What Banking and Financial experts make out from Union Budget 2019?

The Union Finance Minister Nirmala Sitharaman today tabled her maiden Budget 2019, giving a major boost to Micro, Small, and the Medium Enterprises (MSMEs), Non-Banking Financial Companies (NBFCs) and start-ups along with other developments. The Budget aimed at creating new India with major focus on infusing liquidity into the financial sector for improving the economy and growth of the country.

Here is how experts have reacted over the Union Budget:

gaurav chadha

“The numerous amendments proposed by the Hon’ble Finance Minister in the Union Budget 2019 and tax policy road map provided in the budget speech confirms the government’s agenda of providing a conducive environment to start-ups and raising India’s ranking in ease of doing business index. Eligible start-ups can now carry forward of losses where shareholders beneficially continue to hold 51% shareholding or voting power. Period for the investment of capital gains tax in eligible startups extended from March 31, 2019, to March 31, 2021, also now only 25% investment in shareholding is sufficient to claim the exemption,” said Gaurav Chadha, Tax Partner, Ernst & Young.

“Tax Amendments Proposed in Finance Bill 2019 – Investment by Alternative Investment Funds (Category II) exempted from the rigors of ‘Angel tax’. Start-ups are likely to get relief in ongoing tax audits, as for carrying inquiry or verification now tax officer required to obtain approval from the supervisory officer. For providing relief from ‘angel tax’, the identity of investor and source of investment in eligible startup to be resolved by e-verification the mechanism,” he added.

Suman Reddy

“The main objective of the Budget as set by the Finance Minister is to set the groundwork for Prime Minister Narendra Modi’s aspiration of a $5-trillion-dollar economy. Arguably, one of the biggest beneficiary of this vision would be the technology industry. Following up from technology-related announcements during the interim budget including a national Artificial Intelligence-centre and the Digital India vision, the government has acted on additional expectations from the sector,”  said Suman Reddy Eadunuri, Managing Director and Country Head, Pegasystems Inc.

“The elimination of excessive scrutiny through the angel tax through an e-verification process will improve the trust factor in valuation activities. Also, the government has put the first step forward with skilling focus on emerging technologies like artificial intelligence and robotics. However, the government has not elaborated on the latter, further to NASSCOM’s recommendations to show its commitment with an initial fund of Rs. 500 crore, and incentivize corporate to skill training by promoting spending. We also welcome the government’s move to allocate 25% of corporate taxes by increasing the ambit of companies from Rs. 250 – 400 crores of turnovers. This will allow spending and boost the economy while driving returns for the government,” he added.

vinod subramaniam

“Very supportive to SMEs, the move to e-Invoices is going to be the most impactful next step in Goods and Service Tax (GST). E-Invoices will substantially reduce the tax compliance burden for Small and Medium Enterprises (SMEs). Increasing the corporate tax slab to 400 crores, and angel tax removal are icings on the cake. The push for digital payments and waiver of all merchant fees is a superb move. It underlines the focus on transparency and reduces the cost of doing business,” said Vinod Subramaniam, CEO, Logo Infosoft.

yogesh

“Capital is definitely core to banks for expanding credit, earning interest and grow their balance sheets, so that they can drive economic activities. The recapitalisation was needed and is a timely impetus. However, some radical changes like relaxing the statutory requirement of Government to hold not less than 51% of the paid up capital in PSU banks should have been considered,” said Yogesh Chande, Partner, Shardul Amarchand Mangaldas & Co.

Mr. Amar Ambani

“Increase in Public shareholding proposed from 25% to 35% potential negative for Multinational Corporations (MNCs) and companies with high promoters holding. In many mid and small caps, it is better to have more promoter skin in the game, since India’s capital market in the developing phase. Many MNCs listed on Indian bourses may consider delisting, if increase public shareholding implemented. An overhaul of education material is much needed. It’s also a positive measure for companies in publishing space. If increased public shareholding norm implemented, the supply of paper in the market will increase. This will mean that money will be sucked out of the secondary market and valuations will remain under check”, said Amar Ambani, President & Research Head, YES Securities.

“As expected, capital infusion in public sector banks has come through. Infusion of Rs. 70000 crore is positive for PSU Banks. Excellent move to levy 2% tax on cash withdrawal of over Rs one crore in a year. Will help in a more transparent digital economy. The cost of ownership of vehicles further goes up with the implementation of a special duty on fuel. Negative for auto majors,” Ambani said.

“The big surcharge tax on the high-income group and possible liquidity squeezing of secondary market liquidity due to disinvestment and increased public shareholding is causing the stock market to fall today”, he added.

sriram s

“India joining the big league with $3Trillion economy during the year is heart-warming. With the potential for the next couple of decades in front of us, it is going to be exciting times for all based out of and focused on Bharat”, says Sriram S, Co-Founder, iValue InfoSolutions Pvt Ltd.

 

Anjali Amar,

“We welcome the Union Budget’s focus on closing the technology skills gap in the face of disruptive technologies such as Artificial Intelligence (AI), Big Data, and Robotics. The economic and societal benefits that these technologies are poised to deliver means that it is imperative to reskill India’s IT workforce. This will ensure that tomorrow’s IT executives will be armed with the necessary knowledge to future-proof India’s digital future,” said Anjali Amar, Country Manager at Verizon Enterprise Solutions.

“We are also pleased to note the Government’s initiatives in promoting digital payments. This is a recognition that digital payments sector is no longer considered niche and is crucial for the digital transformation of India. As India strives towards a digital and cashless economy, the Government should also continue to strengthen its cyber-security framework. A robust data protection system that is technology-neutral and based on international norms with principles of transparency, accountability will be the catalyst to fuel investment and innovation in new services,” she added.

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