Finance Minister Nirmala Sitharaman made a slew of big announcements to boost the economy including rate cuts on home, vehicle and retail loans, simplification of the GST regime and major incentives to the automobile industry that has been witnessing a particularly bad slump. Sitharaman, however, maintained that the measures were being rolled out in response to repeated demands made by industry, just so that ‘everyone should know this is a responsive government.’ In a special media briefing, Sitharaman flanked by top Finance Ministry officials, put forward six sector-based reforms through a power-point presentation and added that two more such briefings will be done in the following two weeks once more decisions are firmed up. With home buyers in the National Capital Region and Mumbai hit badly as their advance payments remain stuck with builders and developers for years, Sitharaman said that an inter-ministerial committee is in talks with them and some positive news could be in the offing next week.
On Friday, the government announced that it will withdraw enhanced surcharge on long-term/ short-term capital gains arising from the transfer of equity shares/units for foreign and domestic investors. The GST regime is also set to be simplified further and the government will release Rs.70,000 crore capital upfront to public sector banks to boost credit to different sectors of the economy.
In the 2019-20 Budget, the government had increased surcharge from 15 per cent to 25 per cent on taxable income between Rs.2 crore and Rs.5 crore, and from 15 per cent to 37 per cent for income above Rs.5 crore. It was also applicable for FPIs operating as trusts or as an association of persons. These will be withdrawn, Sitharaman said.
“The current global GDP is projected at 3.2 per cent and will probably be revised downwards. The United States and Germany have seen inverse growth and that is the story of not only the emerging economies but also advanced. As a result of the US-China trade war and currency devaluation of China a very volatile situation in the world has developed. Among the ten major economies, we stand high up,” Sitharaman said. “The Prime Minister keeps repeating that we respect wealth creators and that is the spirit with which budget was presented. We had immediately invited different sectors of the economy to come and say if they had anything to share. There were in-depth consultations which ran for hours. This is only a start. I do not want worries to remain. We have come up with a set of responses and two more sets of announcements can be expected shortly to take care of other issues.”
Assuring ‘ease of life’ for taxpayers, Sitharaman announced a list of reforms such as pre-filling of IT returns, faceless scrutiny from Vijaya Dashami this year, reduction in GST returns and simplification of forms, simplification and automatic refund process of GST. Issue of IT orders, notices, summons, letters, etc to go through a centralised system to address complaints of harassment. All notices, summons, by IT authorities issued on or before October 1 shall be re-issued through a centralised computer system and will contain a computer-generated unique Document Identification Number.
“Tax revenue target given to the authorities is not unrealistic. I have finished three consultations with tax authorities and I didn’t get the feeling that they will have to stretch themselves too far to meet targets. With the monsoon in our favour, the collection is sure to meet the target without any kind of overreach by authorities, which can be construed as harassment by an assessee,” Sitharaman clarified.
The government has also decided to withdraw Angel Tax provisions for start-ups and their investors to mitigate genuine difficulties of start-ups and their investors. It has been decided that section 56
(2)(viib) of the income tax act shall not apply to a start-up registered with DPIIT. It has also been decided to set up a dedicated cell under the member of CBDT for addressing the problems of start-ups.
With an upfront release of Rs.70,000 crores to Public Sector Banks, the government hopes to ease all corporates, retail borrowers, MSMEs and small traders. Sitharaman said there were grievances across the board that rate cuts were not reaching customers and even if they did they were only in trickles. “Banks will launch the repo rate/external benchmark linked loan products… Today’s environment demands that banks become more reasonable,” she added.
“The automobile sector representatives have been meeting us individually. To boost demand, the government will consider various measures including a scrappage policy that should come soon… old and unworthy vehicles will be scrapped and owners to be paid in coupons to buy new vehicles,” Sitharam announced.
Clearing the air over the confusion on Bharat stage Emission Standards of vehicles up to March 31, 2020, she said such vehicles will remain operational till their registration is on and will not have to go off the roads. Among other measures are the revision of one-time registration fees deferred till June 2020 and higher depreciation for all vehicles.
“We are moving from prosecution to a more humane route. The intention of the government is not to pursue prosecution,” Sitharaman maintained. CSR violations will not to be treated as a criminal offence and would instead be a civil liability. The ministry of corporate affairs will review the sections under the Companies Act.
Some measures to encourage corporates include easy incorporation in a single day, integrated incorporation form, shifting of 16 offence sections to monetary penalty only, faster and easier approvals for mergers and acquisitions, modifications in provisions for differential voting rights, withdrawal of over 14,000 prosecutions under Companies Act, Robust IBC framework with amendments supporting MSMEs and home buyers.
THE TALKING POINTS
Banks to make home, vehicle, retail loans cheaper
UK Sinha committee has come up with a lot of suggestions, some have already been included in the reforms announced on Friday and several others are being worked upon
Mandated return of loan documents within 15 days of loan closure to all those customers who have mortgaged documents with the bank
Online tracking of loan applications by customers of retails, MSME, housing, vehicle, working capital, limit enhancements, renewals etc
Banks to issue transparent one time settlement policy.
More credit support for purchase of houses, vehicles, consumption goods
NBFCs to be permitted to use the AADHAAR authenticated bank KYC to avoid repeated processes, necessary changes shall be made in PMLA rules and Aadhaar regulations, easier and fast tracked onboarding of customers
The Prime Minister keeps repeating that we respect wealth creators and that is the spirit with which the budget was presented. We had immediately invited different sectors of the economy to come and say if they had anything to share
— Finance minister Nirmala Sitharaman