Insight from the IBFD Asia-Pacific Team
On 5 July 2019, the Finance Minister of India presented the much-anticipated Union Budget 2019 before Parliament. Under pressure to boost growth and arrest domestic slowdown, there were hopes for a robust budget with strong fiscal stimulus and definitive measures to revive investment. However, it appears that the recently re-elected government prefers a more moderate approach, focusing on the ease of doing business, infrastructure development, encouraging entrepreneurship and simplifying tax administration using technology, in order to achieve the goal of building a USD 5 trillion economy. The key proposals introduced include:
- extending the beneficial corporate tax rate of 25% to all companies with an annual turnover of up to INR 4 billion (previously up to INR 2.5 billion);
- online application for obtaining a nil or lower withholding tax certificate;
- interchangeability of using Aadhar number and PAN for income tax filing;
- relief to start-ups from scrutiny in respect of the valuation of share premiums; and
- incentives for the setting up of international financial services centers (IFSCs) in India.
The government will need to ensure that the relevant legislation and guidelines for implementing these proposals are in place to achieve India’s objectives.