Budget at a Glance: Key takeaways from Nirmala's speech

Belying hopes of a vast swathe of the middle class that expected more tax relief, the Modi 2.0 government's first Budget sought to give India's stuttering economy a push by targeting foreign investment, savings and exports, a script followed by neighbouring China. Here are top takeaways from Nirmala Sitharaman's first Budget speech.

Budget highlights: Policy

Education: The new National Education Policy will be introduced. The National Research Foundation will be setup to promote funding and coordinate research in the country. A Study in India programme will be launched to encourage foreign students in higher education.

Legislative Framework: To promote rental housing, a model tenancy law will be finalised and circulated. The Higher Education Commission of India Bill will be introduced. Different multiple labour laws will be streamlined into a set of four labour codes.

Budget highlights: Policy

Rural Development: Under the Pradhan Mantri Gram Sadak Yojana, 1.25 lakh km of road will be upgraded at an estimated cost of Rs 80,250 crore in the next five years. 100 new clusters will be setup under the Scheme of Fund for Upgradation and Regeneration of Traditional Industries (SFURTI). All rural households will be provided with piped water supply by 2024 under the Jal Jeevan Mission. Swachh Bharat Mission will be expanded to undertake solid waste management in every village.

Social Justice: An overdraft of Rs 5,000 will be provided to women self-help group (SHG) members who hold Jan-Dhan accounts. Further, a loan up to one lakh rupees will be provided under the MUDRA scheme to one woman in every SHG.

Social Security: A new pension benefit scheme, namely Pradhan Mantri Karam Yogi Maandhan Scheme, has been announced for traders and small shopkeepers with annual turnover of less than Rs 1.5 crore.

Budget highlights: Policy

Industry: The minimum public shareholding in listed companies will be increased from 25% to 35%. A new electronic fund raising platform will be created for listing social enterprises and voluntary organisations. The present policy of 51% stake of government in non-financial PSUs will be modified to include stake of government controlled institutions.

Investments: 100% Foreign Direct Investment (FDI) will be permitted for insurance intermediaries. Local sourcing norms will be eased for FDI in the single brand retail sector. Further, relaxing of the FDI norms in aviation, media and insurance sectors will be examined. Statutory limit for Foreign Portfolio Investment will be increased from the current 24% to sectoral limits.Foreign shareholding limits in PSUs will be increased to the maximum permissible sectoral limit.

Agriculture and allied activities: Pradhan Mantri Matsya Sampada Yojana has been proposed to address infrastructure gaps in the fisheries sector. 10,000 new Farmer Producer Organisations will be setup over the next five years.The central government will work towards adoption of zero-budget farming.

Budget highlights: Policy

Banking and Finance: The government plans to partially guarantee (for first 10% of loss) Public Sector Banks for funds provided in a pooled manner to NBFCs. Further, Rs 70,000 crore will be provided for recapitalisation of Public Sector Banks.

Government borrowings: The government will raise a part of its borrowings abroad in foreign currency.

Infrastructure: The central government will invest Rs 100 lakh crore in infrastructure over the next five years. Phase II of the Bharatmala project will be launched under which state highways will be developed. Public private partnerships will be leveraged for railways to attract an investment of Rs 50 lakh crore during the period 2018-30. A blueprint will be made for developing gas-grids, water-grids, i-ways (communication networks) and regional airports on the lines of the One Nation–One Grid for power. Structural reforms in the power sector (including tariff) will be announced.

Prohibition of Benami Property Transactions Act, 1988: The Act is being amended to increase penalties under the Act. In addition to existing penalties, any person who fails to comply with summons or furnishes false information will be liable to pay Rs 25,000 for each such failure. Further, under the Act, prior sanction is required for prosecution of certain offences under the Act from the CBDT. The sanctioning authority has been changed to Commissioner, Director, Principle Commissioner, or Principle Director of Income Tax.

The Act is being amended to enable the RBI to take several measures in relation to the management of NBFCs.

Reserve Bank of India Act, 1934

Under the Act, RBI may set a minimum net worth requirement for NBFCs between Rs 25 lakh and two crore rupees. The amendment allows RBI to set the minimum requirement up to Rs 100 crore.

Major Legislative changes proposed in the Finance Bill: Central Goods and Services Tax Act, 2017

Under the Act, an applicant can apply for an advance ruling from an Authority constituted under various GST laws of various state or union territories. An advance ruling can be sought to clarify certain matters, such as the determination of GST liability. The National Authority may decide appeals against conflicting advance rulings on the same question by Authorities of two or more states or union territories. The Bill provides for the qualification, term, and conditions of services of the National Authority.

Major Legislative changes proposed in the Finance Bill: Dispute resolution scheme

A dispute resolution cum amnesty scheme called the Sabka Vishwas Legacy Dispute Resolution Scheme is being introduced for resolution and settlement of legacy cases pending under various Acts, including the Central Excise Tax, 1944, and the Sugar Cess Act, 1982.

Customs duty

The customs duty on gold and precious metals will be increased from 10% to 12.5% on gold and precious metals.

Road and infrastructure cess

The Road and Infrastructure Cess on petrol and high-speed diesel has been increased by one rupee per litre. Excise duty has also been increased by one rupee per litre for these products.

Tax exemptions for electric vehicles

A tax deduction of up to Rs 1,50,000 will be provided on interest paid on loans to purchase an electric vehicle. This deduction will be applicable for loans sanctioned between FY 2019-20 and FY 2022-23.

Tax exemption for affordable housing

An additional tax deduction of up to Rs 1,50,000 will be provided on interest paid on loans for self-occupied house owners. The conditions for availing this deduction are: (i) the loan must be sanctioned in FY 2019-20, (ii) the stamp duty on the house should not exceed Rs 45 lakh rupees, and (iii) the individual should not own another residential house property as of the date of the home loan.

Tax on cash withdrawals

A TDS of 2% will be levied by financial companies and post offices on individuals for cash withdrawals exceeding one crore rupees in a year from a bank account.

Corporation tax: Currently, companies with annual turnover of less than Rs 250 crore pay corporate income tax at the rate of 25%. This threshold has been increased to Rs 400 crore.

Surcharge on income tax: Currently, a surcharge of 15% is levied on the income of individuals earning over one crore rupees, and 10% on persons earning an income of individuals earning between Rs 50 lakh and one crore rupees. In the Union Budget 2019-20, the surcharge on income tax for individuals earning between two crore rupees and five crore rupees has been increased to 25% and for persons earning over five crore rupees has been increased to 37%.

In addition to changes in tax laws, the Finance Bill, 2019 proposes changes in several other laws such as the asthe SEBI Act, The RBI Act, the CGST Act, and the PMLA Act.

Ministry allocations: Among the top 13 ministries with the highest allocations, the highest percentage increase is observed in the Ministry of Agriculture and Farmers’ Welfare (82.9%), followed by Ministry of Petroleum and Natural Gas (32.1%) and Ministry of Railways (23.4%).

Deficits:Revenue deficit is targeted at 2.3% of GDP, which is higher than the revised estimate of 2.2% in 2018-19.Fiscal deficit is targeted at 3.3% of GDP, lower than the revised estimate of 3.4% in 2018-19. Note that the government is estimated to breach its budgeted target for fiscal deficit (3.3%) in 2018-19 and the medium-term fiscal target of 3.1% in 2019-20.

GDP growth: The government has assumed a nominal GDP growth rate of 12% (i.e., real growth plus inflation) in 2019-20. The nominal growth estimate for 2018-19 was 11.5%.

Receipts: The receipts (other than net borrowings) are expected to increase by 14.2% to Rs 20,82,589 crore, owing to higher estimated revenue from corporation tax and dividends.

Expenditure: The government proposes to spend Rs 27,86,349 crore in 2019-20, which is 13.4% above the revised estimate of 2018-19.