India’s budget will draw more FDI

India’s budget will draw more FDI: Industry Leaders US

Nirmala Sitharaman Presenting her second budget to Parliament on Saturday,  gave tax breaks to foreign investors and especially to those including sovereign wealth funds willing to place a long-term bet on the economy.

She said the budget was aimed at boosting incomes and increasing purchasing power, stressing that the fundamentals of the economy were strong and inflation was well contained.

WASHINGTON: Finance Minister Nirmala Sitharaman’s 2020-21 budget will improve the ease of doing business India and draw more foreign direct investment, said US industry leaders.

“After a slowdown in growth, India’s global investment outlook remains strong and therefore the budget was a great opportunity to make global sentiment a reality.”

Measures such as simpler GST refunds, no audit requirement for MSMEs with up to Rs 5 Cr turnover, instant issuance of PAN by furnishing Aadhaar, pre-filing tax returns, faceless appeals and appraisals will further improve India’s reputation from a business perspective that is simple to do. Such moves together demonstrate that the tax policy of India is moving in the right direction.

Noting that e-commerce is a bright spot for the Indian economy and expected to reach USD 84 billion by 2021, Aghi urged the government to rethink its decision to place TDS on e-commerce at one percent.

While the USIBC hoped that the budget proposal would see an increase in the foreign direct investment (FDI) allowance for the insurance sector, “we look forward to continued engagement with the government on reforms needed to bring fresh investment into a critical sector”.

Classifying the budget as an all-inclusive, growth-oriented and disruptive budget, Karun Rishi, president of the U.S. Indian Chamber of Commerce, said he stressed the aim of the Indian government to build a strong foundation for the goal of making India a 5 trillion dollar economy by 2025.

“Nirmala Sitharaman has provided a huge boost to the business morale and entrepreneurship of the country. National Logistics Policy, which is much needed, will promote tourism, manufacturing and job creation. Increased attention to the infrastructure sector is a welcome step”.

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2020 Budget Expectations

2020 Budget Expectations

Some of the steps may include:
i) Lower Personal income tax rates (either by way of rationalizing tax slabs or raising
exemption limits).
ii) Removing Long Term Capital Gains Tax.
iii) Sector specific import duty tweaks for promoting domestic manufacturing.
iv) The government could revisit the plan for overseas issuance of sovereign bonds, to address
some of these issues.

Budget 2020:Senior Citizen Savings Scheme

Demand increases for a full income tax rebate under the Senior Citizen Savings Scheme

Budget 2020: Finance Minister Nirmala Sitharaman will present her second Union budget on 1 February 2020. It will have a dual challenge in this budget— to boost the economy and give the middle class tax relief. In order to hit multiple sparrows with a single arrow, Nirmala Sitharaman may increase income tax benefits under Section 80C and Section 80CCD.

There are nearly 41 million senior citizens in the country with a combined investment of Rs 14 Lakh Crores or 7% of India’s GDP. The average amount of deposits per account is around Rs 3.3 lakh and the interest income from such deposits is 5.5 per cent of the Private Final Consumption Expenditure for FY19. It is imperative that the Government exclude certain interest income from taxes or increasing the threshold.

The basic exemption for senior citizens in Rs 3 Lakhs is too poor. This needs to be increased to at least Rs 5 Lakhs per year.

Government has a very good scheme for senior citizens. Under the Senior Citizens Savings Scheme (SCSS), a senior citizen can deposit Rs 15 lakh and the current interest rate is 8.6%. Nevertheless, the interest on the SCSS is completely taxable, which is a major drawback to the scheme (the amount of interest on the Rs 1 lakh deposit for 5 years is approximately Rs 51,000 which is taxable)