The Union Budget unveiled by Finance Minister Nirmala Sitharaman vows to boost household savings and income and to fuel the domestic economic growth that has slumped lowest in decade. The budget revolves around three prominent areas 1. Aspirational India ; 2. Economic development for all; 3. A Caring Society. The Finance Minister put forth a new optional personal income tax scheme and announced a multi billion dollar farm, infra and healthcare package to fuel the country’s economic growth.
TAXATION
New income tax slabs will be available for those who forego exemptions. 70 exemptions out of 100 have been removed.
Upto Rs. 5 lakhs- Nil
- Rs.5 lakhs to Rs.7.5 lakhs – 10%
- Rs. 7.5 lakhs to Rs.10 lakhs -15%
- Rs.10 lakhs to Rs.12.5 lakhs- 20%
- Rs.12.5 lakhs to Rs.15 lakhs – 25%
- Rs. 15 lakhs and above 30%
- Rs.5 lakhs to Rs.7.5 lakhs – 10%
Depositor Insurance Coverage increased from Rs.100000 to Rs. 500000 considering the catastrophic losses faced by Bank’s customers over a period of time.
Taxes for co-operative societies reduced to 22% plus surcharge and cess as against 30% without exemptions. 15% concessional tax rate for new power generation companies.
100% tax concession to sovereign wealth funds for investing into infrastructural projects.
Tax harassment will not be tolerated says FM.
Vivaad se Vishwaas scheme: Interest and penalty will be waived off for those who deposit the amount before 31st March.
Aadhar Based verification of taxpayers to be introduced to thresh out dummy and non existent units and instant allotment of PAN on Aadhar Card details.
- Indirect Taxes
Custom duty on footwear increased from 25% to 35%.
Custom duty on furniture increased from 20% to 25%.
Custom duty on Newsprint and light weight coated paper reduced from 10% to 5%.
There’s no change in the excise duty rate of Bidis and excise duty is proposed to be raised on cigarettes and other products.
Custom duty rates revised on electric vehicles and parts of mobile. Higher custom duty on certain goods like auto parts and chemicals. Lower custom duty rates on inputs and raw materials like fuse, chemicals and plastics.
5% health cess to be imposed on import of medical equipments except those exempt from BCD.
2. HOUSING
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.
3. INVESTMENT
Government to sell part of its holding in Life Insurance Corporation by way of Initial Public Offering.
Foreign Portfolio Investment(FPI) bar raised to 15%.
Divestment target for the next fiscal year set at Rs.2.1 lakh crore.
4. STARTUPS
Startups with a turnover upto Rs. 100 crore to enjoy 100% tax concession for 3 consecutive assessment year out of 10 years
New simplified GST return filing to be implemented from 1st April, 2020.
5. MSMEs
Turnover limit for the purpose of audit of MSMEs increased from Rs.1 crore to Rs.5 crore for those businesses who carry less than 5% of their business in cash.
Tax burden on employees due to holding of ESOP deferred for 5 years or for the time when they leave the organization or when they sell their options whichever is earliest.
Amendments to be made so that NBFCs can extend the facility of invoice financing to the small sector.
6. Fiscal numbers:
Fiscal deficit for FY 20 revised to 3.8% from 3.3% in the current fiscal. For FY21, fiscal target set at 3.5%.
Net market borrowing for FY 20 at Rs 4.99 lakh crore; For FY21 it’s pegged at Rs 5.36 lakh crore.
Nominal GDP growth rate for 2020-21 estimated at 10%.
Receipts for 2020-21 estimated at Rs 22.46 lakh crore. Expenditure at Rs 30.42 lakh crore.(Deficit)
Defence sector 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.
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 Ladak .
7. Infrastructure: (Key Focus)
Rs 1.7 lakh crore allocated to transportation.
100 more airports to be set up by 2024 to support UDAN scheme.
Five new Smart cities to be set up via Public Private Partnership(PPP) model.
Development of highways to be accelerated with the Delhi Mumbai Expressway and other two projects to be completed by 2023. Construction of Chennai Bengaluru expressway to be commenced.
About Rs.22,000 crore allocated for supporting National Infrastructure Pipeline.
NHAI to monetize 12 lots of highway bundles of over 6,000 km before 2024.
8. Telecom
The government increased the revenue estimate from the debt ridden telecom sector to Rs. 1.33 lakh crore in order to revive the falling graph of this sector, but yet there was no substantial relief as the budget didn’t speak about the AGR dues payment which is Rs.1.47 lakh crore owed to entities, Rs.92,642 crore in licence fee and Rs. 55,054 crore in outstanding spectrum charges.
Rs.6000 crore allocated to BharatNet programme; Fibre to home connections under BharatNet programme will be provided to 1 lakh gram panchayats thus year itself.
New policy for private sector to build Data Centre Parks.
9. Tourism
Rs.2500 crore allocated to promote tourism in India.
5 archeology sites to be developed for word class museums. Dholavira (Gujarat) Shivsagar (Assam) Rakhigarhi (Haryana) Hatinapur (Uttarpradesh) Adichanallur (Tamil Nadu)
A Deemed University status proposed for An Indian Institute of Heritage and Conservation under Ministry of Culture.
Rs. 3150 proposed for Ministry of Culture.
4 crore museums from across the country to be taken up for renovation.
10. Healthcare
Rs 69,000 crore allocated to healthcare sector.
Rs. 6400 crore (out of Rs. 69,000 crore) for PM Jan Arogya Yojana
To upload the nutrition status of 10 crore households; over 60 lakhs Anganwadi workers have been equipped with smartphones.
Jan Aushadhi Kendra Scheme to offer 2000 medicines and 300 surgicals to all districts by 2024.
Budget proposed Rs.35600 crore nutrition related plan.
11. EDUCATION
A New Education policy to be announced soon.
Rs 99,300 crore allocated for education sector, Rs 3,000 crore rupees for skill development.
To benchmark candidates who wish to study in India; US like SAT exams to be held in Asian and African countries.
A Full fledged degree level online education programme to be offered by institutes in top 100 in terms of National Institutional Ranking.
150 higher educational institutions to start apprenticeship embedded degree/diploma courses by March 2021.
2 new National Science Theme to be launched.
12. Railways(5 point programme)
More Tejas-like trains for tourists.
Large solar power capacity to be set up alongside rail tracks, on land owned by Railways.
4 new trains to be redeveloped by PPP and 150 new trains to be introduced on PPP basis.
Bengaluru suburban transport project worth Rs.18,600 crore launched; for the purpose of investment 20% equity will be provided by the centre.
13. Energy
National Gas Grid expanded from 16,200 km to 27000 km with reforms to deepen gas markets.
Rs.22000 crore has been allocated to power and renewable energy and the FM has urged to shut down the the Thermal Power plants if they do not comply with the emission norms.
14. Banking
A big relief for banks depositors was seen in the budget as the deposit insurance has been increased to Rs.500000 as against Rs.100000 before.
Banking Regulation Act to be amended to strengthen Co-operative Societies.
Public Sector Banks encouraged to approach capital markets for raising funds.
15. Jobs
National Recruitment Agency: New common entrance test for non-gazetted government jobs and public sector banks.
Urban local bodies to provide internships for young Engineers for a period of 1 year.
Hence, we end our budget article and expect that the audience can derive some useful information from it.
–Team of Lawkhart Legal
(Adv. Raghavendra Mehrotra, Founder & Managing partner of Lawkhart Legal )
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