Giving a mega booster shot to India’s depressed economy, Finance Minister Nirmala Sitharaman on Friday announced a plethora of measures ranging from tax relief to cash injection into public sector banks to improve liquidity.

In what appeared to be a mini-budget, the FM’s announcements included rolling back of the vexatious surcharge on foreign portfolio investors, withdrawing angel tax on start-ups and a package of measures for the struggling auto sector, MSMEs and banks.

“India will exempt foreign investors from the super-rich tax. An additional surcharge on domestic investors will also be withdrawn,” said

Sitharaman at a press conference here on Friday. “The pre-Budget position is restored,” she added.

The surcharge on foreign portfolio and domestic investors was removed by withdrawing it on long- and short-term capital gains. However, Sitharaman ruled out any immediate review of the super-rich surcharge, stating that would be looked into only in 2022.

FPIs have pulled out Rs 12,105.30 crore from Indian capital markets so far this month. This was on top of the net Rs 12,418.73 crore they withdrew last month.

To mitigate the difficulties faced by start-ups and their investors, Sitharaman decided to withdraw the controversial angel tax, which was stifling start-up funding. The tax imposed by Section 56(2) (viib) of the Income Tax Act imposed a 30% tax on money raised by a start-up during a funding round, which was considered more than its fair market value.

Officials said the tax roll-backs would cost the exchequer Rs 1,400 crore. A dedicated cell under a member of CBDT will be set up for addressing the problems of start-ups.

These measures were a part of the FM’s 32-point measures to boost the economy, which is showing signs of slowdown. I

India's GDP growth in the January-March quarter slid to a near 5-year low of 5.8%, and most analysts expect data due later this month to show that growth in April-June would be in the 5.5-6 per cent range.

The FM’s move comes in the backdrop of rising concerns about the economy. Moody’s Investors Service on Friday cut India’s GDP growth forecast for 2019 calendar year to 6.2% from 6.8% forecast earlier.

Additional surcharge on foreign investors removed

This was a major dampener in the Budget, which spooked foreign portfolio investors who deserted the Indian bourses for safer markets. The relaxation could see them coming back.

Rs 70,000 crore to be injected through PSU banks

This additional credit infusion will enable banks to lend more to small traders, MSMEs and retail borrowers, which will, in turn, perk up consumption and revive market sentiments.

Plus, PSU banks cannot sit on RBI rate cut transmission. EMIs will come down as rates on housing, auto loans will be directly linked with repo rate.

Fast tax refund for cash-strapped MSMEs

From now, GST refunds to be time-bound. All pending payments will be cleared within 30 days; future refunds will be made within 60 days.

Government turns buyer to support ailing automobile sector

Ban on purchasing new vehicles to replace old ones in govt departments lifted. Plus, all vehicles purchased between now and March 2020 will get a 30% depreciation benefit, up from 15%. This can bring down tax liability.

Angel tax relief

Budding firms can now raise big money without fear as angel tax has been withdrawn for govt registered start-ups.

Measures to end tax terrorism

All notices, summons and orders from income-tax authorities will be issued through a centralised computer system to avoid harassment and corruption by tax officers. Individual letters/notices issued by officers will be invalid.

Empowering bank officials

To support honest decision-making and to prevent harassment for genuine commercial decisions by bankers, CVC has issued directions that the Internal Advisory Committee (IAC) in banks to classify cases as vigilance and non-vigilance. Decisions of the IAC and bank CVO/DA will be treated as final.

CSR norms eased

Corporate Social Responsibility violations by companies will now be treated as a civil case and not a criminal offence.