India: India's 2019 Union Budget Drives Wide-Ranging Tax Reforms To Promote Growth

Last Updated: 6 August 2019
Article by Anugraha Mundra

Accounting, tax, HR and payroll professionals must prepare for the implementation of India's comprehensive tax changes under the 2019 Union Budget.

The Union Budget of India, 20191, was presented on 5 July and included significant changes to tax rules to support a growing economy. Accounting and tax professionals, and those managing HR and payroll, must prepare to ensure a smooth implementation of the changes. The full budget is wide-ranging but the main changes affecting businesses are summarised as follows.

Corporate tax

As a boost for larger domestic companies, the upper threshold for the basic 25% tax rate has risen from INR2.5bn to INR4bn. Fewer than 1% of domestic companies will now pay higher rates.

The government has identified the use of share buy-backs to avoid paying taxable dividends. To mitigate this, a 20% tax levy on unlisted company share buy-backs has now been extended to cover listed companies.

Goods and Services Tax (GST) and other indirect tax

There are many changes to the detail of GST, including:

  • certain classes of supplier must facilitate electronic payment from customers
  • companies can now transfer a surplus from one tax category to another tax category in the central electronic cash ledger, including between Union taxes and State taxes
  • the central government is now able to refund State as well as Union taxes, improving efficiency and speed of processing
  • businesses with turnover less than INR50m can now submit quarterly returns
  • creation of the National Appellate Authority to facilitate advance ruling under GST
  • imposition of a 10% penalty on profiteered amounts not paid within 30 days after an order to pay by the Anti-profiteering Authority.

Additionally, the 'Sabka Vishwas (Legacy Dispute resolution) scheme' has been established: a resolution cum amnesty scheme introduced to clear and settle the enormous overload of pending litigations under excise and service tax laws.

Personal tax

The Permanent Account Number (PAN) issued to individuals by the Indian Income Tax Department is now to be used interchangeably with the Aadhaar unique identity number issued by the Unique Identification Authority of India. Either can now be used on any documents, including tax filings, and large financial transactions that require an identification number. If the individual has not formally linked their Aadhaar to their PAN by 1 September 2019 they will have their PAN card made inoperative.

For high earning individuals earning over INR20m, the tax surcharge is increased from 15% to 25%, and up to 37% on earnings above INR50m.

A tax incentive has been introduced to promote the purchase of electric vehicles, with an income tax deduction of up to INR150,000 on loans taken out to purchase the vehicle. There is a similar tax incentive for first time house buyers purchasing affordable housing.

International tax

A tax loophole has been closed, with the gifting of money or property by a resident of India to a non-resident now being included as income.

In one of several initiatives to improve overall efficiency and reduce processing times related to tax, the reporting and determination of withholding tax is now to be fully automated.

There is good news for fund managers of offshore funds, with a relaxation of some of the conditions affecting their special taxation regime. In a bid to kick-start the industry, effective 1 April 2019, remuneration for fund managers is no longer required to be taken at arm's-length and the calculation of average fund value has been relaxed, although it must not be less than INR1bn. 

Incentives for start-ups

Provisions governing carry forward and set-off of prior year losses for eligible closely held start-ups have been relaxed, removing the seven-year limit and allowing set-off even where the main shareholder holds up to 51% of the shares.

Since 2017, shareholders holding more than 50% of start-up company's shares were able to transfer residential property into a start-up business as a means of subscribing for shares, avoiding capital gains. This provision was due to expire 31 March 2019 but has now been extended a further two years. The shareholding condition has also been relaxed to now be set at 25%.

The period for the transfer of computer equipment and computer software assets has been reduced from five to three years.

Next steps

The complete budget announcement is lengthy and complex. Accounting and tax professionals need to review the full set of new and amended provisions and assess how their business can benefit from the changes and the actions that need to be taken to implement the changes. They also need to involve HR and payroll teams to ensure that tax and incentive changes are properly reflected. This will necessarily put additional strain on a company's personnel so they should consider seeking professional help from local experts.

Talk to us

TMF Group can help you implement policies and procedures relating to the Union Budget 2019 and throughout the accounting, tax, HR and payroll functions. TMF India has a team of experts ready to help, and we can also help your company with corporate secretarial and regulatory business issues. Want to know more about our services? Talk to us.

As a global leader in administrative services, TMF Group assesses jurisdictions for business complexity each year. Discover where India ranks among 76 jurisdictions for business complexity – download the free report.



The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions