On July 5, India’s second woman Finance Minister, Nirmala Sitharaman, presented the full Budget for 2019…
What does the Budget bring for you?
If your taxable income is within the Rs 2-crore bracket, there’s no major change in the Income-Tax deductions. But the rich and the super-rich will have to shell out quite a lot because of the rise in surcharge. A look at the break up…
- For taxable income of Rs 2-5 crore, the surcharge has increased from 15% to 25%, so a person with taxable income of Rs 2.5 crore will have to pay Rs 95.06 lakh — up Rs 7.61 lakh from Rs 87.45 lakh earlier
- For those with taxable income above Rs 5 crore, the surcharge has been increased from 15% to 37% — a massive 22 percentage points. So, with a taxable income of Rs 5.5 crore, a taxpayer will have to pay Rs 2.32 crore as opposed to Rs 1.95 crore earlier
What goes up, what goes down!
- With the increase in taxes, the prices of petrol and diesel are likely to increase between Rs 2.3 and Rs 3 per litre across India
- Customs duty on gold, silver and platinum bars have increased by 2.5%, to make jewellery purchases costlier
- Goods, such as Italian marble, imported split ACs, imported international best-sellers, luxury cars, CCTV cameras and sound systems to cost more
- Import duty on capital goods for manufacture of electronic goods to cost less — especially in sunrise sectors — as a boost for the ‘Make in India’ scheme
Kuldip Maity, MD & CEO, Village Financial Services Ltd
‘Much-needed impetus to PSBs’
‘We welcome Hon’ble Finance Minister Nirmala Sitharaman’s move to provide a one-time, six-month, partial credit guarantee to PSBs for first loss of up to 10% for purchase of high-rated pooled assets of financially sound NBFCs amounting to a total of Rs 1 lakh crore. This is aimed at providing the much-needed impetus to public sector banks to buy pooled assets of NBFCs. Considering that, it’ll cover first loss of up to as high as 10% and should push PSBs to infuse liquidity into NBFCs by way of pool buyout. However, since the Finance Minister mentioned ‘high-rated pooled assets of financially sound NBFCs’, it would be interesting to see if there’s any further clarification with respect to the qualifying criteria for this scheme.’
Surendra Kr Jain, MD, Shree Bahubali Stock Broking Ltd
‘It’s a rural budget!’
‘The Finance Minister has presented a Budget for New India that lays the foundation of an inclusive and progressive nation. In line with expectations, this Budget isn’t positive for the stock market in the short term and medium term as the benchmark indices are already ruling at all-time highs. The absence of considerable stimulus packages worsens the scene. Corporate banks and the housing sector, infra sector and strong NBFCs are good bets for the long-term.
‘Looking ahead, the market’s focus will immediately shift to corporate earnings, monsoon behaviour, geo-political factors and central bank meetings and investors will soon forget the Budget speech.
‘As anticipated, this Budget puts greater emphasis on the infrastructure sector and road projects for rural India. ‘Har Ghar Jal’ to all households by 2024 under the ‘Jal Jeevan Mission’ is added in this Budget along with the old slogans of ‘Housing for All by 2022’ and ‘Electricity and clean cooking facility for all by 2022’. PSU banks will be recapitalized with a stimulus package of Rs70,000 crore against the market expectations of Rs50,000 crore for credit improvement.
‘The Finance Minister has proposed that the SEBI consider increasing the threshold limit of public shareholdings from 25% to 35%, which, if implemented, will lead to paper supply of around 1,500 companies in the stock market.
‘A few measures were also announced for the ailing NBFC sector. In a move to restore liquidity in the NBFC sector and push banks to buy assets from them under the pool purchase programme, the government will provide a one-time, six-month partial credit guarantee to public sector banks for first loss of up to 10%. This incentive is superficial in my opinion. The change of regulator from the National Housing Bank (NHB) to the RBI for housing finance companies (HFCs) is positive for the sector in the long term and will boost the image of HFCs in the eyes of investors.
‘The paramount announcement was the Budget proposing to borrow from abroad in foreign currencies to fund government borrowing, citing the lowest external foreign debt-equity ratio. This will not come risk-free as it will entail currency risks.
‘The Budget has targeted PSU divestment at Rs1.05 lakh crore. This target looks difficult to achieve unless some financial jugglery is done as in the past 2 years by cross-selling PSUs.
‘The Finance Minister has proposed to increase the surcharge for those earning Rs2-5 crore to 3% and for those earning above Rs5 crore to 7%. This is very negative, although inheritance tax has not been introduced as rumoured.
‘The surprise increase of import duty on gold and other precious metals by 2.5% is negative for the jewellery sector. This announcement will also increase the volume of gold import through the smuggling route. The increase of duty on petrol and diesel was unwarranted.
‘The Finance Minister has targeted fiscal deficit at 3.3% from 3.4%, but falling GST collections, which aren’t as encouraging as direct tax collections and stiff divestment targets, don’t paint a positive outlook.’