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
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
- 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.
- 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
- 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
- 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.
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%)
- 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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