Interim Budget - 2019
Union Budget is the most comprehensive report of the government's finances in which revenues from all sources and outlays for all activities are consolidated. The interim budget was presented on February 1, 2019, by the Government of India in the Parliament. While, you would have read a number of articles on the tax implication of this interim budget, we would wish to highlight certain important proposed amendment and the implication that will have on corporate acquisitions, employment in India, micro, small and medium enterprises and entertainment industry going forward.
Implications of Interim Budget 2019 on Corporate Acquisitions
As India requires huge investments in the coming years to overhaul its infrastructure sector to boost growth foreign investment is of prime importance. The finance minister while presenting the interim budget said India received massive foreign direct investment (FDI) worth USD 239 billion in the last five years on account of a stable and predictable regulatory regime, growing economy and strong fundamentals. Healthy growth in foreign inflows helps maintain balance of payments and value of the Indian Rupee.
The interim budget has proposed amendments whereby:
- any issue or transfer of securities will attract stamp duty irrespective whether securities are held in physical or dematerialized form.
- any such stamp duty payable will be calculated on an ad valorem basis on the price paid for the securities. Further, this means that there will be standard rate of stamp duty that will be applicable on any issue or transfer of securities across India, irrespective of the state of incorporation of a company.
- the stamp duty is payable only on one document concerning such issue or transfer of securities and not on multiple documents involved in a transaction.
These are welcome changes and another step towards ease of doing business in India and having a unified system of applicable stamp duty across the country. Certain actions, such as, its notification in official gazette and the rules are yet to be made available in the public domain, which we presume will give us a greater insight to the aforesaid proposed amendments.
Implications of Interim Budget 2019 on Social security for workers
While, the finance minister highlighted certain benefits that were made available to the employees working in the organized sector, wherein, amendment to the Payment of Bonus Act, 1965 was made in 2015, which enhanced the salary limits for employees from Rupees 10,000 per month to Rupees 21,000 per month , to be eligible for bonus under this Act, and maximum bonus payable under the Act was increased from Rupees 3,500 per month to Rupees 7,000 per month in respect of scheduled employments. Similarly, emphasis was made to the amendment in the Payment of Gratuity, Act in 2018, which increased the ceiling on the amount of gratuity payable to an employee from Rupees 10,00,000 to Rupees 20,00,000. Increasing gratuity limit will enable employers to pay higher tax-free gratuity to their employees who have worked for them for more five years. The finance minister proposed to increase the employee’s provident fund (EPF) limit from Rupees 2,50,000 to Rupees 6,00,000, in the event of death of an employee during his service, this move will give relief to both government and private sector employees getting the benefits of EPF. The government, likewise, increased the cover limit of employee's state insurance (ESI) to Rupees 21,000 per month from Rupees 15000 per month and minimum pension amount to Rupees 1,000.
Similarly, the finance minister now in the interim budget had announced a mega pension scheme namely ‘Pradhan Mantri Shram-Yogi Maandhan’ for the unorganised sector workers that will provide pensions to those with monthly income up to Rupees 15,000. Under this, an assured monthly pension of Rupees 3,000 from the age of 60 years shall be paid on a monthly contribution for an affordable amount depending on their working age. An unorganised sector worker joining pension yojana at the age of 29 years will have to contribute only Rupees 100 per month till the age of 60 years. A worker joining the pension yojana at 18 years, will have to contribute as little as Rupees 55 per month only. The Government will deposit a matching amount in the pension account of the worker every month.
Implications of Interim Budget 2019 on Micro, Small and Medium Enterprises (MSME)
The finance minister launched a scheme of sanctioning loans upto 'Rupees 1 crore in 59 minutes', wherein, GST-registered MSME units will get 2 percent interest rebate on incremental loan of Rupees 1 Crore. The government has further proposed that 25 percent of sourcing for government projects would be done from the MSME sector, of which three percent will be from women entrepreneurs. Furthermore, the MSMEs will get an opportunity to sell their products on the Government eMarket place (GeM), a one-stop-shop to facilitate online procurement of common use goods.
Implications of Interim Budget 2019 on Entertainment
The government extended the single window clearance for film shootings to the Indian filmmakers, earlier it was available only for foreign filmmakers.