Today, in the wake of the General Elections slated to be held in May 2019, the Government of India (Government) presented the Interim Budget 2019 (Budget)
The Hon’ble Finance Minister, whilst presenting the Budget, recounted some of the major achievements and initiatives undertaken by the Government during its tenure. The highlight being the fact that India has become the sixth largest economy in the world.
The noteworthy initiatives of the Government include, inter alia, the introduction of the Insolvency and Bankruptcy Code, 2016 which has led to recovery of huge Non Performing Assets (approx. USD 5 billion), implementation of the Goods and Services Tax, introduction of the Undisclosed Foreign Income and Assets Act, 2015, to bring about penalties for undisclosed income and assets, enactment of the Real Estate (Regulation and Development) Act, 2016 to bring about transparency in real estate transactions, introducing a legislation to combat fugitive economic offenders, liberalisation of the foreign direct investment policy to provide impetus to foreign investments in India, focusing on bringing down the fiscal deficit and significant reduction in inflation levels.
While there are no major income-tax related announcements, the flavour of the Budget proffered to the needs of the ordinary man and the real estate space. No changes have been proposed that would have an impact on the international investor community or the globalization of Indian businesses. The key highlights of the proposals (if enacted, would be effective from financial year (FY) 2019-20), are as follows:
The crescendo of the Budget speech was to make the Income-tax Department more taxpayer friendly by adopting technology driven measures. To this end, the vision is to implement ‘E-tax assessments’ in India, within the next two years. The salient features would include the elimination of any human interface with the tax administration; and processing of returns and refunds within 24 hours of filing
Since this was an interim budget, the proposals were expectedly limited. As the political scenario in India gears up to welcome its next Government later this year, all eyes are now on the comprehensive Union Budget anticipated to be presented in July 2019 (Union Budget).
Interestingly, the present Government had formed a panel in November 2017 to prepare a report on replacing the existing Income-tax Act 1961 (IT Act) with a direct tax code. The intention of replacing the IT Act with a new code was to reduce tax litigation, simplify and provide clarity in tax law provisions and increase revenue collections. This report is expected to be presented by 28 February 2019. The interplay between the report and the Union Budget would be interesting to note. All in all, the Budget announcements of today were positively geared towards socialistic reforms, a step in the right direction when the country is on the brink of an upcoming election for the new Government
- KCO Direct Tax Team
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