Summary of full Budget 2019

 Current Account Deficit = 2.1% of GDP in 2018-19 (was 5.6% of GDP in 2013-14)
 Tax to GDP ratio estimated at 11.9% in 2018-19 and 11.7% in 2019-20
 Fiscal deficit target = 3.3% GDP (as against 3.4% set in Interim Budget)
 Economy was US$ 1.85 trillion in 2014; has reached US$ 2.7 trillion in 2018; aim to reach US$ 5 trillion in few years
 India to be US$3 trillion economy this year; currently 6th largest in world; 3rd largest after US and China in PPP terms
 India is world’s 3rd largest domestic aviation market
 1st indigenously developed payment ecosystem for transport, National Common Mobility Card (NCMC) - to pay multiple
transport charges (metro, toll tax, bus, parking charges) across country +shopping +withdraw money; runs on RuPay card
 Phase-II of FAME Scheme - outlay of Rs10,000 crore for a period of 3 years, has commenced from 1st April, 2019
 Jal Marg Vikas Project - multi modal terminals at Varanasi, Sahibganj and Haldia + navigational lock at Farakka
 Railway infra to need investment of Rs 50 lakh crores between 2018-2030
 Capital expenditure outlays of Railways = 1.5 to 1.6 lakh crores per annum
 Online provision of loans up to Rs1 crore for MSMEs within 59 minutes; Interest Subvention Scheme for MSMEs – Rs 350
crore for FY 2019-20 for 2% interest subvention for all GST registered MSMEs, on fresh or incremental loans
 Pension benefit to about 3 crore retail traders & small shopkeepers with annual turnover < Rs 1.5 crore under new
Pradhan Mantri Karam Yogi Maandhan Scheme; requires only Aadhaar + bank account
 India requires investments averaging Rs 20 lakh crores/year ($300 bn/year)
 Set up Credit Guarantee Enhancement Corporation for which regulations have been notified by the RBI
 Permit investments made by FIIs/FPIs in debt securities issued by Infrastructure Debt Fund – NBFCs (IDF-NBFCs) to be
transferred / sold to any domestic investor within the specified lock-in period
 To deepen corporate tri-party repo market in Corp Debt Secs,enable stock exchngs to allow AA rated bonds as collateral
 GoI has asked SEBI to consider increasing minimum public shareholding in listed companies from 25 to 35%
 Create an electronic fund raising platform – a social stock exchange - under SEBI regulations for listing social enterprises,
NGOs etc so that they can raise capital as equity, debt or as units like a mutual fund
 Global FDI flows slid by 13% in 2018 to US$1.3tn from US$1.5tn in 2017 as per UNCTAD World Investment Report.
 India’s FDI inflows in 2018-19 = US$ 64.375 billion; 6% growth over previous year
 100% FDI to be permitted for insurance intermediaries
 Increase statutory limit for FPI investment in a company from current 24% to the sectoral foreign investment limit with
option given to the concerned corporate to limit it to a lower threshold
 FPIs to be permitted to subscribe to listed debt securities issued by ReITs and InvITs.
 Merge the NRI-Portfolio Investment Scheme Route with the Foreign Portfolio Investment Route
 Cumulative resources garnered through innovative instruments like REITs, INVITs etc exceed Rs24,000 crore.
 New Space India Limited (NSIL) - new commercial arm of Dept of Space to tap the benefits of R&D by ISRO
 PM Awas Yojana (Gramin): number of days for completion of houses fell from 314 in 2015-16 to 114 days in 2017-18
 Pradhan Mantri Matsya Sampada Yojana (PMMSY) – new focused scheme for fisheries
 PM Gram Sadak Yojana, All weather connectivity by constructing 130 to 135 km road per day; PMGSY-III to upgrade
1,25,000kms of road length over next five years, with estimated cost of Rs 80,250 crore
 Scheme of Fund for Upgradation and Regeneration of Traditional Industries (SFURTI) to set up more Common Facility
Centres (CFCs) to facilitate cluster based development to make traditional industries more productive; focused sectors -
Bamboo, Honey and Khadi clusters; setting up 100 new clusters during 2019-20; Scheme for Promotion of Innovation,
Rural Industry and Entrepreneurship (ASPIRE) to improve the tech of such industries; to set up 80 Livelihood Business
Incubators (LBIs) and 20 Technology Business Incubators (TBIs) in 2019-20 to develop 75,000 skilled entrepreneurs
 Form 10,000 new Farmer Producer Organizations
 Promote Zero Budget Farming
 Jal Shakti Mantralaya = Ministry of Water Resources, River Development and Ganga Rejuvenation + Ministry of Drinking
Water and Sanitation; Har Ghar Jal (piped water supply) to all rural households by 2024 under the Jal Jeevan Mission
 Rashtriya Swachhta Kendra will be inaugurated at Gandhi Darshan, Rajghat on 2nd October, 2019
 Gandhipedia developed by National Council for Science Museums to sensitize youth and society about Gandhian values
 National Research Foundation (NRF) to fund, promote research; will assimilate research grants by various Ministries
Budget and Survey 2019 notes: https://skidha.home.blog/2019/03/14/budget-and-es-2019/ 1
 For higher education - 400 crore provided under the head, “World Class Institutions”, for FY 2019-20
 Start a programme, ‘Study in India’; focus on bringing foreign students to study in our higher educational institutions
 Teachings of Lord Basveshwara - principles of Kayaka and Dasoha; Implementing ‘Kayakave Kailasa’(work itself is heaven)
for skill training; Principle of Dasoha = care for underprivileged persons
 To streamline multiple labour laws into a set of 4 labour codes
 For every verified woman SHG member having a Jan Dhan Bank Account, an overdraft of Rs 5,000 shall be allowed
 One woman in every SHG will be made eligible for a loan up to Rs 1 lakh under the MUDRA Scheme
 Indian Development Assistance Scheme (IDEAS) provides concessional financing for projects and contributes to
infrastructure development and capacity building in the recipient developing countries
 NPAs of commercial banks reduced by > Rs 1 lakh crore over last year, record recovery of > Rs 4 lakh cr due to IBC and
other measures over last 4 years, provision coverage ratio highest in seven years, domestic credit growth risen to 13.8%
 PSBs to be further provided Rs 70,000 crore capital to boost credit for a strong impetus to the economy
 For purchase of high-rated pooled assets of financially sound NBFCs, amounting to Rs 1 lakh crore during current
financial year, govt will provide one time six months' partial credit guarantee to PSBs for first loss of up to 10%
 To allow NBFCs to raise funds in public issues, do away with requirement of creating a Debenture Redemption Reserve
 Return regulation authority over housing finance sector from NHB to RBI
 Govt’s intention to invest Rs 100 lakh crore in infrastructure over the next five years
 To facilitate on-shoring of international insurance transactions and to enable opening of branches by foreign reinsurers
in International Financial Services Centre, reduce Net Owned Fund requirement from Rs 5,000 crore to Rs 1,000 crore.
 Enhanced target of Rs 1,05,000 crore of disinvestment receipts for the financial year 2019-20
 India’s sovereign external debt to GDP is among the lowest globally at < 5%. Govt would start raising a part of its gross
borrowing programme in external markets in external currencies
 New coins of 1 Rupee, 2 Rupees, 5 Rupees, 10 Rupees, 20 Rupees, easily identifiable to visually impaired released
 Direct tax revenue grew by 78% : Rs 6.38 lakh crore in 2013-14 to 11.37 lakh cr in 2018-19 (grew 13.5% from 2017-18)
 Taxpayers’ number also increased by 48%: from 5.71 cr(2013-14) to 8.44 crore(2017-18) taxpayers (13.9% from 2017-18)
 Corporate tax of 25% for companies with annual turnover <400 crore (covers 99.3% companies)(so far limit was 250 cr)
 Govt has moved GST council to lower GST rate on electric vehicles from 12% to 5%; to make electric vehicle affordable,
additional income tax deduction of 1.5 lakh on interest paid on loans to purchase electric vehicles
 Start-ups not required to justify fair market value of their shares issued to certain investors including Category-I
Alternative Investment Funds (AIF) - this benefit to be extended to Category-II Alternative Investment Funds also
 Interest paid on housing loans is allowed as deduction up to 2 lakh in respect of self-occupied property; for further
impetus, allow an additional deduction of up to 1.5 lakh for interest paid on loans for purchase of affordable house of
up to 45 lakh. Hence, purchaser of an affordable house will now get enhanced interest deduction up to 3.5 lakh
 Alignment of definition of affordable housing in IT Act with GST Acts: increase limit of carpet area from 30 square meters
to 60 square meters in Metropolitan regions and from 60 square meters to 90 square meters in non-metropolitan
regions; provide the limit on cost of the house at Rs. 45 lakh in line with the definition in the GST Acts
 Currently, interest on bad or doubtful debts made by SCBs and FIs is allowed to be offered to tax in year in which this
interest is actually received; extend this facility to deposit taking and systemically important non-deposit taking NBFCs
 Relief in Securities Transaction Tax (STT) by restricting it only to difference b/w settlement and strike price for options
 India’s Ease of Doing Business ranking under category ‘paying taxes’ jumped from 172 in 2017 to 121 in 2019
 Propose to make PAN & Aadhaar interchangeable and allow those with no PAN to file IT returns quoting Aadhaar
 To discourage making business payments in cash, levy 2% TDS on cash withdrawal > 1 crore/year from bank account
 Businesses with annual turnover > 50 crore shall offer low cost digital modes of payment to customers and no charges or
Merchant Discount Rate to be imposed on customers or merchants. RBI and Banks will absorb these costs from the
savings that will accrue to them on account of handling less cash as people move to digital modes
 Thru surcharge, enhance tax by 3% for persons with income between 2-5 crore and by 7% for those with income >5 cr
 GST rates have been reduced significantly, where relief of about 92,000 crore per year has been given
 GST payer having annual turnover of <5 crore shall file quarterly return + get free accounting software
 To encourage domestic publishing and printing industry, 5 % custom duty is being imposed on imported books
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 Increase Special Additional Excise duty & Road and Infrastructure Cess each by 1 Re a litre on petrol and diesel
 Increase custom duty on gold and other precious metals from 10% to 12.5%
 Sabka Vikas Legacy Dispute Resolution Scheme that will allow quick closure of litigations from pre-GST era
o Dispute resolution cum amnesty scheme for resolution and settlement of legacy cases on central excise and service tax
o Relief of 40-70% of tax dues; relief from payment of interest and penalty
 Direct Tax Proposals
o Deduction of tax by certain individuals or HUF: Presently, no requirement for individual/HUF to deduct tax at source
on payments made to a contractor/professional when it is for personal use, or if individual/HUF is not audited for his
business/profession. Proposal to insert a new provision making it obligatory for such individual to deduct tax at source
at the rate of 5% if annual payment made to a contractor/professional > Rs. 50 lakh.
o Consideration for TDS on immovable property: It is proposed to provide that for the purpose of tax deduction at
source from payment made for acquisition of immovable property, consideration shall include other charges like club
membership fee, car parking fee, electricity and water facility fee, maintenance fee, etc
o Gifts made to non-residents: Presently, gifts made by a resident to another resident are liable for income tax subject
to some exemptions. It is proposed to provide that gift of any sum of money/property in India, by a person resident in
India to a person outside India, shall be deemed to accrue or arise in India.
 Proposal to make return filing compulsory for persons, who have deposited > Rs. 1 crore in a current account in a year,
OR who have expended > Rs. 2 lakh on foreign travel or > Rs. 1 lakh on electricity consumption in a year
 Tax Incentives for International Financial Services Centre (IFSC) in GIFT City
o Exemption from dividend distribution tax to companies and mutual funds
o A unit in IFSC is allowed deduction of 100% profits for first 5 years and 50% for next 5 years. Proposal to provide 100%
deduction for 10 years. Also, deduction can be claimed for any 10 consecutive years out of 15 years from commencing
o Currently, non-resident not required to pay capital gains tax on transfer of specified securities made on stock exchnge
in IFSC. Now extend this to Cat-III Alternative Investment Fund (AIF) in IFSC of which all unit holders are non-residents
 Incentives for start-ups: The condition for carry forward and set off of losses for eligible start-ups is proposed to be
relaxed enabling them to carry forward losses on satisfaction of any one of two conditions, continuity of 51%
shareholding power or continuity of 100% of original shareholders; condition of minimum holding of 50% of share capital
in the start-up is proposed to be relaxed to 25%
 Incentives to NPS subscribers : Increase limit of exemption from 40% to 60% on final withdrawal from NPS; allow
deduction for employer’s contribution up to 14% of salary from 10%, in case of Central govt employee; allow deduction
under Sec 80C for contribution made to Tier II NPS account by Central govt employees
 Preventing tax abuse : To discourage practice of avoiding Dividend Distribution Tax (DDT) through buy back of shares by
listed companies, propose to provide that listed companies shall pay additional tax at 20% in case of buy back of share,
as is the case for unlisted companies
 Tax reforms by NDA in previous Budgets (including 2019 Interim Budget)
o 100% tax rebate to individuals with income up to Rs. 5 lakh
o Basic exemption limit increased from Rs. 2 lakh to Rs. 2.5 lakh; for senior citizens increased from Rs2.5 lakh to 3 lakh
o Tax rate for the slab Rs. 2.5 to 5 lakh was reduced from 10% to 5%; levy of wealth tax was abolished
o Standard deduction of Rs. 40,000 for salaried taxpayers and pensioners; further increased to Rs. 50,000
o Tax rate for corporate assessees with turnover < 250 crore (NOW 400 crore) was reduced to 25%
o Deduction limit for savings under section 80C was increased from Rs. 1 lakh to Rs. 1.5 lakh
o Deduction limit for medical insurance from Rs. 15,000 to 25,000; for senior citizens, from Rs. 20,000 to Rs. 50,000
o Deduction limit for individuals with disability was increased by Rs. 25,000.
o Deduction of Rs. 50,000 provided on interest income from deposits for senior citizens; Deduction limit for senior
citizens for medical expenditure for critical illnesses was increased from Rs. 60,000 to Rs. 1,00,000.
o Threshold for presumptive taxation of businesses was raised from Rs. 1 crore to Rs. 2 crore.
o For maintenance of books of accounts by individuals/HUFs – income threshold was raised from Rs. 1.20 lakh to Rs. 2.5
lakh; and turnover threshold was raised from Rs. 10 Lakh to Rs. 25 Lakh.
o Presumptive taxation was introduced for professionals having receipts up to Rs. 50 lakh.
o Deduction of interest on loan to buy self-occupied house was increased from Rs. 1.5 lakh to 2 lakh (NOW 3.5 lakh)
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 o Base year for computation of long term capital gains was shifted from 1981 to 2001.
o Holding period for long-term gain on immovable property was reduced from 36 months to 24 months.
o Safe harbour of 5% on stamp duty provided for the purpose of computation of capital gains on immovable property.
 Measures taken in past to curb black money
o Acceptance of cash payment of Rs. 20,000 or more for immovable property transaction was prohibited
o The threshold for cash donation to charitable trusts was reduced from Rs. 10,000 to Rs. 2,000.
o Threshold of Rs. 2,000 was introduced for acceptance of cash donation by political parties.
o Profit rate for non-cash transactions in presumptive regime for businesses was reduced from 8% to 6%.
o Any cash transaction of Rs. 2,00,000 or more was prohibited
 Conceptual – custom duty rates changes
o Reduction in duty on certain inputs and raw materials to incentivise Make in India
o Increase in duty on certain items to provide level playing field to the domestic industry
o Reduction in duty on certain items to promote electrical mobility
o Changes in duty on certain items to address the problem of inverted duty structures in certain sectors
o Reduction in duty on certain items to promote renewable energy
o Withdrawal of duty on certain items used as inputs in sports manufacturing to promote sports exports
o Reduction in duty for defence sector
o Increase in duty on precious metals to earn more revenue
 Conceptual – excise duty rates increased on manufacture of cigarette/tobacco related products to disincentivize their
consumption and to earn more revenue
 Budget estimates for 2019-20 (no need to memorize; only to get a rough idea of the numbers involved)
o Revenue receipts = 19.6 lakh crore; Capital receipts = 8.3 lakh crore; Total receipts = 27.9 lakh crore
o Revenue expenditure = 24.5 lakh crore; Capital expenditure = 3.4 lakh crore; Total expenditure = 27.9 lakh crore
o Revenue deficit = 2.3%; Effective revenue deficit = 1.3%; Fiscal deficit = 3.3%; Primary deficit = 0.2%
o Rupee from: Corporation tax (highest, 21%) > Borrowings and other liabilities(20%) > GST(19%) > Income tax (16%) >
... > Excise duties (8%) > Customs (4%)
o Rupee to: States’ share of tax and duties (23%) > Interest payments (18%) > Central sector schemes (13%) > Centrally
sponsored schemes (9%) > Defence (9%) > Subsidies (8%)
o Primary deficit has either decreased or remained constant (NEVER increased) since 2011-12 (UPSC prelims type
question); no such trend in other deficits
o High allocations to following– Food subsidy to FCI (1.51 lakh crore) > Defence services (1 lakh crore) > PM-KISAN (75k
crore) > various Railway schemes (68k cr) > MGNREGA (60k crore) > Urea subsidy (54k cr)
 Important terms mentioned in the Budget (to be studied from the net)
o Special Economic Zones; International Financial Services Centre
o Interest subvention scheme
o Corporate bond repo; Corporate tri-party repo market
o Credit default swaps
o Infra Debt Fund – NBFCs
o Social stock exchange
o National Infrastructure Investment Fund (NIIF); ReITs; InvITs
o NRI-Portfolio Investment Scheme Route vs Foreign Portfolio Investment Route
o Scheme of Fund for Upgradation and Regeneration of Traditional Industries (SFURTI)
o A Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship (ASPIRE)
o Common Facility Centres; Livelihood Business Incubators; Technology Business Incubators
o Zero Budget Farming
o Compensatory Afforestation Fund Management and Planning Authority (CAMPA)
o Provision Coverage Ratio
o Debenture Redemption Reserve
o Exchange Traded Funds (ETFs); Alternative Investment Funds
o Settlement and strike prices in exercise of options