Budget 2019-20 highlights that matter for individual investors
Dated: 5th July 2019
· Income tax slab rate unchanged
· Additional deduction of Rs 1.5 lac on interest payment on the loan is taken for purchasing electric vehicles.
· Additional deduction of Rs 1.5 lac on interest payment on home loan under the affordable housing category. This deduction is applicable for loans taken before 31st March 2020.
· TDS of 2% on cash withdrawal exceeding Rs 1 crore in a year from a bank account.
· Surcharge for individuals earning Rs 2-5 crore a year and individuals earning more than Rs 5 crore will increase by around 3% and 7% respectively.
· Pension benefit to be extended to around Rs 3 crore retail traders and shopkeepers with an annual turnover less than Rs 1.5 crore under Pradhan Mantri Karam Yogi Man Dhan Scheme.
Impacting Banking, NBFC and HFC sectors:
· Rs 70,000 cr will be provided to Public sector Banks to boost capital and increase credit.
· Regulating authority over housing finance companies to be returned from NHB to RBI
· Government will provide one-time 6-month partial credit guarantee for the purchase of high rated pooled assets of financially sound NBFCs up to Rs 1 lac cr in FY20. This measure is in response to the funding issues faced by the NBFC sector.
Impacting Capital markets:
· Asked SEBI to consider raising the threshold of public shareholding in listed companies from 25% to 35%. If the change is made, listed companies will have to issue fresh equity or undertake stake sale to comply with the new rules.
· Special Additional Excise duty and Road and infrastructure cess raised by Re 1/litre each on petrol and diesel.
· Import duty to be hiked on gold and precious metals to 12.5%, from the current level of 10%.
· Corporate tax rate of 25% for companies with an annual turnover below Rs 400 cr. The previous threshold was Rs 250 cr.
· Proposed GST rate cut for Electric Vehicles from 12% to 5%.
What the market did not like:
· No relief on the Long term capital gains tax.
· Corporate tax reduction is proposed for companies below Rs 400 cr turnover. Larger corporates get no benefit.
· Special Additional Excise duty and Road and Infrastructure Cess each by one rupee a litre on petrol and diesel. This might have negative implications for the already weak auto demand.