Highlights of Budget 2020 – 2021
Finance Minister Nirmala Sitharaman on Saturday (01.01.2020) announced massive state funding to help India’s farm sector in Union Budget 2020-21, aiming to get broader economic growth back up from its lowest in a decade.
- New optional tax slabs: New income tax slabs will be available for those who forgo exemptions.
|Taxable income slabs||Tax Rates|
|Up to Rs 5 lakh||Nil|
|Rs 5 Lakh to Rs 7.5 Lakh||10%|
|Rs 7.5 lakh to Rs 10 lakh||15%|
|Rs 10 lakh to Rs 12.5 lakh||20%|
|Rs 12.5 lakh to Rs 15 lakh||25%|
|Rs 15 lakh and above||30%|
- To simplify the tax system and lower tax rates, around 70 of more than 100 income tax deductions and exemptions have been removed.
- Dividend Distribution Tax (DDT) abolished; Companies will not be required to pay DDT; dividend to be taxed only at the hands of recipients, at applicable rates.
- Cash reward system envisaged to incentivise customers to seek invoice.
- 15% concessional tax rate for new power generation companies.
- Tax on cooperative societies reduced to 22% without exemptions.
- 100% tax concession to sovereign wealth funds on investment in infrastructure projects.
- Tax on Cooperative societies to be reduced to 22 per cent plus surcharge and cess ,as against 30 per cent at present.
- To end tax harassment, new taxpayer charter to be instituted. Tax harassment will not be tolerated, says FM.
- Proposes to amend Companies Act to bring criminal liability in certain areas.
- To amend I-T Act to allow faceless appeals.
- To launch new direct tax dispute settlement scheme — Vivaad se Vishwaas scheme.
- Interest and penalty will be waived for those who wish to pay the disputed amount till March 31.
- Government to look at ensuring that contracts are honoured.
- Proposes new National Policy on Official Statistics to improve data collection and dissemination with the help of technology.
- Rules of origin requirements in Customs Act to be reviewed, to ensure FTAs are aligned with the conscious direction of our policy: FM
- Aadhaar-based verification of taxpayers is being introduced to weed out dummy or non-existent units; instant online allotment of PAN on the basis of Aadhaar.
- Registration of charity institutions to be made completely electronic, donations made to be pre-filled in IT return form to claim exemptions for donations made to be pre-filled in IT return form to claim exemptions for donations easily.
- Tax holiday for affordable housing extended by 1 year. Additional deduction up to Rs. 1.5 lakhs for interest paid on loans taken for an affordable house extended till 31st March, 2021.
- Govt plans to sell part of its holding in Life Insurance Corporation (LIC) by way of Initial Public Offering.
- Certain specified categories of government securities will be open fully for NRIs
- FPI limit in corporate bonds raised to 15% from 9%.
- Government doubles divestment target for the next fiscal at Rs 2.1 lakh crore.
- Expand Exchange Traded Fund by floating a Debt ETF, consisting primarily of govt. securities.
Indirect Tax :
- Customs duty raised on footwear to 35% from 25% and on furniture goods to 25% from 20%.
- Excise duty proposed to be raised on Cigarettes and other tobacco products, no change made in the duty rates of bidis.
- Basic customs duty on imports of news print and light-weight coated paper reduced from 10% to 5%.
- Customs duty rates revised on electric vehiclesand parts of mobiles.
- 5% health cess to be imposed on the imports of medical devices, except those exempt from BCD.
- Lower customs duty on certain inputs and raw materials like fuse, chemicals, and plastics.
- Higher customs duty on certain goods like auto-parts, chemicals, etc. which are also being made domestically.
Startups & MSME:
- Tax burden on employees due to tax on ESOPs to be deferred by five years or till they leave the company or when they sell, whichever is earliest.
- New Simplified return for GST from April 2020
- Start-ups with turnover up to Rs. 100 crore to enjoy 100% deduction for 3 consecutive assessment years out of 10 years.
- Turnover threshold for audit of MSMEs to be increased from Rs 1 crore to Rs 5 crore, to those businesses which carry out less than 5% of their business in cash.
- App-based invoice financing loans product to be launched, to obviate problem of delayed payments and cash flow mismatches for MSMEs.
- Amendments to be made to enable NBFCs to extend invoice financing to MSMEs
Fiscal numbers & allocations:
- FY20 fiscal deficit revised to 3.8% from 3.3% in the current fiscal. For FY21, fiscal target seen at 3.5%.
- Deviation of 0.5%, consistent with Section 4(3) of FRBM Act.
- Net market borrowing for FY20 at Rs 4.99 lakh crore; For FY21 it’s pegged at Rs 5.36 lakh crore.
- Nominal GDP growth for 2020-21 estimated at 10%.
- Receipts for 2020-21 estimated at Rs 22.46 lakh crore. Expenditure at Rs 30.42 lakh crore.
- Defence gets Rs 3.37 lakh crore as the defence budget
- Rs 2.83 lakh crore to be allocated for the 16 Action Points; Rs 1.6 lakh crore allocated to agriculture and irrigation; Rs 1.23 lakh crore for Rural development and Panchayti Raj.
- Rs 4,400 crore for clean air; Rs 53,700 crore for ST schemes; Rs 85,000 crore for SC, OBCs schemes; Rs 28,600 for women specific schemes; Rs 9,500 crore for senior citizen schemes.
- Rs 30,757 crore rupees for Union Territory of J&K; Rs 5,958 crore rupees for Union Territory of Ladakh.
- To help bank depositors, government increases depositor insurance to Rs 5 lakh from current Rs 1 lakh.
- Encourage PSBs to approach capital markets for fund raising.
- Banking Regulation Act to be amended to strengthen Cooperative banks.
National recruitment agency: New common entrance test for non-gazetted government jobs and public sector banks.
- Special bridge courses to be designed by the Ministries of Health, and Skill Development: To fulfill the demand for teachers, nurses, para-medical staff and care-givers abroad.
- Urban local bodies to provide internships for young engineers for a period of up to one year.
- 5 new Smart cities to be set up via PPP model.
- Rs 1.7 lakh crore allocated to transportation.
- 100 more airports to be set up by 2024 to support UDAN scheme.
- Accelerated development of highways will be undertaken; Delhi-Mumbai expressway and two other projects to be completed by 2023. Chennai-Bengaluru Expressway to be started.
- NHAI to monetize 12 lots of highway bundles of over 6,000 km before 2024.
- Young engineers and management graduates will be roped in for infrastructure projects under Project Preparation Facility.
- About Rs 22,000 crore already provided for supporting National Infrastructure Pipeline.
- Investment Clearance Cell to set up through a portal, will provide end-to-end facilitation, support and information on land banks
- National Logistics Policy will soon be released, creating single window e-logistics market.
- Rs 6,000 crore for BharatNet programme; Fibre to Home connections under BharatNet will be provided to 1 lakh gram panchayats this year itself
- New policy for private sector to build Data Centre Parks.
5 archaeology sites to be developed for world-class museums
- Rakhigarhi (Haryana)
- Hastinapur (Uttar Pradesh)
- Shivsagar (Assam)
- Dholavira (Gujarat)
- Adichanallur (Tamil Nadu)
- Rs 2,500 crore for tourism promotion.
- An Indian Institute of Heritage and Conservation under Ministry of Culture proposed; with the status of a deemed University.
- 4 more museums from across the country to be taken up for renovation and re-curation.
- Rs.3150 crore proposed for Ministry of Culture for 2020-21.
- Maritime museum to be set up at Lothal- the Harrapan age maritime site near Ahmedabad, by Ministry of Shipping.
- Expansion of National Gas Grid from 16,200 km to 27,000 km along with reforms to deepen gas markets, enable ease of transactions and transparent price discovery
- Rs 22,000 crore allocated to to power and renewable energy.
- FM urges all states and UTs to replace conventional energy meters by pre-paid smart meters in 3 years, this will give consumers the freedom to choose supplier and rate as per their requirements.
- Advise to shut thermal plants if they don’t meet emission norms.
5 measures for Railways
- Large solar power capacity to be set up alongside rail tracks, on land owned by Railways
- More Tejas-like trains for tourists.
- 150 new train to be introduced on PPP basis; Four stations will be also be redevelopment with the help of PPP.
- Rs 18,600 crore worth Bengaluru suburban transport project launched; 20%equity will be provided be the Centre.
- Rs 99,300 crore allocated for education sector, Rs 3,000 crore rupees for skill development
- External commercial borrowings and FDI to be leveraged to improve the education system.
- A medical college to be attached to a district hospital in PPP mode, viability gap funding to be set up for setting up such medical colleges.
- US-like SAT exam to be held in African and Asian countries for benchmarking foreign candidates who wish to Study In India
- Degree-level full-fledged online education programme to be to be offered by institutes in top 100 in National Institutional Ranking Framework
New Education Policy to be announced soon.
- To bring in equivalence in the skill sets of the workforce and employers’ standards.
- 150 higher educational institutions to start apprenticeship embedded degree/diploma courses by March 2021.
- To launch 2 new National science scheme
- National Police University and National Forensic Science University proposed for policing science, forensic science, and cyber-forensics.
- Agriculture market needs to be liberalised; govt proposes to handhold farmers, says FM
- Comprehensive measures for 100 water-stressed districts being proposed
- PM KUSUM scheme will be expanded to 20 lakh farmers.
- Government will help 20 lakh farmers for setting up solar pumps; Farm market will to be liberalized.
- Another 15 lakh farmers to be helped to solarise their grid-connected pump sets.
- Scheme to enable farmers to set up solar power generation capacity on their fallow/barren lands and to sell it to the grid.
- Supporting states to focus on one product for one district so as to make way for Horticulture to gain momentum.
- Change in incentive scheme for chemical fertilisers. We will encourage balanced use of all fertilizers, a necessary step to change the incentive regime which encourages excessive use of chemical fertilizer
- Krishi UDAN scheme for agricultural exports on international and national routes. This will also improve value realization in North East and tribal districts.
- Railways will set up Kisan Rail through PPP arrangement, for transportation o ..
- For better marketing and export, supporting states will focus on one product for one district, so that high focus is given at district level for horticulture to gain momentum
- Zero Budget farming focus of the government.
- MGNREGS to be used to develop fodder farm.
- Jaivik Kheti Portal – online national organic products market to be strengthened.
- Milk processing capacity to be doubled to 108 tonne from 53 tonne by 2025.
- Artificial insemination to be increased to 70% from the present 30%.
- MNREGS to be dovetailed to develop fodder farms.
- Foot and Mouth Disease, Brucellosis in cattle and Peste Des Petits ruminants (PPR) in sheep and goat to be eliminated by 2025.
- Deen Dayal Antyodaya Yojana – 0.5 crore households mobilized with 58 lakh SHGs for poverty all ..
Village Storage Scheme:
- Will further expand on SHGs for alleviation of poverty.
- To be run by the SHGs to provide farmers a good holding capacity and reduce their logistics cost.
- Women, SHGs to regain their position as Dhaanya Lakshmi.
- NABARD to map and geo-tag agri-warehouses, cold storages, reefer van facilities, etc.
- Warehousing in line with Warehouse Development and Regulatory Authority (WDRA) norms:
- Viability Gap Funding for setting up such efficient warehouses at the block/taluk level.
- Food Corporation of India (FCI) and Central Warehousing Corporation (CWC) to undertake such warehouse building.
- Financing on Negotiable Warehousing Receipts (e-NWR) to be integrated with e-NAM.
- State governments who undertake implementation of model laws (issued by the Central government) to be encouraged.
- Framework for development, management and conservation of marine fishery resources to be put in place.
- Fish production to be raised to 200 lakh tonnes by 2022-23
- Youth and fishery extension work to be enabled by rural youth as Sagar Mitras, forming 500 fish farmer producing organizations.
- Rs 3.6 lakh crore allocated to water sanitation and pipeline project; Rs 12,300 crore for Swachh Bharat.
- Our government is committed to Open Defecation Free country, in order to sustain ODF behaviour and to ensure no one is left behind.
- Rs 69,000 crore allocated to healthcare sector.
- Rs. 6400 crore (out of Rs. 69,000 crore) for PM Jan Arogya Yojana (PMJAY):
- Indradhanush immunization plan expanded to cover 12 new diseases,.
- Viability gap funding window to be set up to cover hospitals, with priority given to aspirational districts that don’t have hospitals empanelled under Ayushman Bharat.
Propose Rs 35,600 crore nutrition-related plan.
- Jan Aushadhi Kendra Scheme to offer 2000 medicines and 300 surgicals in all districts by 2024.
- Over 6 lakh anganwadi workers have been equipped with smartphones to upload the nutrition status of 10 crore households.
- Nominal health cess on import of medical equipment to be introduced to encourage domestic industry and generate resources for health services.
- A new scheme to provide higher insurance cover, cover, reduced premium for small exporters and simplified procedure for claims
- Targeting diseases with an appropriately designed preventive regime using Machine Learning and AI.
Three prominent themes of the Budget:
Aspirational India: Better standards of living with access to health, education and better jobs for all sections of the society. Three components of Aspirational India
- Agriculture, Irrigation, and Rural Development
- Wellness, Water, and Sanitation
- Education and Skills
Economic Development for all: “Sabka Saath , Sabka Vikas , Sabka Vishwas”.
Caring Society: Both humane and compassionate; Antyodaya as an article of faith.
- Provision of Rs 8,000 crore over five years for Quantum Technologies and it’s applications.
- GIFT City to have an International Bullion Exchange, enabling better price discovery of gold
- India will host G20 Presidency in 2022, Rs 100 crore to be allocated for making preparations for this historic occasion, where India will drive global economic agenda
- This is the Budget to boost income and purchasing power of Indians, says Sitharaman.
- This Budget is woven around three prominent themes: Aspirational India; Economic Development for All; A Caring Society
- Proliferation of technologies such as analytics, machine learning, Artificial Intelligence, bioinformatics and number of people in productive age group at its highest, point out two cross-cutting developments.
- Sitharaman cites a poem — Pyara Watan.
- Budget aims to meet hopes and aspirations of all the sections of the society.
- Govt has taken several steps to formalisation of economy.
- Govt wants to improve the life of the people through Rs 100 lakh crore infrastructure pipeline projects.
- FM terms GST as historic structural reform; says it integrated country economically
- GST has resulted in efficiency gains in transport and logistics sector, inspector raj has vanished, it has benefitted MSME Consumers who have got a annual benefit of Rs 1 lakh crore by GST.
- 6 million new taxpayers have been added.
- Average household now saves nearly 4% more on the monthly basis after implementation of GST.
- Govt says aim is to achieve seamless delivery of services through digital governance.
- GST resulted in Rs 1 lakh crore gains to consumers, removed inspector raj and helped transport sector.
- India uplifted 271 million people out of poverty.
- India is now 5th largest economy in world.Central Govt debt reduced to 48.7% of GDP from 52.2 per cent in March 2014
- We shall strive to bring ease of living for every citizen.
- 7.4% growth surpassed in 2014-19 with average inflation of 4.5%.
- Centre’s debt down from 52.2% in 2014 to 48.7% in 2019
- During 2014-19, govt brought paradigm shift in governance.
- Fundamentals of economy strong, inflation well contained, banks cleaned up accumulated loans.
- Finance Minister lists out welfare schemes like affordable housing scheme, DBT and Ayushman Bharat