Flash News Budget 2019 090719FV1 - Sannam S4...digital technology/venture funds. n 100 Business...
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Being the first budget after the historic victory of Modi Government in the recent Lok Sabha elections, the expectations from the budget were high. The budget demonstrated the Government’s commitment to education and development sector. A number of interventions were announced to bring about changes in India’s education system as well as promote impact investing and social welfare. In this white paper, India’s current economic overview and the key proposals under this year’s budget that affect foreign companies that intend to or are currently doing business in India are being discussed. PREFACE th On 5 July 2019, our newly appointed Hon’ble Finance Minister (FM), Nirmala Sitharaman, presented her th maiden budget under Modi 2.0 government for the 6 largest economy in the world currently standing at $2.7 trillion. A day before, the FM tabled the Economic Survey that laid out Chief Economic Adviser Krishnamurthy Subramanian’s blueprint for a $5 trillion economy by 2024-25, at the core of which is an annual growth rate of 8%. For the current financial year, the Survey has estimated economic growth at 7%, marginally higher than last year’s 6.8%. Relying upon behavioural economics to bring about investment and savings, the plan is focused on increasing exports, job creation, removing policy uncertainty and tackling pending cases in courts. [email protected] www.sannams4.com l l EXPLORE ENTER EXPAND UNION BUDGET 2019 Key policy announcements and implications for the next decade 10 Vision Tenets HEALTH PHYSICAL & SOCIAL INFRASTRUCTURE DIGITAL INDIA POLLUTION FREE INDIA MAKE IN INDIA WATER MANAGEMENT AND CLEAN RIVERS BLUE ECONOMY (MARITIME MANAGEMENT) SPACE PROGRAMMES SELF SUFFICIENCY AND EXPORT OF FOOD GRAINS MINIMUM GOVERNMENT, MAXIMUM GOVERNANCE 1
Transcript of Flash News Budget 2019 090719FV1 - Sannam S4...digital technology/venture funds. n 100 Business...
Being the first budget after the historic victory of Modi Government in the recent Lok Sabha elections, the expectations from the budget were high. The budget demonstrated the Government’s commitment to education and development sector. A number of interventions were announced to bring about changes in India’s education system as well as promote impact investing and social welfare.
In this white paper, India’s current economic overview and the key proposals under this year’s budget that affect foreign companies that intend to or are currently doing business in India are being discussed.
PREFACEthOn 5 July 2019, our newly appointed Hon’ble Finance
Minister (FM), Nirmala Sitharaman, presented her thmaiden budget under Modi 2.0 government for the 6
largest economy in the world currently standing at $2.7 trillion.
A day before, the FM tabled the Economic Survey that laid ou t Ch ie f Economic Adv i ser Kr i shnamur thy Subramanian’s blueprint for a $5 trillion economy by 2024-25, at the core of which is an annual growth rate of 8%. For the current financial year, the Survey has estimated economic growth at 7%, marginally higher than last year’s 6.8%. Relying upon behavioural economics to bring about investment and savings, the plan is focused on increasing exports, job creation, removing policy uncertainty and tackling pending cases in courts.
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UNION BUDGET 2019Key policy announcements and implications
for the next decade 10 Vision Tenets
HEALTH
PHYSICAL & SOCIAL INFRASTRUCTURE
DIGITAL INDIA
POLLUTION FREE INDIA
MAKE IN INDIA
WATER MANAGEMENT AND CLEAN RIVERS
BLUE ECONOMY (MARITIME MANAGEMENT)
SPACE PROGRAMMES
SELF SUFFICIENCY AND EXPORT OF FOOD GRAINS
MINIMUM GOVERNMENT, MAXIMUM GOVERNANCE
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country through one centralised body instead of independently by various government Ministries. The aim is to ensure that the overall research eco-system in the country is strengthened with focus on identified thrust areas relevant to our national priorities and towards basic science without duplication of effort and expenditure.
n National Sports Education Board or Development of Sportspersons to be set up under ‘Khelo India’ scheme.
n Focus on skill building in Artificial Intelligence, Internet of Things, Big Data, 3D Printing and Virtual Reality and Robotics. Also, focus on building skill sets needed to work outside India including language training.
Development Sector
n Proposal to create an electronic fund raising platform – a social stock exchange - under the regulatory ambit of Securities and Exchange Board of India (SEBI) for listing social enterprises and voluntary organisations working for the realisation of a social welfare objective to enable them to raise capital as equity, debt or as units like a mutual fund.
n Tax incentives to provide impetus for faster adoption of electric vehicles and set up of related infrastructure.
n Expansion of women self-help group (SHG) interest subvention programs pan-India, along with a ~INR 5,000 loan for every woman under each SHG.
n Constitution of a Water Ministry (‘Jal Shakti Mantralaya’). Focus on integrated demand and supply side management at local level, creation of local infrastructure for rainwater harvesting, groundwater recharge and household waste water management, and ensure that all households have water by 2024.
n Swachh Bharat (Clean India) Mission to be expanded to undertake sustainable solid waste management in every village.
nthBy 2022, the 75 year of India’s independence, every
single rural family to have electricity and a clean cooking facility.
n In the second phase of Pradhan Mantri Awas Yojana – Gramin (PMAY-G), during 2019-20 to 2021-22, 195 million houses are proposed to be provided to the eligible beneficiaries.
n The ‘Scheme of Fund for Upgradat ion and
INDIA’S ECONOMIC SNAPSHOT
nthFrom being the 11 largest economy five years ago,
thIndia is currently the 6 largest economy in the world. rdIn terms of Purchasing Power Parity, it is the 3 largest,
behind China and USA.
n Country’s GDP stood at 6.8% in 2018-19 as compared to 7.2% in 2017-18. This moderation in GDP growth is mainly attributed to the lower growth of ‘agriculture and allied’ sectors as well as services sector (except financial, real estate and professional services).
n While global Foreign Direct Investment (FDI) flows slid by 13% in 2018, $1.3 trillion from $1.5 trillion the previous year, India’s FDI flows in 2018-19 remained strong at $64.375 billion, marking a 6% growth over the previous year.
n Inflation based on Consumer Price Index (combined) declined to 3.4% in 2018-19 from 3.6% in 2017-18. CPI inflation stood at 3% in May 2019.
n Fiscal deficit target for 2019-20 is estimated at 3.3% of GDP vis a vis 3.4% for 2018-19. Target for next two years is set at 3%.
n India’s sovereign external debt to GDP is among the lowest globally at less than 5%.
KEY STRATEGIC ANNOUNCEMENTS
Education Sector
n Introduction of a new National Education Policy that promises to bring about major changes in the education sector, among others, better governance systems and greater focus on research and innovation.
n Proposal to start a programme, ‘Study in India’, that will be focused on bringing foreign students to study in India’s higher educational institutions.
n India to tap its potential to become a hub for higher education. Proposal to reform the regulatory systems of higher education to promote greater autonomy and focus on better academic outcomes. Draft legislation for setting up Higher Education Commission of India (HECI) to be shortly presented.
n Proposal to set up National Research Foundation (NRF) with an annual grant of approx.$3 billion to fund, co-ordinate and promote research in the
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approx.$10 billion to give strong impetus to the economy.
KEY CORPORATE TAX PROPOSALS
The proposals announced in the Budget were aimed at promoting following agenda of the Government:
n Digital and less cash economy
n Ease of business
n Promoting entrepreneurship
n Affordable housing
n Lesser interface with tax authorities
n Make in India
The key tax proposals announced by the Finance Minister are as under:
Corporates
n Tax rate of 25% on corporates extended to all companies having turnover upto INR 4 billion ($58 million) in FY 2017-18 vis a vis earlier turnover threshold of INR 2.5 billion ($36 million).
n No disallowance of payments made without tax withholding to non-residents for payer if the non-resident offers such income in its return in India.
Not For Profit entities
n Greater scrutiny to be observed by tax officer while granting income tax exemption (12AA registration) to non-profit organisations. Tax officer to evaluate whether the applicant has fulfilled requirements under other applicable laws which are material for the purpose of achieving its objectives.
n Tax officer may also cancel 12AA registration in case non-profit organisation is not fulfilling requirements under other applicable laws which are material for the purpose of achieving its objectives.
Individuals
n No change in headline tax rates.
n Surcharge increased on super-rich as below:
¨ Surcharge on individuals having taxable income in excess of INR 20 million ($290,000) but not exceeding INR 50 million ($724,000) – from 15%
Regeneration of Traditional Industries’ (SFURTI) aims to set up Common Facility Centres (CFCs) to facilitate cluster based development to make the traditional industries more productive, profitable and capable for generating sustained employment opportunities. The focused sectors are Bamboo, Honey and Khadi clusters.
n For ease of access to credit for MSMEs, Government has introduced providing of loans through a dedicated online portal. Under the Interest Subvention Scheme for MSMEs, $ 51 million has been allocated for FY 2019-20 for interest subvention for all GST registered MSMEs.
Other
n Boost to aircraft financing and leasing activities to make India a hub for such activities. Policy interventions proposed to create a congenial environment for Maintenance, Repair and Overhaul (MRO) industry.
n Streamlining of multiple labour laws into a set of four labour codes to ensure that process of registration and filing of returns is standardised and lower the number of disputes.
n Proposal to organise an annual Global Investors Meet in India, using National Infrastructure Investment Fund (NIIF) as the anchor, to get all three sets of global players-top industrialists/corporate honchos, top pension/insurance/sovereign wealth funds and top digital technology/venture funds.
n 100 Business Incubators to be set up to enable 75,000 entrepreneurs under ASPIRE (Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship).
n Proposals for strengthening the regulatory authority of India’s central bank, the Reserve Bank of India (RBI), over Non-Banking Financial Companies (NBFCs) placed in the Finance Bill.
n New Space India L imited (NSIL) has been incorporated as a new commercial arm of Department of Space to tap the benefits of the Research & Development carried out by ISRO. The Company will spearhead commercialization of various space products including production of launch vehicles, transfer to technologies and marketing of space products.
n Public Sector Banks to be given additional capital of
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REGISTER FOR THIS WEBINAR »
THE INDIA BUDGET 2017:IMPACT ON FOREIGN ORGANISATIONS IN INDIA
TIMINGS:
USA - 10:00 AM (EST)
USA - 7:00 AM (PST)
UK - 3:00 PM (GMT)
INDIA - 8:30 PM (IST)
ABHINAV SOODManagerTax & Regulatory ConsultingSannam S4
KAPIL DUAGroup CFO & Executive Director of Financial ConsultingSannam S4
Presenters:
15 FEBRUARY 2017
MICHAEL GREENDirector of Client & Stakeholder RelationsSannam S4
ledger for Integrated Tax, Central Tax, State Tax, Union Territory Tax or Cess through a new form.
n Simplified return forms to be implemented soon. Composition registered dealers are required to pay tax quarterly and file return on annual basis.
n On account of contrary rulings from different Advance Ruling Authorities, the Government shall constitute an Authority 'National Appellate Authority for Advance Ruling (NAAAR)' for hearing appeals. It shall pass an order within 90 days from the date of filing of appeal.
KEY INDIAN FOREIGN EXCHANGE CONTROL PROPOSALS
n Single brand retail – relaxation in local sourcing norms proposed.
n 100% Foreign Direct Investment (FDI) to be permitted in Insurance Intermediaries.
n Further relaxation under consideration for FDI in Aviation, Animation, Visual effect, Gaming & Comics (AVGC) and Insurance sectors proposed.
n Permission for investments by Foreign Portfolio Investors (FPI)/ Foreign Institutional Investors (FII) in debt securities issued by Infrastructure Debt Fund – Non-Banking Finance Companies (IDF-NBFCs) to be transferred/sold to any domestic investor within the specified lock-in period.
n FPIs permitted to invest in listed debt securities of Infrastructure Investment Trusts (InviTs) and Real Estate Investment Trusts (REITs).
n Rationalisation and streamlining of existing Know Your Customer (KYC) norms for FPIs to make it more investor friendly without compromising the integrity of cross-border capital flows.
to 25% resulting in effective tax rate of 39%.
¨ Surcharge on individuals having taxable income in excess of INR 50 million ($724,000) – from 15% to 37% resulting in effective tax rate of 42.74%.
n Government to provide access to pre-filled return forms having particulars of income in the nature of salary, capital gain, rent etc.
Others
n Clarification proposed with regard to secondary adjustments in Transfer Pricing provisions. As a major relief, Indian tax payers need not to get money repatriated to India if they pay tax @18% on the secondary adjustment amount.
n It is proposed to promote faceless assessment to cut down interaction between tax payers and tax officers.
n Every person carrying on business and having turnover in excess of INR 500 million ($7 million) during previous financial year has to provide facility for accepting payment through electronic modes. Penal implication in case of non-compliance.
n INR 50,000 ($725) penalty for filing inaccurate details in Statement of Specified Financial Transactions now applicable on all type of filers.
n Online mechanism to be introduced to apply to the tax officer for determination of income of a non-resident for tax withholding purposes.
n A number of proposals announced for start-ups to promote entrepreneurship.
n Tax sops for units established in GIFT City (India’s first International Financial Services Centre (IFSC)).
KEY GOODS & SERVICES TAX (GST) PROPOSALS
The Government has introduced certain amendments in the GST Act 2017 in order to implement the decision taken by GST council. The major proposals are as below:
n It is proposed that interest for late payment of GST shall be levied only on net-liability (i.e. liability after adjustment of input tax credit).
n A registered person can transfer any amount of tax, interest, penalty, fee or any other amount available in the electronic cash ledger to the electronic cash
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ABOUT SANNAM S4
Established in 2008, Sannam S4 works with the world’s leading and most globally ambitious education institutions, small, medium and large companies, non-profit organisations, trade bodies and government agencies.
Operating in over 20 countries, Sannam S4 enables its clients to successfully explore, enter, and expand in these dynamic markets by providing practical, high quality, and reliable local support in areas of market research and partner development, finance & accounting, tax & compliance, staff recruitment and HR advisory.
Sannam S4 is a strategic partner to the U.S. International Trade Administration (ITA) – U.S. Department of Commerce and the UK Department for International Trade and an adviser to several federal governments focused on supporting the interests of institutions and companies internationally.
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Kapil DuaCo-Founder, Group CFO & Executive Director of Financial [email protected]
Neoma KapoorHead - Tax & Regulatory [email protected]
Abhinav Sood Head of Client Relations & International Projects - Financial [email protected]
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