Tax Surcharge on FPIs & Domestic Investors Revoked: FM Nirmala Sitharaman Finance Minister Nirmala Sitharaman announces stimulus measures to boost the economy
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Amid the concerns of economic slowdown, Union Minister Nirmala Sitharaman assured the countrymen that India's growth is better than rest of the world. "Indian GDP growth continues high above other countries; consumption growth is down in not just emerging but also advanced economies; volatile situation has developed in global trade," she started.
Global growth is 3.2 per cent which is likely to be revised downwards. She directed the focus towards the US-China trade war that has led to the Chinese currency devaluation, adversely affecting the world. Despite the slump in the economy, "We are maintaining the reform momentum, be it regarding labour reforms or environmental clearance," Sitharaman boasted.
Addressing the media, Finance Minister Nirmala Sitharaman outlined stimulus measures the government plans to take for boosting the economy:
Quoting the Prime Minister Narendra Modi, "We respect wealth creators," Sitharaman shared that the violations in Corporate Social Responsibility will not be treated as criminal offences and would instead be civil liability. "There is no intention of the government to go on the prosecution route," she clarified.
Digitized Approach for IT Summons
There has been a flurry of complaints about the harassment on account of notices, summons, orders, etc issued by the Income Tax Department. A centralized computer system with a unique Document Identification Number will issue these notices from October 1, 2019. All old IT notices issued till now will have to be cleared in 1.5 months.
Relief from Enhanced Surcharge
In order to encourage investments in the capital market, the government has decided to withdraw surcharge levied on long and short term capital gains on equities. Surcharge on Foreign portfolio investment (FPIs) and domestic investors has also been revoked. The tax measure would cost the government exchequer INR 1,400 crore.
Removal of Angel Tax Provisions
The Finmin announced to withdraw angel tax provisions for start-ups and their investors. "It has been decided that section 56(2)(viib) of the Income Tax Act shall not be applicable to a startup registered with DPIIT. A dedicated cell under Member of CBDT would be set up to resolve any income-tax related issues faced by the startups.
Additional Capital Release Through PSBs
For benefiting Corporates, Retail borrowers, MSMEs and small traders, the government announced an upfront release of INR 70000 crores as additional lending and liquidity to the tune of ~INR 5 lakh crore by providing upfront capital to PSBs.
"Banks have decided to pass on rate cuts by RBI to borrowers; launched repo rate or external benchmark-linked loan products," Sitharaman said, adding the home loans and auto loans by banks will be made cheaper.
The housing finance companies will get an additional INR 20,000 crore from the National Housing Board (NHB). The funding to the NHB has been increased to INR 30,000 crore, up from INR 20,000 crore. Partial Credit Guarantee Scheme for purchase of pooled assets of NBFCs/HFCs upto INR 1 lakh crore to be monitored at the highest level in each bank.
GST Refund Within 30 Days
All pending GST refunds to be paid within 30 days to all MSME, the finmin said. For future, all GST refunds shall be paid within 60 days from the date of application. It was announced that TReDS will use GSTN system in medium term to enhance market for bill discounting for MSMEs. Further, MSME Act will go to the cabinet so they can come up with a single definition of 'MSME'.
Deepening Bond Market
In order to improve access to long term loans, it is proposed to establish an organization to provide Credit Enhancement for Infrastructure and housing projects. Broad basing & deepening bond markets in India a credit enhancement organization for infrastructure and housing projects; further development of Credit Default Swap markets & alignment of bond market regulations with international best practices.
Access to Global Markets
The Depository Receipt Scheme 2014 is expected to be operationalized soon. This will give Indian companies increased access to foreign funds through ADR/GDR. To further improve market access for the domestic retail investors, Aadhaar-based KYC to be permitted for opening of Demat account and making investments in mutual funds.
The issue of delayed payments from government/CPSEs to now be monitored by Department of Expenditure & performance reviewed by Cabinet Secretariat. INR 100 lakh crores will be released by the government for developing modern infrastructure over five years.
Addressing the concerns of automotive industry, Sitharaman assured that the BS IV vehicles purchased till 31.03.20 will remain operational for entire period of registration. She furthered announced an additional 15 per cent depreciation on all vehicles, to increase it to 30 per cent. Ban on purchase of new vehicles for replacing all old vehicles by departments was also lifted by the government.