- Date : 22/07/2019
- Read: 3 mins
Tax proposals are aimed at improving the ease of living, promoting Make in India and driving the country towards a digital economy
The Finance (No. 2) Bill, 2019 was passed in the 17th Lok Sabha on July 18, 2019. Finance Minister Ms Nirmala Sitharaman said the tax proposals are aimed at improving the ease of living, promoting Make in India and driving the country towards a digital economy.
While winding the presentation, that lasted over three hours, the FM said, "The intent of the government is to ensure minimum government, maximum governance. Ease of living is the primary driving force of Prime Minister Modi...we are trying to reduce the pain and making sure ease of living dominates everything that we do as regards to taxation."
Related: Deposits in Jan Dhan accounts cross Rs 1 lakh crore
Points debated
Over two dozen official amendments were approved by voice vote, brining the Budgetary exercise for 2019-20 to a close.
The FM, however, did not reconsider the proposal with regards to Foreign Portfolio Investors (FPI), 2% TDS on bank withdrawals in excess of Rs 1 crore, additional cess on petrol and diesel, and hike in customs duty on print material, as demanded by the opposition.
The budget for FY 2019-20 proposes an increase in surcharge from 15% to 25% for those earning between Rs 2 to 5 crore and from 15% to 37% for those with a taxable income in excess of Rs 5 crore.
The escalation in surcharge will increase the effective income tax rate for individuals earning 2 to 5 crores to 39% up from 35.88% and 42.7% for those earning above 5 crores. Ms Sitharaman clarified FPI would not impact individuals earning over 2 crores if they structure themselves as companies rather than trusts to avoid paying the increased surcharge.
Regarding the 2% TDS on withdrawals, the FM assured that taxpayers would not incur any additional burden. The TDS can be adjusted against other liabilities of the assesses.
"I want to assure the members if there are people who are tax-paying citizens, who have withdrawn, this TDS will be adjusted with the total tax due.
So, it's not over and above what is expected to be paid as tax, but it is going to be reconciled with the total tax claim which can be levied on the individual. "It is not something running parallel to it," she said.
The Finance Minister, however, did not address the concerns regarding the cess on diesel and petrol and import duty on newsprint that will adversely affect the common man.
The withdrawal of tax exemption on a pension for disabled armed personnel was undertaken in consultation of the armed forces HQ and was not a call of the Finance Ministry.
Related: Deposits in Jan Dhan accounts cross Rs 1 lakh crore
Looking forward
The Finance Ministry is looking to simplify tax laws and a task force will submit its report on a new Direct Tax Code (DTC) by the end of the month.
Seven legislations under GST will be amended to ensure greater simplicity under indirect tax laws.
To reduce the stress on the NBFC sector, the government will amend the RBI Act to strengthen RBI's regulatory powers and supersede the boards of NBFCs, if required to remove its directors or to amalgamate NBFCs, in public interest and to maintain financial stability. Understand what is Vote-On-Account and know how the government needs to keep aside adequate funds to run the administration.
The Finance (No. 2) Bill, 2019 was passed in the 17th Lok Sabha on July 18, 2019. Finance Minister Ms Nirmala Sitharaman said the tax proposals are aimed at improving the ease of living, promoting Make in India and driving the country towards a digital economy.
While winding the presentation, that lasted over three hours, the FM said, "The intent of the government is to ensure minimum government, maximum governance. Ease of living is the primary driving force of Prime Minister Modi...we are trying to reduce the pain and making sure ease of living dominates everything that we do as regards to taxation."
Related: Deposits in Jan Dhan accounts cross Rs 1 lakh crore
Points debated
Over two dozen official amendments were approved by voice vote, brining the Budgetary exercise for 2019-20 to a close.
The FM, however, did not reconsider the proposal with regards to Foreign Portfolio Investors (FPI), 2% TDS on bank withdrawals in excess of Rs 1 crore, additional cess on petrol and diesel, and hike in customs duty on print material, as demanded by the opposition.
The budget for FY 2019-20 proposes an increase in surcharge from 15% to 25% for those earning between Rs 2 to 5 crore and from 15% to 37% for those with a taxable income in excess of Rs 5 crore.
The escalation in surcharge will increase the effective income tax rate for individuals earning 2 to 5 crores to 39% up from 35.88% and 42.7% for those earning above 5 crores. Ms Sitharaman clarified FPI would not impact individuals earning over 2 crores if they structure themselves as companies rather than trusts to avoid paying the increased surcharge.
Regarding the 2% TDS on withdrawals, the FM assured that taxpayers would not incur any additional burden. The TDS can be adjusted against other liabilities of the assesses.
"I want to assure the members if there are people who are tax-paying citizens, who have withdrawn, this TDS will be adjusted with the total tax due.
So, it's not over and above what is expected to be paid as tax, but it is going to be reconciled with the total tax claim which can be levied on the individual. "It is not something running parallel to it," she said.
The Finance Minister, however, did not address the concerns regarding the cess on diesel and petrol and import duty on newsprint that will adversely affect the common man.
The withdrawal of tax exemption on a pension for disabled armed personnel was undertaken in consultation of the armed forces HQ and was not a call of the Finance Ministry.
Related: Deposits in Jan Dhan accounts cross Rs 1 lakh crore
Looking forward
The Finance Ministry is looking to simplify tax laws and a task force will submit its report on a new Direct Tax Code (DTC) by the end of the month.
Seven legislations under GST will be amended to ensure greater simplicity under indirect tax laws.
To reduce the stress on the NBFC sector, the government will amend the RBI Act to strengthen RBI's regulatory powers and supersede the boards of NBFCs, if required to remove its directors or to amalgamate NBFCs, in public interest and to maintain financial stability. Understand what is Vote-On-Account and know how the government needs to keep aside adequate funds to run the administration.
