While presenting the fifth and the most crucial budget of the current government, Jaitley highlighted several structural reforms undertaken during the current regime and also pointed new emerging topics such as Artificial Intelligence, cryptocurrency and Blockchain.
In the first half of his budget speech Finance Minister highlighted the significance of indirect tax system, Goods and Services Tax (GST).
He later talked about the personal income tax collection generated from the salaried class. He quotes, “For assessment year 2016-17, 1.89 crore salaried individuals have filed their returns and have paid total tax of Rs 1.44 lakh crores which works out to average tax payment of Rs76,306 per individual salaried taxpayer.”
Although there was no change in the personal income tax slab, In the Union Budget, 2017, Arun Jaitley announced 25 per cent reduction in the income tax for companies whose turnover is lesser than 50 crore in financial year 2015-16.
Explaining the role of cooperate tax in enhancing the profit quotient of the companies, Adhil Shetty, CEO and Co-founder, BankBazaar, “Reduction of corporate income tax for companies with revenue up to Rs 250 crore is a big announcement and will benefit more than 99 per cent of the companies in India. The framework is still to be analysed to qualify the benefits. Another announcement on standard deduction of Rs 40,000 for salaried class is a great step to simplify the taxation process.”
The budget 2018-19 also talked about the role played by digitisation in benefiting the poor. Speaking about demonetisation drive and its position in boosting e-payments and taxation base, Jaitley said, “Benefits to the poor have been targeted more effectively with use of digital technology. The demonetisation of high value currency has reduced the quantum of cash currency and circulation in India. It has increased the taxation base and spurred greater digitisation of the economy.”
While the budget spoke about several reforms, it also shared the details on corrective measures taken by the Centre in tackling the menace of Non-Performing Assets (NPAs) and insolvency “The Insolvency and Bankruptcy Code (IBC) have changed the lender-debtor relationship. The recapitalised banks will now have a greater ability to support growth,” he said.
He further said that all the structural reforms initiated by the Centre will help in the medium and long run in making the Indian economy achieve stronger growth for a long time.
Finance Minister made a special mention on the role of Non-Bank Finance Companies (NBFCs) as a powerful medium in delivering finances. NBFCs can be very powerful vehicle for delivering loans under MUDRA. Refinancing policy and eligibility criteria set Micro Units Development and Refinance Agency Ltd. (MUDRA) will be reviewed for better refinancing of NBFCs, the budget stated.
“By introducing incentives for MSMEs in the form of capital support and corporate tax reduction to 25 per cent for companies with turn over under Rs 250 crore, government will encourage small entrepreneurs in both urban and rural areas. Clubbed with increased target for MUDRA Yojana for this year, it will encourage small and medium entrepreneurs to expand their businesses. Government’s decision to review refinancing policy of MUDRA for better financing of NBFCs is a good news for NBFC-MFIs,” said Rakesh Dubey, President, Microfinance Institutions network.
“MUDRA has been an important source of financing for microfinance companies and after this announcement, they can expect easier access of finance at lower rates in the future through MUDRA. Lastly, government’s focus on improving digital infrastructure in rural areas will help increase the reach of financial inclusion and with the strengthened internet and telecom infrastructure microfinance companies will be able to accelerate cashless adoption in rural areas,” he said.
In addition to this, the budget made major announcements pertaining to technology and its usage in boosting the economy.
The budget announced that “NITI Aayog will initiate a national program to direct our efforts in the area of artificial intelligence, including research and development of its applications.”
Speaking about the role of technology, Maneesh Jhawar, CEO & Founder, QualityKiosk ,”The Union Budget 2018-19 is revolutionary as Finance Minister Arun Jaitley announced this ambitious but firm-footed goal of establishing India as a knowledge-driven digital society riding cutting edge technologies of machine learning, artificial intelligence and internet of things. We welcome the government’s decision to start a national programme spearheaded by NITI Aayog to direct the Indian government’s efforts in these areas including research and development of its applications.”
Usage of AI will add a new dimension to the financial institutions and enhance all intercation among the financial entities.
“The Government’s initiative to accelerate research in artificial intelligence (AI) reinforces our belief that AI would revolutionise the way financial institutions and customers interact with each other. This would add a new dimension to the digital transformation of our economy and expedite our march towards Digital India,” said S. Sundararajan, Executive Director at i-exceed.
The budget further talked about Fintech, Blockchain helping in the development of institutional policy and measures.
The Budget stated that use of Fintech in financing space will help growth of MSMEs. It announced that a group in the Ministry of Finance is examining the policy and institutional development measures needed for creating the right environment for Fintech companies to grow in India.
“Micro, Small and Medium Enterprises (MSMEs) are the most important sectors yet underserved segment when it comes to access to finance. Allotment of Rs 3 lakh crore for lending in Financial Year 2018-19 under PM’s MUDRA Yojana for MSMEs definitely bring cheers to them. Also government’s initiative to focus on process digitisation and easing the loan sanctioning process will help & encourage the emerging fintechs like us which are taking efforts to digitise the ecosystem with increased acceptance by the ecosystem,” said Anita Gandhi, Whole Time Director at Arihant Capital Markets Ltd.
However, it put a strong foot forward towards the legality of crypto-currencies. It said it will take measures to eliminate the use of crypto-assets in financing illegitimate activities or as part of the payment system.