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The Budget 2020 was presented by our honorable Finance Minister Nirmala SeethaRaman on the morning of February 1st, 2020. She detailed the union budget under three themes along with the target of achieving the $5 Trillion economy by the end of 2022.
The themes of this budget were centered around three ideas:
- Aspirational India
- Economic Development
- A caring society
This theme aims to provide a better standard of living with easier access to health, education, and better job opportunities for all sections of society. This theme covers the following components:
- Agriculture, Irrigation and Rural Development
- Wellness, Water and Sanitation
- Education and Skill development
The slogan for this theme is “Sabka Saath, Sabka Vikas, Sabka Vishwas.” Where every citizen would get equal opportunities to grow along with the nation with utmost confidence.
A humane and compassionate society that upholds Antyodya (society’s upliftment) as the basis of faith
Sector Wise Highlights of Budget 2020
Here are the Sector wise highlights of Budget 2020
|Tax||Investments||Indirect Taxation Changes||MSME & Start-ups||Fiscal Numbers & Allocations||Banking|
|Jobs Sector||Infrastructure||Tourism||Education||Agriculture||Health & Sanitation|
This budget also witnessed the introduction of a “Simplified Tax Regime” where the taxpayers can choose between the old and new schemes of taxation. The new taxation schedule is optional, and the taxpayer needs to forego certain deductions and exemptions. Check out the below table for new tax rates,
|INCOME||NEW TAX RATES|
|Between ₹5 lakh and ₹7.5 lakh||Reduced to 10% from 20%|
|Between ₹7.5 lakh to ₹10 lakh||Reduced to 15% from 20%|
|Between ₹10 lakh to ₹12.5 lakh||Reduced to 20% from 30%|
|Between ₹12.5 lakh to ₹15 lakh||Reduced to 25% from 30%|
|Above ₹15 lakh||Continues at 30%, No exemptions|
- Subsequently, the rates for the new taxation regime were also lowered from the current tax rates.
- People who have a taxable income of up to Rs.5 lakhs are exempted from paying tax.
- To simplify the taxation system further, this budget has abolished over 70 deductions and exemptions out the existing 100.
- Also, the Dividend Distribution Tax (DDT) has been removed for companies and is taxable for the recipients.
- Aadhaar based GST compliance to introduced and followed.
- Instant allotment of PAN-based on Aadhaar
- Aadhaar based verification of taxpayers to find out both dummy or non-existent units
- To encourage customers to seek invoices, a cash reward system has been detailed.
- A 15% concessional tax rate announced for new power generation companies
- Co-operative societies need to pay only 22% as a tax without any exemptions against the present 30%
- To launch Vivaad se Vishwaas scheme- a direct tax dispute settlement system
- Interest and penalty to be waived for those who want to pay the disputed amount till March 31st,2020
- Charity institutions’ registrations to be made entirely electronic, and any donations made to them would automatically show up on the taxpayer’s IT form. This allows the taxpayer to claim exemptions easily.
- Tax holiday on affordable housing extended by a year. Additionally, a deduction up to Rs.1.5 lakhs was announced applicable against the interest paid for the affordable house category till March 2021
- 100% tax concession to sovereign wealth funds when investing in infrastructure projects.
- A new Tax charter to be instituted to end tax harassment
- Proposal to amend the Companies Act to include criminal liability in specific areas.
- The proposed amendment of the I-T Act in the pipeline to allow faceless appeals.
- Government to review steps that ensure that the contracts are honoured.
- A new National Policy on Official Statistics proposed for improving data collection and dissemination.
- Origin requirements rules of Customs Act to be reviewed
- Government to sell a part of its stake in Life Insurance Corporation (LIC) through Initial Public Offering (IPO)
- NRIs will be able to purchase specific government securities just like domestic investors.
- The divestment target has been set at Rs.2.1 lakh crore for the coming fiscal year
- The FPI limit of corporate bonds has been raised to 15% from the existing 9%
- The scope of Exchange Traded funds to be increased by floating a Debt ETF consisting of government securities.
Indirect Taxation changes:
- Basic customs duty on imports and light-weight coated paper reduced to 5% from the existing 10%
- There is a proposal to increase Excise Duty rates on cigarettes and other tobacco products. No change has been effected in the Excise Duty rates of bidis.
- Both electric vehicles and mobile parts will come under revised Custome Duty rates.
- Customs Duty raised on footwear to 35% and furniture goods to 25%
- A 5% health cess imposed on the medical devices imports except on those devices exempt under BCD
- Specific inputs and raw materials like chemicals, plastics, and fuse to come under lower Customs duty rates
- Goods like auto-parts, chemicals that are being produced domestically to have higher Customs Duty.
MSME and StartUps
- Employee’s tax burden on ESOP’s to be deferred by five years or till they leave the company or sell their shares (Whichever is earliest)
- Simplified GST returns from April 2020
- Startups who have an annual turnover up to Rs.100 crore will have a 100% deduction for three successive assessments out of a total of 10 years.
- The turnover threshold for the MSME audit has been increased from Rs.1 crore to Rs.5 crores, applicable to businesses that carry their business transactions up to 5% in cash.
- Launch of app-based invoice financing loan products to bridge the gap of working flow capital and delayed payment hurdles faced by MSMEs.
- Amendments to be done to enable NBFC’s to offer invoice financing to MSMEs
Fiscal numbers & Allocations:
- FY20 budgetary deficit revised to 3.8% in the current fiscal from 3.3%. For FY21, the target is set at 3.5%
- Deviation set at 0.5% that is consistent with Section 4(3) of FBRM act
- Net market borrowing for FY20 is at Rs.4.99 lakh crore, and FY21 is set at Rs.5.36 Lakh crore.
- The Nominal GDP growth of 2020-2021 is estimated at 10%.
- Estimated receipts are at Rs.22.46 Lakh crore, and expenditure is at Rs 30.42 lakh crore
- Defense forces budget stands at R.3.37 lakh crore
- 2.83 lakh crore has been allocated for 16 Action points: Rs.1.6 lakh crore for agriculture and irrigation and Rs.1.23 lakh for Rural Development and Panchayati Raj.
- Allocation of Rs.4,400 crore for clean air, Rs.85,000 crores for SC, OBC’s scheme; Rs.28,600 for women-specific programs; Rs.9,500 crores for Senior Citizen Schemes and Rs.53,700 crores for ST schemes
- The Union Territories of Jammu& Kashmir and Ladhak to get Rs.30,757 crores and Rs.5,958 crores, respectively.
- Depositor insurance to be increased to Rs.5 lakh from the current Rs.1 lakh
- Encourage Public Sector Banks to explore capital markets for fundraising
- To strengthen Co-operative banks, the Banking Regulation Act is to be amended.
- National Recruitment Agency to set a new standard entrance test for both Non-Gazetted Government jobs and Public Sector Banks
- the Ministeries of Health and Skill Development is to offer Special Bridge courses.
- The Ministeries of Health and Skill Development is to offer Special Bridge courses to meet the rising demand of teachers, care-givers,para-medical staff, and nurses abroad.
- One year internships for young engineers to be conducted by Urban local bodies.
- Five new smart cities to be planned and set up via the PPP model.
- Transportation receives Rs.1.5 lakh crores.
- One hundred more airports to be set up by 2024 in support of the UDAN scheme.
- Highways development to be accelerated and the Delhi-Mumbai expressway along with two other projects to be completed by 2023. The work for Chennai- Bengaluru expressway is to be started.
- NHAI to monetize 12 highway bundles of over 6000 km before 2024.
- Young management graduates and engineers to be employed in infrastructure projects under the program of Project Preparation Facility.
- 22,000 already provided for National Infrastructure Pipeline support.
- Investment Clearance Cell portal will provide end-to-end facilitation, support, and information about land banks.
- National Logistics Policy to be implemented soon for a unified window of e-logistics market.
- The BhartNet program has been allotted Rs.6000 crores, and Fiber to home connections by BharatNet will be provided to One lakh gram panchayats by the end of this year.
- New policy implementation for the private sector to build a Data Center park.
Five archaeology sites have been chosen for building world-class museums:
- Rakhigarhi (Haryana)
- Hastinapur (Uttar Pradesh)
- Shivsagar (Assam)
- Dholavira (Gujarat)
- Adichanallur (Tamil Nadu)
Other allocations for the Tourism Department:
- 2500 crores allotted for tourism promotions
- An Indian Institute of Heritage and Conservation with deemed university status regulated by the Ministry of Culture.
- Four more museums across the country to renovated and curated.
- The Ministry of Culture has been allotted Rs.3500 crore for the year of 2020-21
- Maritime Museum to be constructed at Lothal- the Harappan site near Ahmedabad by the Ministry of Shipping.
- The education sector has been allotted Rs.99,300 crore and about Rs.3000 crore for Skill Development.
- Introduction of Degree level online educations program by institutes ranked in top 100 of NIRF rankings. This scheme has been specially introduced for underprivileged students.
- A National Forensic Science University and National Police University has been proposed
- IND SAT exam for Asian and African students to boost the “Study In India” program.
- A budget of Rs.2.83 lakh crore set apart for agriculture and its allied activities
- Doubling the income of farmers by 2022
- The Agri-credit availability has been set at Rs.15 lakh crore for 2020-21
- Comprehensive measures for 100 water-deficiency districts
- Offer 20 lakh farmers to set up standalone solar pumps and another 15 lakh farmers to solarise their power grid.
- Proposal for Women Self-help groups to manage Village Storage Scheme.
- Indian railways “Kisan Train” to have refrigerated coaches that can carry perishables and milk.
- Krishi UDAN to operate both on international and national routes.
Health and Sanitation:
- The health sector has been allocated Rs.69,000 crore.
- Swachh Bharat movement has been allocated Rs. 12,300 crores.
- Proposal for setting up hospitals in Tier-2 and Tier-3 cities by using PPP with the private sector.
- Expansion of the “Jan Aushadi” scheme to provide for hospitals coming under the Ayushman Bharat by 2025.