In a bid to boost economy, capital markets and consumption, Finance Minister Nirmala Sitharaman on Friday announced a slew of measures including the rollback of controversial tax surcharge on foreign portfolio investors (FPIs) and equities of domestic investors announced in the Budget last month besides some reliefs for the beleaguered automobile sector.
Amid concerns over economic slowdown, she addressed a press conference in which she also announced the withdrawal of ‘angel’ tax provision for startups and their investors.
The impact of rollback of enhanced tax surcharge will be about Rs 1,400 crore. The minister also promised a review of enhanced surcharge on high net worth individuals in 2022 when the country celebrates 75th anniversary of Independence.
The government has decided to withdraw enhanced surcharge levied on long and short-term capital gains arising from transfer of equity shares. “The pre-Budget position is restored. The enhanced surcharge levied by Finance Act 2019 on long and short term capital gains tax is being withdrawn,” Sitharaman said.
“This is only a start of measures. More moves to stimulate the economy will be announced by middle of next week,” she said. “To address concerns of homebuyers, measures will be announced soon and another package will follow shortly.”
India’s GDP growth in the January-to-March quarter slid to a near five-year low of 5.8 per cent.
“I want to assure that we are responsive to changes in the economy. Reforms is a continuous process for this government. Now, faster approvals are being given for mergers and acquisitions. GST filing will also be simplified further with fewer forms and will meet GSTN officials to remove further glitches in GST filing process,” she said.
The Finance Minister said that India’s growth is still comfortably high compared to many developed countries in a volatile global economy which is growing at 3.2 per cent amid trade wars and currency manipulations.
She said that CSR violations will not be treated as a criminal offence. The Ministry of Corporate Affairs will review sections in the Companies Act on CSR violations.
For startups and their investors, angel tax provision has been withdrawn. Also, banks will issue improved one-time settlement plan for micro, small and medium enterprises (MSMEs), Sitharaman said.
The government will infuse upfront Rs 70,000 crore into public sector banks to enable release of Rs five lakh crore liquidity in the market. Banks will have to pass on repo rate reduction to consumers. Aadhar-based KYC will be permitted for opening of demat accounts and investing in mutual funds.
Sitharaman said pending GST refunds so far will be paid to small businesses within 30 days. In future, all settlements will be done with 60 days. At the same time, payments delayed by government departments and central public sector enterprises will be monitored by the Department of Expenditure on a dashboard for faster clearances.
Meanwhile, non-banking finance companies (NBFCs) will be permitted to use the Aadhaar authenticated bank KYC to avoid repeated processes. “There will be syergies between NBFCs and banks with more credit support for home loans and auto loans to stimulate growth,” said Sitharaman.
For the automobile sector which has seen faltering sales in recent quarters, she said the higher registration fees has been deferred till June 2020. An additional 15 per cent depreciation will be provided on vechicles acquired from now till March 2020, taking the total depreciation to 30 per cent.
Electric vehicles and internal combustion vehicles will continue to be registered. Vehicles complying with BS-IV norms purchased upto March 2020 will remain operational for their entire period of registration. At the same time, the government will replace its old vehicles with new one and come up with a new scrappage policy, said Sitharaman.