Union Budget 2020:
Finance Minister Nirmala Sitharaman (1st February 2020) presented the Union Budget 2020-21 in ‘bahi khata’.
This is her 2nd budget in 8 months. Before presenting the budget, she paid homage to her predecessor Arun Jaitley and described him as the ‘Architect of GST’. She said GST has helped in formalisation of the economy and an average household saves 4% on monthly spending after implementation of GST. Sitharaman added that GST has helped in vanishing ‘inspector raj’ of the past.
While presenting the Budget 2020, the Finance Minister has highlighted 3 Themes of the budget. They are- “Aspirational India“, “Economic development for all” and “Caring society“.
In this budget, sitaraman introduced a new optional personal income tax system, a new tax dispute settlement scheme and unveiled a 16-point plan to revive growth in the country.
The Union Budget 2020-21 has allocated ₹2.83 lakh crore for its 16-point action plan to double farmers’ income by 2022. The plan includes raising fish and milk production. Of this, ₹1.6 lakh crore will go towards agriculture, irrigation and allied fields and ₹1.23 lakh crore for rural development and Panchayati Raj.
The Finance Minister also announced that Indian Railways will set up ‘Kisan Rail’ with refrigerated freight trains under a PPP model so that perishable goods such as milk, fish and meat can be easily transported.
The Civil Aviation Ministry will start ‘Krishi Udaan’ on international and national routes for the transportation of agricultural produce. Sitharaman also announced that 5 new smart cities will be developed in the country. The cities will be developed with states in private partnership mode.
- Agriculture allocation – ₹1.38 lakh crore
- Rural development allocation – ₹1.23 lakh crore
- Agriculture and rural allocation – ₹2.83 lakh crore
- Agriculture credit target – ₹15 lakh crore
- Education allocation – ₹99,300 crore
- Healthcare allocation – ₹69,000 crore (out of the total amount, ₹6,400 crore will be sanctioned for Ayushman Bharat Yojna)
- Transport infra allocation – ₹1.7 lakh crore
- Welfare of senior citizens – ₹9,000 crore
- Uplift of Scheduled Tribes – ₹53,700 crore
- Welfare of Scheduled castes and Other Backward Classes – ₹85,000 crore
- New income tax slabs 0 – 2.5 lakh – exempted
- ₹2.5 lakh – ₹5 lakh – 5%
- ₹5 lakh – ₹7.5 lakh – 10% (20% earlier)
- ₹7.5 lakh – ₹10 lakh – 15% (20% earlier)
- ₹10 lakh to ₹12.5 lakh – 20% (30% earlier)
- ₹12.5 lakh – ₹15 lakh – 25% (30% earlier)
- No change in tax rates above ₹15 lakh
- Aadhaar-based verification of taxpayers is being introduced
- Additional Rs 1.5 lakh tax benefit on affordable housing loans
- Allocation of Rs 8,000 cr for National Mission on Quantum Computing and Technology
- Budget proposes deferment of tax payment by employees on ESOPs from startups by five years
- Budget to boost income, enhance purchasing power
- Concessional corporation tax rate for electricity generation companies in place
- Customs duty raised on footwear and furniture
- Date of approval of affordable housing projects for availing tax holiday on profit earned by developers extended by 1 yr
- Degree level full-fledged online education system to be set up
- Dividend Distribution Tax shifted to individuals instead of companies
- Double farmers’ income by 2022
- Estimated nominal GDP growth rate for 2020-21 at 10 per cent.
- From April 2020, government to introduce simplified return for GST
- Government to sell part holding in LIC
- Govt proposes deferment of tax payment by employees on ESOPs from startups by 5 years
- Govt to launch system for instant allotment of PAN on basis of Aadhaar
- Govt to set up national recruitment agency for recruitment of non-gazetted posts
- Health cess on import of medical equipment imposed in Budget
- High-speed train between Mumbai and Ahmedabad will be actively pursued.
- Housing made more affordable, tax holiday to affordable housing developers
- Income above 15 lakh rupees will continue to be taxed at 30%
- Income tax rates cut, 10% for income of Rs 5-7.5 lakh against earlier 20%.
- Income tax rates will be significantly reduced for those who forego reliefs.
- Income tax rates will be significantly reduced for those who forego reliefs, exemptions
- India uplifted 271 million people out of poverty
- Insurance cover for bank depositors to be raised to Rs 5 lakh from Rs 1 lakh.
- Manufacturing sector Corporate Tax for new companies at 15%; for existing companies at 22%
- Medical college to be attached to a district hospital in PPP mode
- More Tejas-like trains between key stations, Kisan rail for farmers
- National Education Policy coming soon
- National Police University and National Forensic Science University proposed by Sitharaman
- New power generation companies to be taxed at 15%
- Nominal GDP growth for FY21 revised to 10%
- Nominal health cess on import of medical equipment to be introduced
- Parameters and incentives for states who take measures for cleaner air
- Rs 12,300 crore allocated for Swachh Bharat Mission this year
- Rs 30,757 cr for Jammu and Kashmir; Rs 5,958 for Ladakh for fiscal 2020-21
- Rs 4,400 crore to fight Delhi air pollution
- Rs 40,000 cr per annum will be revenue foregone from new income tax rates for individuals
- Scheme to provide subordinated debt for entrepreneurs of MSMEs to be introduced
- Sitharaman proposes ‘Kisan Rail’ in her 16-point plan to improve farm sector
- Tax on Co-op societies to be reduced to 22% plus surcharge, as against current 30%
- Universal pension coverage to have auto-enrolment
- Zero-budget farming may not be a good move for fertiliser companies