Lok Sabha has passed the Finance Bill, by voice vote, after giving approval for more than two dozen official amendments. This move completes the Budgetary exercise for the Financial Year 2019-20 in the Lower House.
Finance Minister Nirmala Sitharam while replying to a discussion in the Lok Sabha said that her Union Budget is aimed at improving the ease of living for the citizens of the country and various initiatives has been included in the Budget seek to promote a less-cash economy.
However, she rejected the demands of the opposition party for withdrawing cess on petrol-diesel and also, 2 percent Tax Deducted at Source (TDS) on cash withdrawal.
“The intent of the government is to ensure minimum government, maximum governance. Ease of living is the primary driving force of Prime Minister Modi…we are trying to reduce the pain and making sure ease of living dominates everything that we do as regards to taxation,” she said while finishing up a debate, which had lasted for around three hours.
While replying on the proposal to hike tax liability on individuals earning more than Rs 2 crore, Sitharaman said that it will not impact Foreign Portfolio Investors (FPIs) provided they organised themselves as company.
The Budget had proposed to increase the surcharge from the current 15 percent to 25 percent on taxable income between Rs 2-5 crore, and from 15 percent to 37 percent for income above Rs 5 crore.
With the increase in surcharge, the income tax rate for the individuals who have the taxable income of Rs 2-5 crore will go up from 35.88 percent to 39 percent, and for those who have the taxable income of above Rs 5 crore it would go up to 42.7 percent.
“There is also an issue of FPI where you are trying to include tax deduction from HUF on TDS. It has an impact on those FPI who is registered as a trust. There is an option for FPIs to register as a company. But when you are registered as a company, you don’t have a problem of tax which we are talking about,” she said.
A trust is treated as a taxable entity, Sitharaman said.