Budget 2019: Finance Minister Nirmala Sitharaman presented her maiden Budget on Friday. In the over two-hour long speech, she made many announcements, including concessions on purchase of affordable housing to a higher surcharge on those earning over Rs 2 crore. Budget 2019 has also addressed the problem of the liquidity crunch in NBFC sector. There is no change in personal income tax rates. As it was announced earlier in February Budget, people earning up to 5 lakhs need not to pay income tax.

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The insurance intermediaries enjoy a massive boost with FDI in the sector increased from 49 percent to 100 percent. Mrutyunjay Mahapatra, MD & CEO, Syndicate Bank, said, "Overall the budget is a positive one. The government has reaffirmed it's trust on PSU banks as per the recapitalisation outlay. The NBFC liquidity problem is also addressed through the 1st loss guarantee on the pool buyouts by banks." 

He said encouragement of Foreign Direct Investment (FDI) and increasing the minimum public holding with widespread digitalisation like an electronic trading platform, non-human tax dispute settlements and disincentivisation for cash transactions by business entities are progressive steps. The boost for MSME, affordable housing and infrastructure sector are expected to generate the growth in the bank credit.

The Budget was also hailed for incentives announced for homebuyers in the affordable housing space.  CS Sudheer, CEO and founder of IndianMoney.com, said now homebuyers buying affordable homes can avail of a total tax deduction of Rs 3.5 lakh on home loans taken up to March 31, 2020. This translates to a benefit of Rs 7 lakhs over a 15 year home loan period. This is a boon from the Finance Minister to the middle class, he said.

The Finance Minister has made the tax filing process easy. PAN and Aadhaar are interchangeable and if you don’t have PAN you can still file ITR just by quoting the Aadhaar number. This is a faceless income tax assessment in electronic mode with no human interface. All a taxpayer must do is verify the pre-filled form and submit the form.

However, there is a piece of bad news for the super-rich as they have to pay more now. India’s peak tax rate for the super rich is 42.7 percent which is higher than the US which stands at 40 percent.  The super-rich who earn more than 5 crore now has to pay a surcharge of 37 percent on their tax, which is over and above the 30 percent marginal tax. This is an effective rate of 41.1 percent, said Sudheer. The super-rich will now bear the tax burden, instead of the middle class.

The insurance intermediaries enjoy a massive boost with FDI in the sector increased from 49 percent to 100 percent. This is great news for the insurance brokers, insurance repositories, TPAs and web aggregators as more foreign funds will flow into the sector. Insurance penetration was a meagre 3.4 percent in 2015 compared to a World average of 6.2 percent. Foreign investments are crucial to increase penetration as crores of Indians still remain uninsured.