resolved – Start-ups and investors who file requisite declarations and providing information in their returns not to be subjected to any kind of scrutiny in respect of valuations of share premiums.

Funds raised by start-ups to not require scrutiny from Income Tax DepartmentE-verification mechanism for establishing identity of the investor and source of funds.

Special administrative arrangements for pending assessments and grievance redressal – No inquiry in such cases by the Assessing Officer without obtaining approval of the supervisory officer.

There will be no scrutiny of valuation of shares issued to Category-II Alternative Investment Funds.


Indirect Taxes

Make in India

A 5% Basic Customs Duty to be imposed on imported books.

Basic Customs Duty increased on cashew kernels, PVC, tiles, auto parts, marble slabs, optical fibre cable, CCTV camera etc.


Custom duty on gold and other precious metals increased.

Customs duty reduced on certain raw materials such as Inputs for artificial kidney and disposable sterilised dialyser and fuels for nuclear power plants etc. Capital goods required for manufacture of specified electronic goods. 8 Defence

Defence equipment not manufactured in India exempted from basic customs duty & other Indirect Tax provisions

End use-based exemptions on palm stearin, fatty oils withdrawn.

Withdrawal of exemptions from Custom Duty on certain electronic items now manufactured in India.

Withdrawal of exemptions to various kinds of papers.

Export duty to be rationalised on raw and semi-finished leather.

Increase in Special Additional Excise Duty and Road and Infrastructure Cess each by Rs. 1 per litre on petrol and diesel.

Legacy Dispute Resolution Scheme for quick closure of pending litigations in Central Excise and Service tax from pre-GST regime.


Banking and Financial Sector

NPAs of commercial banks reduced by over Rs. 1 lakh Crore over the last year.

Record recovery of over Rs. 4 lakh Crore effected over the last four years.

Provision coverage ratio at its highest in seven years.

Domestic credit growth increased to 13.8%.


Measures related to PSBs

Rs.70, 000 crores proposed to be provided to PSBs to boost credit. PSBs to leverage technology, offering online personal loans and doorstep banking, and enabling customers of one PSBs to access services across all PSBs. Steps to be initiated to empower account holders to have control over deposit of cash by others in their accounts. Reforms to be undertaken to strengthen governance in PSBs.


Measures related to NBFCs:

Proposals for strengthening the regulatory authority of RBI over NBFCs to be placed in the Finance Bill.

Requirement of creating a Debenture Redemption Reserve will be done away with to allow NBFCs to raise funds in public issues.

Steps to allow all NBFCs to directly participate on the TReDS platform.

Return of regulatory authority from NHB to RBI proposed, over the housing finance sector.

Rs. 100 lakh crore investment in infrastructure intended over the next five years. Committee proposed to recommend the structure and required flow of funds through development finance institutions.

Steps to be taken to separate the NPS Trust from PFRDA.

Reduction in Net Owned Fund requirement from Rs. 5, 000 crore to Rs. 1, 000 crore proposed:

To facilitate onshoring of international insurance transactions.

To enable opening of branches by foreign reinsurers in the International Financial Services Centre.


Measures related to CPSEs:

Target of Rs. 1, 05, 000 crore of disinvestment receipts set for the FY 2019-20.

Government to reinitiate the process of strategic disinvestment of Air India, and to offer more CPSEs for strategic participation by the private sector.

Government to undertake strategic sale of PSUs and continue to consolidate PSUs in the non-financial space.

Government to consider going to an appropriate level below 51% in PSUs where the government control is still to be retained, on case to case basis.

Present policy of retaining 51% Government stake to be modified to retaining 51% stake inclusive of the stake of Government controlled institutions.

Government to offer an investment option in ETFs on the lines of Equity Linked Savings Scheme (ELSS).

Government to meet public shareholding norms of 25% for all listed PSUs and raise the foreign shareholding limits to maximum permissible sector limits for all PSU companies which are part of Emerging Market Index.

New series of coins of One Rupee, Two Rupees, Five Rupees, Ten Rupees and Twenty Rupees, easily identifiable to the visually impaired to be made available for public use shortly.


Digital Payments

TDS of 2% on cash withdrawal exceeding Rs. 1 crore in a year from a bank account

Business establishments with annual turnover more than Rs. 50 Crore shall offer low cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants.


Mega Investment in Sunrise and Advanced Technology Areas

Scheme to invite global companies to set up mega-manufacturing plants in areas such as Semi-conductor Fabrication (FAB), Solar Photo Voltaic cells, Lithium storage batteries, Computer Servers, Laptops, etc

Investment linked income tax exemptions to be provided along with indirect tax benefits.


New Space India Limited (NSIL)

Nirmala Sitharaman announced during her Budget speech that New Space India Limited (NSIL), a PSE, incorporated as a new commercial arm of Department of Space. To tap the benefits of the Research & Development carried out by ISRO like commercialization of products like launch vehicles, transfer to technologies and marketing of space products.


Sports

National Sports Education Board (NSEB)

Nirmala Sitharaman announced that National Sports Education Board for development of sportspersons to be set up under Khelo India, to popularize sports at all levels. She has also announced that Khelo India Scheme to be expanded with all necessary financial support.

Khelo India Scheme to be expanded with all necessary financial support.


Pradhan Mantri Gramin Digital Saksharta Abhiyan,

Over two crore rural Indians made digitally literate.

Internet connectivity in local bodies in every Panchayat under Bharat-Net to bridge rural-urban divide.

Universal Obligation Fund under a PPP arrangement to be utilized for speeding up Bharat-Net.


India’s Soft Power

Proposal to consider issuing Aadhaar Card for NRIs with Indian Passports on their arrival without waiting for 180 days.

Mission to integrate traditional artisans with global markets proposed, with necessary patents and geographical indicators.

18 new Indian diplomatic Missions in Africa approved in March, 2018, out of which 5 already opened. Another 4 new Embassies intended in 2019-20.

Revamp of Indian Development Assistance Scheme (IDEAS) proposed.

17 iconic Tourism Sites being developed into model world class tourist destinations.

Present digital repository aimed at preserving rich tribal cultural heritage, to be strengthened.

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