Budget 2020 : Highlights

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Budget 2020: Highlights

Budget Highlights: What is changing?

On 1st Feb 2020, the Finance Minister Ms. Nirmala Sitharaman presented the Union Budget. These budget announcements will be applicable for the Financial Year 2020-21 corresponding to Assessment Year 2021-22.

Highlights of budget 2020:

Vision – Budget to boost income and increase purchasing power. Focus on fundamental Structural reforms.

  • GST has integrated the country and added 60 lakh more taxpayers
  • Simplified GST returns filing system from April 2020.
  • Govt to focus on three pillars – Aspirational India + Economic development + Caring society

Aspirational India

Rural and Agricultural India

  • By 2022 committed to double the farmer’s income
  • Farm markets need to be liberalised
  • 16 action points laid to implement this. Solar pumps and solar power generation in farms promoted. Farmers with barren lands etc can use the land to generate this and earn living.
  • NABARD to evaluate agro-warehousing facilities.
  • Kisan Mail to transport perishable goods faster
  • Horticulture exceeds the production of food-grain. Focus on “one product” per district.
  • Online national organic product markets promoted
  • Agriculture credit target set at 15 lakh crores.
  • Rs. 2.83lakh crores allocated for Agriculture and Irrigation.

Wellness Water and  Sanitation

  • Taxes on medical devices will be used to support hospital development. New hospitals will be developed.
  • TB free India proposed by 2025.

Education and skills

  • New Education Policy will be announced soon
  • Degree level online education programme for deprived students
  • Foreign candidates promoted to “study in India”
  • Medical college to attach to district hospital for more doctors. Viability gap funding available.
  • Skill development and teacher training programmes
  • Rs 99300 cr allocated for the education sector

Economic Development

  • Need to boost domestic manufacturing. Promoting manufacturing of mobile phones, healthcare devices etc.
  • Quality standard Audit by all Ministries.Zero defect zero effect manufacturing
  • Reversal of Duties to Exporters from this year: Digitally refund to exporters duties and taxes levied at the centre and state levels.
  • New policy to be announced for exports called “NIRVIK”.
  • Huge employment generation opportunity in the Infrastructure sector.
  • Accelerated development of Highways proposed. Delhi Mumbai expressway by 2023.
  • National Logistic policy to be announced soon
  • Measures announced for Indian Railways. Solar capacity to be developed on Railways
  • Waterways will be developed.
  • “Udaan Scheme” for 100 more airports by 2024 as fliers are increasing in India against the global average.
  • Smart electric meters to give the consumers flexibility to select an electricity service provider.
  • New Economy i.e. AI, digitisation etc, to get direct benefit transfers. Policy to enable firms to build data centres will be announced soon.
  • Digitisation promoted all across India
  • National mission on Quantum Technology related to computing etc.

Caring Society

  • Women-centric programmes promoted
  • No manual cleaning of septic tanks etc. Technology to be used for such jobs.
  • 5 archaeological sites to be developed with some iconic museums
  • Rs 2500 cr allocated for tourism promotion
  • Foreign exchange reserves grew to 1.88 lakh crores
  • 85,000 cr allocated for scheduled caste and OBCs
  • Thrust on Environment and climate change

Ease of Living is promoted. National Security is the top priority of this government.

2 hands that will embrace the above 3 pillars. Governance and  Financial Sector

Governance

  • Govt is committed to “NO TAX HARASSMENT” of any manner.
  • Certain amendments are proposed to the Companies Act and other acts to bring criminal liability in certain areas.
  • Nation Recruitment Agency will be set up for recruitment of non-gazetted posts
  • Garment Development promotion for North East India

Financial Sector

  • A robust mechanism is in place to monitor the working of PSU banks. Insurance coverage for Deposit increased to Rs 5 lac from Rs 1 lac
  •  To amend Banking Regulation Act to strengthen  Co-operative Banks
  • Scheme to provide subordinated debt (Quai equity) for MSMEs
  • Govt to sell stake in IDBI bank through stock exchange
  • New debt ETF to be launched
  • NRIs will be allowed to invest in certain G-Sec. bonds
  • Credit guarantee scheme to NBFCs
  • Gift city to set up a new exchange for trading rupee derivatives.
  • Govt plans to raise fund through LIC IPO

Estimated nominal GDP growth FY 21 at 10% improvement over current GDP.

Fiscal GDP Deficit has seen at 3.8% against a target at 3.5% for FY 20.

Taxation

Proposed new Personal Income Tax Regime with reduced taxes and if he claims no deductions/exemptions. This is an Optional Regime.

Individual Taxpayers will be taxed at the following rates in the new regime

  • 2.5 lacs – 5 lacs – 5% (current 5%)
  • Rs 5 lacs-7.5 lacs – 10% (earlier 20%)
  • Rs. 7.5 lacs – 10 lacs – 15% (current 20%)
  • Rs. 10 lacs – 12.5 lacs – 20 % (Current 30%)
  • Rs 12.5 lacs to 15 lacs – 25% (Current 30%)
  • Rs 15 lacs above 30% (Current 30%)

Click here to understand the slab rates change in detail 

  • Pre-filled Income tax returns for new Tax Regime.
  • 70 exemptions are removed in the new Tax regime.
  • Dividend Distribution Tax is removed. No more DDT paid by companies and dividend will be taxed in the hands of individuals.
  • New power generation cos to tax at 15%
  • 100% Tax exemption to foreign investment in priority sector
  • Concessional withholding of interest on municipal bonds/deposits.
  • Startups – ESOPs to employees to be taxable after 5 years or sale or as per other conditions.
  • Turnover limit for exemption for Start-Ups now 100 Cr
  • Option to co-operative soc to exempt form MAT and the new tax rate of 22 % tax with 10 % surcharge and 4 % cess without exemptions.
  • Turnover limit for retailers raised to 5 cr from 1 cr for tax audit if cash sales are less than 5%.
  • Affordable Housing developers projects application for approval for Tax holiday extended by 1 more year
  • increase the limit from 5% to 10% for infrastructure
  • Charitable / Educational Institutions tax return will be pre-filled with donors information. Completely electronic registration.
  • Faceless Appeals will also be done along with Faceless Assessments.
  • Tax Charter will be notified.
  • Interest and Penalty removed for payment of tax under dispute till March 2020.
  • Indirect taxes compliance will be Aadhar based.
  • Custom duty reduced for certain items.
  • Health cess introduced on custom duty on import of medical equipment

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About CA Janhavi Phadnis 73 Articles
Chartered Accountant and financial consultant. She has worked with corporates for 14 years with expertise in Forex-Treasury, Accounting, and Corporate Tax. She can be contacted at info.financepost@gmail.com

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