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Vinkesh Gulati, , vice president of the Federation Of Automobile Dealers Associations, said that the announcements may not give much of a boost but it will build confidence. “Besides increase in depreciation rate, there is nothing much for the industry and nor for individual buyers,” he said adding that government hasn’t offered anything that could boost the sales. “There could just be 3-4 percent impact in sales.”
The volatility in the rupee will help India’s exports, SItharaman said. “That itself would help the economy because exporters can look to reach greater markets across the world.”
Higher surcharge will continue to apply for high networth individuals. The government will review it by 2022.
The removal of enhanced surcharge for FPIs will be effective from this year, Pandey said.
The approximate revenue impact from removing the enhanced surcharge on capital gains would be Rs 1,400 crore, Revenue Secretary Ajay Bhushan Pandey said.
India’s Tax Collection Growth In April-June At Lowest In A Decade
The government will make another set of announcements by the middle of next week. A third set of announcements will be made subsequently.
Finance Minister Nirmala Sitharman addressed the worst auto slowdown in a decade with a slew of announcements.
An inter ministerial task force will be formed to review the pipeline of infrastructure projects.
Delayed payments from government and CPSEs will be monitored by the Department of Expenditure and their performance will be reviewed by the Cabinet Secretariat.
All dues under litigation will be cleared, she said.
The finance ministry and RBI are working on bringing offshore rupee market on domestic exchanges and to permit trading of the U.S dollar-Rupee derivatives through GIFT City.
Sitharaman announced that Aadhaar-based KYC will be allowed for opening demat accounts and investing in mutual funds. This will improve participation from domestic retail investors, she said.
The Depository Receipt Scheme 2014 is expected to be operationalised soon by the SEBI. This will give Indian companies increased access to foreign funds through ADRs and GDRs.
The finance minister has proposed to establish an organisation to provide credit enhancement for infrastructure and housing projects. The name will be notified soon.
The government will amend the MSME Act to have a single definition for MSMEs. The changes in the act will be taken up by the Cabinet soon.
New definition for MSMEs will not necessarily be on turnover but also on things like plant machinery.
The government will make all pending GST refunds to MSMEs within 30 days. “In the future, all GST refunds shall be paid within 60 days from the date of application,” Sitharaman said.
Partial credit guarantee scheme for purchase of pooled assets of NBFCs and HFCs to be monitored at the highest levels in each of the banks, Sitharman said.
“NHBs have already settled some of the issues. Very clearly showing that NBFCs are receiving liquidity from the banks and they are also moving towards giving credit people. “
Additional liquidity support will be provided to HFCs by National Housing Bank—Rs 30,000 crore from Rs 10,000 crore earlier.
NBFCs will also be allowed to use Aadhaar-based KYC.
Banks will issue a one-time settlement policy to benefit small enterprises and retail borrowers to settle their loan overdues. “This would be done through check box approach and not remain pending for approval.”
Banks have also decided to launch repo rate-linked loan products, the finance minister said. “This will result in reduced EMI for housing, vehicle, retail and other loans.”
The Section 56 2(B) of the Income Tax Act, related to the angel tax, will not be applicable to startups registered with the DPIIT.
A dedicated cell under the CBDT will address any income tax problems faced by startups.
The government will release Rs 70,000 crore upfront state-run banks, as announced in the budget. "This will benefit all Corporate and retail borrowers."
From Oct. 1, issue of IT orders, notices, summons, letters etc. shall now go through a centralised computer system. It will contain computer generated document identification number.
“If there is a notice being issued at the ground level and some amount is claimed by the assessee, that cannot happen without centralised approval,” Sitharaman said.
Income tax communication issued without document identification number will be treated as non-established.
Government has changed 16 offence sections in companies law to monetary penalty, Sitharaman said. This government “at no point” wants to pursue any prosecution, she added, explaining that the government has withdrawn over 14,000 prosecutions under Companies Act.
The Narendra Modi government has kept reform at the top of the agenda, Sitharaman said. “It is not like after 2019 we have forgotten that.”
The cassendras should now accept that the government is well on top of the situation and will do all it can to revive the 'animal spirits' in the economy. https://t.co/F1mbV3pwfK
— Rajiv Kumar 🇮🇳 (@RajivKumar1) August 23, 2019
In Charts: India’s Auto Slowdown And The Forces Behind It
The finance minister is also likely to exempt foreign portfolio investors from a tax on super rich announced in the budget.
The Union Budget proposal to raise surcharge on individuals earning Rs 2-5 crore and above had also covered FPIs and alternative investment funds as they are registered as non-corporate entities.
This spooked investors and triggered a selloff in the market. FPIs have pulled out about Rs 12,418 crore from the equity market in July, according to data available on the National Securities Depository Ltd.’s website.
Auto Slowdown: More Layoffs May Be Coming In Sales, R&D
Prime Minister Narendra Modi has reviewed the state of the economy with Finance Minister Nirmala Sitharaman as his government scrambled for solutions to tackle a fast-spreading slowdown in various sectors, on Aug. 15.
Modi, after delivering his Independence Day address, went into a brainstorming session with Sitharaman and all top officials in her ministry, sources privy to the development said.
The meeting, they said, was to assess the nature of the slowdown and its long-term impact. There are expectations that the government would come out with sector-specific stimulus sometime soon.
In her maiden budget, Finance Minister Nirmala Sitharaman had announced a one-time six-month partial credit guarantee to state-owned banks for first loss of up to 10 percent on high-rated pooled assets of NBFCs. Guidelines for these were announced yesterday. The guarantee would be provided for a total amount of Rs 1 lakh crore during the current financial year.
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