The maiden Budget

07/07/2019

Much ado about nothing, Finance minister Nirmala Sitharaman presented her maiden Budget on Friday with hiked petrol and diesel prices, raised import duty on dozens of items and increased tax on the super-rich as it sought to spur growth through higher spending and sops for startups, housing and corporates. Sitharaman announced further opening up of aviation, insurance and media sectors to foreign investment while throwing a lifeline to the struggling shadow banks (NBFCs) to boost investment and lending in the economy. She made no changes to the income tax slabs but hiked surcharge on the super-rich. Those with a taxable income of Rs 2 to 5 crore will now pay 39 per cent tax while those with more than Rs 5 crore incomes would pay 42.47 per cent.While she made no changes to the income tax slabs but hiked surcharge on the super-rich. Those with a taxable income of Rs 2 to 5 crore will now pay 39 per cent tax.
There nothing new for the common masses but the increase of petrol and diesel prices will increase more problems for a common man as this will directly increase price of everything and anything depending on transport.To spur consumption, she lowered corporate tax on companies with revenue of up to Rs 400 crore to 25 per cent from 30 per cent. Currently, the lower rate is applicable only to companies with revenue up to Rs 250 crore. The Budget also sought to boost 'Make in India' by way of reducing duties on certain inputs and raw materials and creating a level playing field by increasing duties on certain goods. Emphasis has also been placed on promoting electrical mobility by reducing customs duty on parts used to manufacture electric vehicles. Sitharaman surprised most analyst by narrowing the budget deficit target to 3.3 per cent of the GDP for the current fiscal from 3.4 per cent previously. Giving relief to startups, she said they will not be subject to 'angel tax' scrutiny where the companies and investors file certain declarations.
The tax proposals are underwhelming. A small step was taken to lower the headline corporate tax rate to 25%. Companies with a turnover of upto Rs 400 crore, representing 99.3% of base, have been brought into this category. These tentative steps are inconsistent with the goal of attracting large investments in manufacturing. The economy will be better off with a faster transition to lower rates and a phase out of exemptions. The Budget does show the way forward is to attract foreign savings and investment. However, there isn't much by way of a coherent fiscal policy. Actualization of these plans will depend on regulatory details.

Share This Story


Comment On This Story

 

Photo Gallery

  
BSE Sensex
NSE Nifty