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. This 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 return 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 libralised
  • 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 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 centre and state levels.
  • New policy to be announced for exports called “NIRVIK”.
  • Huge employment generation opportunity at 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 global average.
  • Smart electric meters to give the consumers flexibility to select 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 museaums
  • 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 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 ammendments are proposed to 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

  • 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 subordinate debt (quai equity) for MSEMs
  • 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 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 seen at 3.8% against 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 Tax payers will be taxed at following rates in 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 interst 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 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 infra structure
  • 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

 

The article is compiled by CA Janhavi Phadnis. If you have any queries concerning the above article. Please write to us either in the comments section below or email the author on info.financepost@gmail.com.

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CA Janhavi Phadnis