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Posted at: Aug 24, 2019, 7:01 AM; last updated: Aug 24, 2019, 11:29 AM (IST)

Sitharaman’s booster dose for growth

Sandeep Dikshit
Tribune News Service
New Delhi, August 23

Union Finance Minister Nirmala Sitharaman today rolled back several budgetary proposals, attempted to dispel the climate of fear in the industry and announced measures in the banking, investment, automotive and taxation sectors in an attempt to reverse the gloom surrounding the economy.

For the common man, she hoped loans for automobiles and housing would become cheaper as banks had promised to pass on the rate cuts announced by the RBI. The government also said it would immediately make available the Rs 70,000 crore promised to public sector banks (PSBs) in recapitalisation instead of in phases, as envisaged earlier.

The stimulus package for the automotive sector consists of lifting the ban on purchase of vehicles by government departments, allowing additional 15 per cent depreciation on vehicles acquired till March 2020, making BS-IV vehicles purchased up to March 2020 operational for the entire period of registration and deferring the one-time registration fee to June, 2020.

India’s GDP growth in January-March slid to a near five-year low of 5.8 per cent and is expected to further fall in the April-June quarter when the figures are announced a week from today. Sitharaman will hold two more press conferences in the coming weeks to announce measures in other sectors.

Sitharaman sought to improve the sentiment in the industry by rolling back some of the taxation measures — removal of tax surcharge on foreign portfolio investments,  scrapping of ‘angel tax’ provision and removing a provision making violation of corporate social responsibility (CSR) norms a criminal offence. It was not clear whether an ordinance would be issued or the amendments moved in the winter session of Parliament. The revenue hit by rolling back tax surcharge would be Rs 1,400 crore while officials found it difficult to quantify the revenue loss from other measures.

To dispel the climate of fear after suicide by CCD owner VG Siddharth and images of CBI sleuths scaling the boundary wall of former Union Finance Minister P Chidambaram’s house, Sitharaman said all Income Tax Department missives would be issued through a centralised computer system with a unique Document Identification Number. Manually issued notices should be treated as invalid, she advised.

Tax authorities have been instructed not to “overreach” as tax targets were within achievable limits by the use of appropriate technology. At her meetings with tax officials, she asked them not to stress on tax liabilities.

The Finance Minister also said instances of coercion and graft would be minimised by the introduction of “faceless” tax scrutiny from the forthcoming Vijayadashmi. For the MSME sector, which accounts for 29 per cent of the GDP, she announced payment of all pending GST refunds within 30 days to ease liquidity woes. In future, their refunds woud be paid within 60 days from the date of application. NBFCs, the prime lenders to housing, automotive and MSME sectors, would be permitted to use Aadhaar-authenticated ‘Know Your Customer’  to avoid repeated processes.

Sitharaman also reiterated ongoing attempts, such as Rs 20,000 crore to housing finance, improving the  domestic bond market and further developing credit swap arrangements, along with steps already taken, such as reforming the labour market and making the bankruptcy law more effective.

FM rolls back several budgetary proposals, fpi surcharge goes

 Auto sector

  • BS-IV vehicles bought up to March 2020 will remain in operation for entire period of registration
  • Revision of one-time registration fee deferred till June 2020
  • Govt to lift ban on purchase of new vehicles by govt depts
  • Additional 15% depreciation on vehicles acquired from now till March 2020
  • Govt to come up with scrappage policy for old vehicles soon
Banks/HFCs

  • Rs 70,000 crore to be released upfront for public sector banks 
  • Another Rs 5 lakh crore to be released in a phased manner to inject liquidity into the system
Consumers

  • Banks to launch repo-linked loan products soon
  • More credit for vehicles, homes, consumer goods
  • Home, auto, other retail loans to become cheaper
  • Rs 20,000 crore to support housing finance companies
Financial markets

  • Super-rich tax on foreign portfolio investors (FPIs) goes
  • Higher surcharge on long-term/short-term gains withdrawn
  • Govt to work with RBI to make bond market more conducive for investors
Start-ups

  • Angel tax withdrawn 
  • Dedicated cell to address tax-related problems
MSMEs

  • Pending GST refunds in 30 days
  • Future refunds in 60 days

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