The 2020 budget provides for contingent tax cuts on income as well as rural and infrastructure banks

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New Delhi: Union Finance Minister Nirmala Sitharaman offered conditional relief to millions of individual taxpayers on Saturday (February 1), lifted dividend tax on businesses, and announced record spending in the agriculture and infrastructure sectors to help the economy from its worst slowdown since to hold for more than a decade. Sitharaman presented her second budget to parliament, stating that the 2020-21 budget was aimed at increasing incomes and strengthening purchasing power, stressing that economic fundamentals were strong and inflation was well contained.

The Treasury announced that the proposed cut in income tax rates, which could save people with an annual income of up to 17 billion rupees a year, would be subject to current exemptions and deductions, including the standard 50 billion rupee deduction The waiver of the payment of up to 1.5 billion rupees tuition for children and the contribution to the insurance premium and pension fund was abandoned.

Union budget 2020: key highlights

In its budget speech, the FM stated that import duties and charges for a variety of products ranging from dishes and kitchen items to electrical appliances to shoes, furniture, stationery and toys have to be imposed to boost domestic production and set up coal stores for transportation of perishable goods.

In addition, the limit of insurance coverage in the event of bank failure on deposits was raised from Rs 1 to Rs 5 lakh and a sale of government shares in the country's largest insurer, Life Insurance Corporation (LIC), was announced. For agricultural and rural sectors, it allocated 2.83 billion rupees and 15 billion rupees as a target for agricultural credit. Additional spending of 1.7 billion rupees for the transport infrastructure and an allocation of 40.740 billion rupees for the energy sector were planned.

In this way, the government will miss its deficit target for the third year in a row and reduce the deficit to 3.8 percent of GDP in the current financial year after 3.3 percent previously planned. The budget deficit target for the coming fiscal year, which begins on April 1, has been set at 3.5 percent.

FM Sitharaman, which reduced corporate taxes to its lowest level in September last year, proposed new tax rates of 15% and 25% in addition to the existing 10%, 20% and 30%. The new plates would be for individuals who do not use certain deductions or exceptions.
expenditure

Total expenditure in the Union budget for 2020-21 is estimated at 30.42 billion rupees, taking into account the government's commitment to various programs and the need to improve the quality of life. For the next fiscal year, it recorded net borrowing of 5.45 billion rupees and doubled the goal of increasing the income from the sale of government shares in PSUs to 2.1 billion rupees.

Accordingly, revenues for the year beginning April 1 are estimated at 22.46 billion rupees. Significant tax reforms to boost investment have recently been implemented. However, the expected tax recovery is likely to take some time. Much of the loans for 2020-21 go to government investments, which have been increased by more than 21 percent. Finance Minister Nirmala Sitharaman said the measures will stimulate growth in the economy.

Based on the trends available, the government has estimated nominal GDP growth for 2020-21 at 10 percent. In the meantime, the revised spending estimates for the current financial year 2019-20 are at 26.99 billion rupees and the income is at 19.32 billion rupees.

defense

FM announced that the center has decided to increase the defense budget by 6 percent to 3.37 billion rupees, compared to 3.19 billion rupees allocated in the 2019 budget. The defense pension budget was increased from 1.17 billion rupees in 2019 to 1.33 billion rupees. It should be noted that the defense pension budget increase is more than the amounts stated in Defense Revenue and Capital Funds.

Defense forces were given Rs 1,10,734 crore for the modernization and purchase of new weapon systems. The new allocation is 10 rupees, 340 crores more than the budget for 2019.

Agriculture

Finance Minister Nirmala Sitaraman has announced 16-point measures to revive the agricultural sector when she presented her second Union budget. This is in line with Prime Minister Narendra Modi's goal of doubling farmers' incomes by 2022 and increasing their purchasing power.

The Union's 2020-21 budget focuses on three themes: ambitious India, economic development for all and caring society. It announced a 16-point action plan for farmers and said that these measures were underlined by the FM to stimulate the agricultural sector.

infrastructure

According to the FM, 1.7 billion rupees have been allocated to transport infrastructure in the Union's 2020-21 budget, and 100 more airports are to be developed by 2024 to support the UDAN program (Ude Desh ka Aam Naagrik). "The domestic aviation sector in India has grown and the UDAN program has contributed to growth. By 2024, another 100 airports will be developed to support the UDAN program," said Sitharaman, presenting the budget for 2020-21.

The Centre's UDAN program was created with the aim of making air travel affordable for citizens of the country.

Railways

The railways received a budget allocation of 70,000 rupees and an investment cost of 1.61 rupees (just under 3 percent more than in the previous year) from the 2020 Union budget. In the 2019-2020 period, capital expenditure (RE) was 1.56 billion rupees, which 17.2 percent more than the CAPEX from 2018-2019. The total revenues of the railways, which are made up of the revenues of the recruitment agencies for passengers, goods, various other minds and railways, should increase in the budget estimates (BE) for 2020-21 by 9.5 percent compared to the revised estimates (RE) for 2019 , 20th

The 2020-21 budget included appropriations of 12,000 billion rupees for the construction of new lines, 2,250 billion rupees for changing the gauge, 700 billion rupees for doubling, 5,786.97 billion rupees for rail vehicles and 1,650 billion Rupees provided for signaling and telecommunications services. The allocation for the comfort of the passengers in this financial year amounts to 2,725.63 rupees. The budget also provided for freight loading of 1,265 tons, which corresponds to an increase of 42 tons (3.4 percent) compared to RE 2019-20.

For the coming financial year, revenues of 61,000 rupees from passenger income and 1.47,000 rupees from goods income are planned. The gross traffic inflows are thus held at 2.25.613 rupees. This is 9.6 percent more than in RE 2019-20. The operating rate, which was estimated at 95 percent for BE 2019-20 and revised to 97.46 percent for RE 2019-2020, is now 96.2 percent for BE 2020-21.

The budget also envisaged the construction of a large solar capacity along the rails on the land of the railways. The renovation of four train stations and the operation of 150 passenger trains would take place within the framework of the public-private partnership model (PPP). It also announced the launch of additional Tejas trains linking famous tourist destinations, a 148 km long local transportation project in Bengaluru, with a price of 18,600 rupees and enabling the establishment of a "Krishi Rail" through PPP agreements.

income tax

According to the proposed I-T plate, annual income of up to 2.5 billion rupees is exempt from tax. People who earn between 2.5 lakh and 5 lakh pay 5 percent tax. A 10 percent tax is levied on earnings between Rs 5 and 7.5 Lakh, 15 percent, 20 percent and 25 percent on Rs 2.5 Lakh each and 30 percent on earnings over Rs 15 Lakh. "Currently, income up to 2.5 lakh is exempt from income tax. For income between 2.5 and 5 lakh, a tax of 5% is levied. For income between 5 lakh and 10 lakh, 20% and 30% is levied for those Who earn more than Rs 10 lakh: "The new tax regime is voluntary for taxpayers," she said.

Taxpayer Charter & Corporation Tax

CBDT, a direct tax institution, will adopt a "taxpayer charter" that maintains trust between a taxpayer and the government and reduces harassment, Finance Minister Nirmala Sitharaman said on Saturday. "We want to embed a" Taxpayer Charter "in the statutes through this budget. Our government wants to reassure taxpayers that we are committed to taking measures to ensure that our citizens are not bothered," she said ,

The 2019-20 Economic Survey submitted to parliament on Friday said that creating ethical prosperity is key to making India a $ 5 trillion economy by 2025.

The budget also proposed a new dispute settlement scheme – "Vivad Se Vishwas" – for the timed settlement of 4.83 lakh direct tax cases pending in various appeals forums – Commissioner (Appeals), ITAT, High Court and Supreme Court. According to the proposed one System, a taxpayer would only have to pay the amount of the disputed taxes and will receive a full waiver of interest and penalties if they pay by March 31, 2020. Anyone who uses this system after March 31, 2020 will do so. I have to pay an additional amount. The regulation will remain open until June 30, 2020.

On the revenue side, the budget set gross tax revenue for rupees 24-23 billion for 2020-21, up 12 percent from rupees 21.63 billion in the current fiscal year. Income tax is expected to be removed from Rs 6.38 Lakh Crore between 2020 and Rs 21, which is a 14.13 percent increase over Rs 5.59 Lakh Crore in 2019-20.

In addition, corporate tax revenues are expected to increase by 11.63 percent to 6.81 billion rupees in the period 2020-21, compared to 6.10 billion rupees in the current financial year. Income from goods and services tax (GST) is estimated at 6.90 billion rupees in 2020-21, compared to 6.12 billion rupees in the current financial year.

In the current financial year, the government failed to raise the gross tax by 2.97 billion rupees. The budget estimates for gross tax revenues for the period 2019-20 were 24.61 billion rupees, while according to revised estimates they are 21.63 billion rupees. Income from corporation tax has been significantly reduced from 7.66 billion rupees (2019-20) to 6.10 billion rupees (2003-2020). Income tax revenue also missed the budget projections of 5.69 billion rupees. In revised estimates, it stands at 5.59 billion rupees for 2019-20.

Dividend distribution tax

In her budget speech, FM Nirmala Sitharaman proposed to drop the deeply unpopular dividend distribution tax (DDT). Sitharaman therefore accepted the industry’s request to reverse taxation of dividends to recipients, making it more attractive to invest. Now the dividends are taxed in the hands of the recipients, a move that puts 25,000 rupees in their coffers.

In addition, she has shifted taxes for ESOPs into the hands of employees, which will be an important decision for employees to own shares in the employer without worrying about organizing cash to pay taxes. This also gives employers and workers more flexibility in shaping their employment prospects. One proposal that could be controversial was taxing Indian citizens abroad if they are not taxable in their home country.

casing

To increase demand on the property market, Union Finance Minister Nirmala Sitharaman announced on Saturday that it would grant additional deductions of up to 1.5 billion rupees to interest on loans to buy affordable houses by March 2021 on home loans approved on or before March 31, 2020.

"To achieve the goal of" housing for everyone "and affordable housing, I announced in the last budget an additional deduction of up to 1.50 rupees for interest paid on loans for the purchase of an affordable house to ensure that For more people to take advantage of this and to further promote the affordability of housing, I suggest extending the loan sanction date for taking advantage of this additional deduction for another year, "said Sitharaman.

To improve the supply of affordable homes in the country, the household proposed tax relief on profits generated by developers of affordable housing projects that were approved by March 31, 2020. It also announced the granting of concessions for real estate transactions.

Banking

According to FM, a clean, reliable, and robust financial sector is required to achieve the ambitious goal of a $ 5 trillion economy. Sitharaman presented the budget for 2020-21 and said that a robust health monitoring mechanism was in place for all commercial banks. He said the depositors' money was absolutely safe.

She noted that crown capital of 3.50 rupees had flowed into public sector banks in recent years, while acknowledging that there was a greater need for private capital in banks. Sitharaman said the government is planning an amendment to ease the separation of the state pension fund from the pension fund regulator and development agency (PFRDA).

MSME

The government announced on Saturday that it would introduce a system to put subordinated debt on MSME entrepreneurs. The government has also asked the reserve bank to extend the micro, small and medium-sized corporate debt rescheduling period until March 31, 2021 to advance the MSME sector, FM said. She said that necessary changes to the Factor Regulation Act 2011 will be made so that non-banking financial companies (NBFC) can extend TReDS invoice financing to MSMEs, thereby improving economic and financial sustainability.

"Working capital credit remains an important issue for MSMEs. It is proposed to introduce a system that provides MSE entrepreneurs with subordinated debt. This subordinated debt to be paid by banks would be considered equity and would be fully guaranteed by the loan." Guarantee trust for medium and small business owners, "said Sitharaman.

TReDS is an institutional mechanism to facilitate the financing of trade receivables from micro, small and medium-sized enterprises (MSMEs) against buyers of companies through several financiers.

highways

To improve the infrastructure, an accelerated highway development program is underway that includes the construction of 15,500 km of highways, including 9,000 km of economic corridors, FM said. The allocation of funds to the Ministry of Roads and Motorways has also been increased to 91,823.22 billion rupees, compared to 83,016 billion rupees previously. "Motorway expansion is accelerating, including the expansion of 2,500 km of access control highways, 9,000 km of economic corridors, 2,000 km of coastal and port roads, and 2,000 km of strategic highways," said Sitharaman.

Sitharaman submitted the Union budget 2020-21 to parliament, noting that the Delhi-Mumbai expressway will be completed in three years, in addition to two other expressway projects.

Jal Jeevan's mission

The Modi government's ambitious mission in Jal Jeevan to provide water to every household in the country by 2024 has been allocated 11,500 rupees. The amount is more than half of the total funds allocated to the Ministry of Drinking Water and Sanitation of the Ministry of Jal Shakti of rupees 21,518.

Prime Minister Narendra Modi announced the Jal Jeevan mission on Independence Day. Rs 9416 crore were provided in the last household for this ambitious mission, which aims to supply all households with tap water by 2024.

The Swachch Bharat Mission (Gramin), another flagship of the Modi government, was allocated 20,000 rupees.

Clean Air

The central government underlined its increased focus on improving air quality and provided a whopping 4,400 billion rupees for cleaner air for FY 2020-21, a massive increase from the last allocation of rupees 460 billion. The announcement was made by Union Finance Minister Nirmala Sitharaman in her budget speech on Saturday at Lok Sabha. The money would be spent on various initiatives, including the National Clean Air Program (NCAP).

health service

"Aspirational India, where all sections of society strive for a better standard of living, with access to health, education and better jobs," said FM Sitharaman. The Union budget estimates healthcare spending of INR 69,000 billion (USD 9.6 billion), an increase of almost 10% over the previous year.

The FM said the government has a holistic vision of healthcare that translates into the health of its citizens. Healthcare allocation includes INR 6400 for Prime Minister Jan Arogya Yojana (PMJAY). To expand PMJAY's reach in Tier 2 and Tier 3 markets, Sitharaman said PMJAY currently has more than 20,000 staffed hospitals. She also proposed extending the Jan Aushadhi Kendra program to all districts that offer 2,000 drugs and 300 surgical instruments by 2024.

gas

Finance minister Nirmala Sitharaman on Saturday set plans to expand the national gas pipeline network to 27,000 km from the current 16,200 km and price reforms as the government plans to promote the use of environmentally friendly fuels.

The government has set itself the goal of increasing the share of natural gas in the primary energy basket from currently 6.2 percent to 15 percent by 2030. The connection of gas sources to consumption centers is the key.

Speaking at the 2020-21 budget, Sitharaman said that further gas price reforms are in the offing. "To deepen the gas markets in India, further reforms are being implemented to enable transparent pricing and simplification of transactions," she said.

Currently, the price of domestically produced natural gas is determined by a formula that averages prices in countries with excess gas, such as Russia and the United States. "It is also proposed that the national gas network be expanded from the current 16,200 km to 27,000 km," she said without giving a time frame.

tourism

FM proposed on Saturday to allocate Rs 2,500 crore in 2020-21 for the tourism sector and the construction of eight new museums, which include the construction of infrastructure around 5 places of worship. "To make India an attractive destination for international and local tourists, we are proposing Rs. 2,500 crore for the 2020-21 tourism sector and Rs. 3,150 crore for the Ministry of Culture," said Sitharaman.

The finance minister highlighted the improved tourism revenue generated by a better ranking. "India rose from 65th place in 2014 to 34th place in 2019 in the competition index for travel and tourism (World Economic Forum)." Http: //zeenews.india. "Due to tourism revenue, foreign exchange earnings rose 7.4 percent in January 2019 from 1.75 billion rupees to 1.88 billion rupees," she said.

She also proposed 8 new museums, including building infrastructures at 5 places of worship and renovating 5 major museums across India.

The 5 archaeological sites to be developed as cult sites with local museums are located in Rakhigarhi (Haryana), Hastinapur (Uttar Pradesh), Shivsagar (Assam), Dholavira (Gujarat) and Adichanallur (Tamil Nadu). It also includes – Maritime Museum to highlight Harappan Age in Lothal, Ahmedabad, through the Department of Shipping, Kolkata, Indian Museum: restoration of the oldest museum in India, as announced by Prime Minister Narendra Modi in January 2020, to be Numismatics and Trade Museum located in the historic Old Mint Building, supports the establishment of the Tribal Museum in Ranchi (Jharkhand) and refurbishes and restores 4 other museums across India.

Women / divyangs

Finance minister Nirmala Sitharaman said on Saturday that a task force would be set up to recommend women of marriageable age. Sitharaman presented the budget for 2020-21 and said Rs 9,500 crore was allocated for seniors and Divyangs, while Rs 35,600 crore was allocated for nutrition-related programs in FY21.

The FM further said that Rs 85,000 crore for planned boxes (SCs) and other backlog classes (OBCs) have been allocated in the budget.

education

FM proposed a total expenditure of 99,300 billion rupees for the education sector in the period 2020-21 and 3,000 billion rupees for the development of qualifications.

"By 2030, India will have the world's largest working-age population. We are proposing a total of 99,300 rupees for the 2020-21 education sector and 3,000 rupees for skills development," said Sitharaman.

Sitharaman announced that approximately 150 higher education institutions will start apprenticeships and diploma courses from March 2020 to March 21 to improve the employability of students in general electricity. While the government will also launch a program in which municipalities across the country offer young engineers internship opportunities for up to a year, the National Skills Development Agency (NDS) will pay particular attention to infrastructure skills development opportunities, the minister said.

The online education program is only offered by institutions ranked in the top 100 in the National Institutional Ranking Framework (NIRF). Considering that India should be a preferred destination for higher education, she said: "An Ind – SAT exam under the" Study in India "program will be conducted in Asian and African countries to assess foreign candidates who receive grants to study at Indian higher education centers. "

Prime Minister Narendra Modi praised the budget for his "vision and action". The Prime Minister welcomed the budget and said it would accelerate economic growth, empower every citizen, and strengthen the foundation of the economy in the new decade. PM Modi praised it for its "vision and actions" and said that it offers faceless appeal, a new and simple structure of direct taxes, a unified procurement system and the pressure on divestments and will improve its "ease of life".

However, the opposition criticized Sitharaman's announcements as "bland" and said it shows that the government "talks everyone". Her second budget, which she needed a record of 160 minutes to leave, left opposition parties unaffected when congressional leader Rahul Gandhi said it offered no strategic idea or anything concrete and left unemployment unanswered.