Budget 2020 highlights: key Changes for Income tax Slab 2020-21

Budget-2020-Important-Key-Highlights

On February 1st, Union Budget 2020-2021 was presented by Finance Minister Nirmala Sitharaman in Lok Sabha. To revive the economic growth after record GDP crash, Nirmala Sitharaman presented the budget which primarily focuses on increasing the purchasing power by decreasing income tax rates and improving rural income along with empowering marginalized section. The primal concern of this year’s budget centres around three pivotal ideas- Aspirational India, Economic development, A Caring Society.

Here are some key highlights of Union Budget 2020-2021:

Economy and Finance:

A.   Taxation

A new tax regime has been proposed by the Finance Minister. She calls the new regime “Lowest, simplest, smoothest”.  One can choose to switch to the new income tax regime but won’t get exemption benefits. And, those willing to continue with the old system with deductions, can continue to follow the old rates. Over 70 deductions have been removed in the new budget 2020.

She says, Personal income tax is at lowest rate of all time.

INCOME TAX
Income between Rs 5 lakh to RS 7.5 lakh Reduced to 10% from the present 20%
Income between Rs 7.5 lakh to RS 10 lakh Reduced to 15% from the present 20%
Income between Rs 10 lakh to RS 12.5 lakh Reduced to 20% from the Present 30%
Income between Rs 12.5 lakh to RS 15 lakh Reduced to 25% from the present 30%
Income above Rs 15 lakh Continue at 30%, without exemptions

B.   Dividend Distribution Tax (DDT)

 

Companies will not be required to pay DDT anymore. FM says, “Dividend Distribution Tax to be removed. Dividend shall be taxed at the hands of the recipients”.

C.   Corporate Tax

The government proposes 100% tax exemption on Sovereign Wealth Fund’s Indra Investment. Another step to boost up investments has been taken by slashing corporate tax to 22% for existing companies. FM proposes to extend concessional corporate tax rates of 15% to the new companies in the manufacturing sector to new domestic electricity generating firms.

  • New taxpayer charter will be established to fight tax harassment.
  • The government proposes to launch new direct tax dispute settlement scheme called “Vivaad se Vishwaas scheme”.

D.   Housing

Tax holiday has been extended by 1 year for affordable housing. An additional deduction up to Rs 1.5 lakh for interest paid on loans under additional housing scheme has been extended till 31st March, 2021.

E.    Investment

  • The government offers to sell a part of its stake in LIC (Life Insurance Corporation) via initial public offer. “Government will list LIC on the stock exchanges”, she said in her budget 2020 speech.
  • In this budget, Foreign Portfolio Investment (FPI) limit in corporate bonds has been raised to 15% from 9%.
  • FDI or Foreign Direct Investment in India has increased to $284 billion during 2014-19 from $190 billion in previous five years.
  • To offer enhanced insurance cover and low premium for small exporters Niryat Rin Vikas Yojana Scheme has been introduced.
  • The government has increased divestment target for the next FY at Rs 2.1 lakh crore.

F.    Indirect Taxes in budget 2020

  • Customs duty increases on footwear to 35% to 25% and on furniture goods from 20% to 25%.
  • FM proposes to increase excise duty on cigarettes and other tobacco related products except Bidis.
  • Customs duty reduces on certain inputs and raw materials such as fuse, chemicals and plastics.
  • Customs duty increases on goods like auto-parts, chemicals, etc (domestically prepared).
  • Health cess of 5% will be imposed on the imports of medical devices.

 G.     Ministry of Micro, Small and Medium Enterprises

  • Nirmala Sitharaman addresses that more than 5 lakh MSMEs benefitted from RBI’s restructuring of loans.
  • In order to extend invoice financing, amendments will be made to enable NBFC (Non-Bank Financial Company).
  • In order to eliminate problem of delayed payments and cash flow mismatches for MSMEs, an app-based invoice financing loans products will start.
  • Businesses that execute less than 5% of their business in cash, for them, turnover threshold for audit of MSMEs will increase to Rs 5 crore from Rs 1 crore.

H.   Start-up

According to a survey, it takes just 19 documents to purchase a gun whereas starting a restaurant requires 45. So, start-ups and businesses need better schemes to perform well and boost up the economy.

  • 100% deduction will be enjoyed by start-ups with turnover up to Rs 100 crore for 3 consecutive assessment years out of 10 years.
  • The budget 2020 proposes to loosen the tax burden on the employees of start-ups by deferring the tax payment on ESOPs by five years or till they leave the company or they sell it, whichever comes earlier.

I.     Banking

  • Finance Minister says, Insurance Cover for Bank Depositors raised from Rs 1 lakh to Rs 5 lakh.
  • In order to strengthen cooperative banks, Banking Regulation Act will be amended.
  • The government proposes to encourage Public Sector Banks to approach capital markets to raise funds.

J.     Fiscal numbers and Allocations

  • Fiscal deficit target fixed at 3.8% of GDP from 3.3% for FY 2019-2020. Fiscal deficit target fixed at 3.5% of GDP for FY 2021.
  • FM Sitharaman says, nominal GDP for 2020-21 has been estimated at 10%.
  • The receipts estimated at Rs 22.46 lakh crore for 2020-21. The expenditure estimated at Rs 30.42 lakh crore.
  • The approximate market borrowing estimated at Rs 4.99 lakh crore for FY20 and Rs 5.36 lakh crore for FY21.
  • Rs 3.37 lakh crore has been budgeted for defence.
  • Rs 69,000 crore has been allocated for healthcare sector.
  • Rs6 lakh crore will be allocated to agriculture and irrigation.
  • Rs 1.23 lakh crore has been budgeted for rural development and Panchayati Raj.
  • Rs 4,400 crore will be allocated for clean air programs.
  • Rs 30,757 crore has been budgeted for Union Territory of J&K and Rs 5,958 crore has been budgeted for Union Territory of Ladakh.
  • For SC schemes, ST schemes, women specific schemes and senior citizen schemes following amount will budgeted in the mentioned order- Rs 53,700 crore, Rs 85,000 crore, Rs 28,600 crore, Rs 9,500 crore. 

Infrastructure budget 2020

  • Union Budget 2020 proposes to offer Rs 1.7 lakh crore for transportation infrastructure in 2021.
  • An allocation of Rs 1,480 crore will be made to launch National Textile Mission.
  • In order to boost infrastructure, Sitharaman claims to set up a 9,000 km economic corridor. She says, “Chennai-Bengaluru expressway will also be started. Delhi-Mumbai expressway to be completed by 2023,”.
  • FM proposes to set up 100 more airports by 2025 to support UDAN scheme.
  • The government will monetise 12 lots of national highways by 2024.
  • The government aims at achieving electrification of 27,000 km of lines.
  • In order to create single window e-logistics market, National Logistics Policy will be released soon.

Indian Railways budget 2020

  • The government plans to build more Tejas-like trains to connect tourist spots.
  • FM proposes 150 new trains to be introduced in PPP (public private partnership) basis and redevelopment of 4 stations will be done with the help of PPP.
  • 20% equity will be provided by centre to Bengaluru Suburban Transportation Raj.
  • The government is planning to have a large solar power capacity for the Indian Railways.

Telecom

  • New policy will launch for private sector to set up Data Centre Parks.
  • Rs 6,000 crore has been budgeted for BharatNet Scheme. FM claims that 1 lakh gram panchayats will get optical fibre link.

Education and Skill India

  • FM proposes Rs 3,000 crore for Skill India Initiative in order to provide skill training to the youth.
  • IND SAT exam will be held in Africa and Asian countries to promote “Study in India”.
  • Standard online educational programme will be offered by top 100 NIRF ranked institutions to benefit underprivileged students.
  • FM proposes to set up a National Police University and National Forensic Science University.

Energy

  • FM allotted Rs 20,000 crore for the renewable energy sector.
  • FM proposes extension of National Gas Grid to 27,000 km from 16,200 km.
  • She has advised to shut such thermal plants that do not follow emission norms.

Healthcare and Sanitation

  • Rs 12,300 crore will be allotted for this year’s Swachh Bharat Mission.
  • Rs 6400 crore has been budgeted for PM Jan Arogya Yojana (PMJAY).
  • Indradhanush immunization plan has been expanded for covering 12 new diseases.
  • FM proposes to established hospitals in Tier 2 and Tier 3 cities through PPP.
  • Jan Aushadhi scheme has been expanded to provide for every hospital under Ayushman Bharat by 2025.
  • To promote ‘Nal se jaal’ scheme, FM proposes Rs 3.6 lakh crore to improve water supply chain to households.

Agriculture budget 2020

  • The government aims at doubling farmers incomes by 2022.
  • Kisan Rail will be set up by Indian Railways through PPP model to quicken the transportation for perishable goods.
  • Similarly, Krishi Udaan scheme will be launched to transport agricultural products to various national and international markets.
  • The government will take comprehensive steps for 100 water stressed districts.
  • PM KUSUM scheme will be extended to 20 lakh farmers and 20 lakh famers will get help by the government to set up solar pumps.
  • FM encouraged the balanced use of fertilisers including traditional and organic to reduce the excessive usage of chemical fertilizers.
  • Online organic products will be encouraged-Jaivik Kheti Portal.

Jobs

  • A common entrance test by National Recruitment Agency for non-gazetted government jobs and private sector banks has been introduced.
  • Ministries of Health, and Skill Development will design courses to prepare students/learners (in fields such as teaching, nursing, para-medical) for foreign opportunities.

Tourism in India

  • FM proposes to develop 5 archaeology sites to build world-class museums.
  1. Rakhigarhi
    2. Hastinapur
    3. Shivsagar
    4. Dholavira
    5. Adichanallur
  • Rs 2,500 crore has been allotted to promote tourism in India.
  • A maritime museum will be established at Lothal- the Harrapan age maritime site near Ahmedabad, by Ministry of Shipping.

Fisheries:  

  • FM claims to raise fish production to 200 lakh tonnes by 2022-2023
  • 500 fish farmer producing organizations will be set up by rural youth as Sagar Mitras.

Livestock:

  • FM claims to double the milk processing capacity to 108 tonnes from 53 tonnes by 2025.
  • Various cattle diseases such as Brucellosis and Peste Des Petits ruminants (PPR) in sheep and goat will be eliminated by 2025.

Village Storage Scheme:

  • Self Help Groups will be expanded for poverty alleviation.
  • NABARD will map and geo-tag agricultural-warehouses, cold storages, van facilities, etc.
  • FM proposes to create warehousing with the help of Warehouse Development and Regulatory Authority (WDRA) norms.
  • Food Corporation of India (FCI) and Central Warehousing Corporation (CWC) will execute such warehouse building operations.

Other Announcements in budget 2020

  • Central government’s debt has fallen down to 48.7% in March 2019 from 52.2% in March 2014
  • India will be hosting G20 Presidency in 2022. So, Rs 100 crore will be allotted for this occasion.
  • After implementation of GST, Average household now saves nearly 4% more on a monthly basis.

This budget 2020 has introduced various schemes such as optional personal income tax system and introduced multi-billion-dollar farm, infra and healthcare packages to revive growth in the country to accomplish Sitharaman’s vision (“Sabka Saath, Sabka Vikas, Sabka Vishwas”).

 

 

Related posts

Leave a Comment