Budget 2020 Highlights: Amidst the economy struggling with a six-year low GDP growth, Union Finance Minister Nirmala Sitharaman presented the Budget 2020 on Saturday that focused on raising the purchasing power by cutting income tax rates and boosting rural income. Union Budget 2020 Highlights
This was the longest Budget speech by any finance minister, going beyond 2 hour 30 minutes. Sitharaman, 60, broke her own record of a 2-hour-17-minute-long maiden Budget speech in July 2019.
Fiscal deficit target pegged at 3.8% of GDP for FY20. Insurance cover for bank depositors has been raised from Rs 1 lakh to Rs 5 lakh. Check out your new tax rates here
In a shot in the arm for the middle class, Nirmala Sitharaman has proposed a new simplified tax regime soon. “10% tax for income between 5 lakh-7.5 lakh; 15% tax for income between 7.5 lakh to 10 lakh; 20% tax for income between 10 lakh to 12.5 lakh; 25% tax for income between 12.5 lakh to 15 lakh; 30% tax for income above 15 lakh. No income tax for those with taxable income below Rs 5 lakh,” says Sitharaman.
Union Budget 2020 highlights:
1. Between 2006-2016, 271 million are out of poverty and we should be proud of it, says Finance Minister Nirmala Sitharaman.
2. Country has moved on from over 4 per cent growth in 1950s to 7.4 per cent to 2014-19 period, says Sitharaman
3. Total of 60 lakh new taxpayers and 105 crore e-way bills generated under GST, says Nirmala Sitharaman. Average household now saves 4 percent of monthly spend due to reduced GST rates, she added.
4. Finance minister Nirmala Sitharaman says Central government debt reduced to 48.7 per cent of GDP in 2019 from 52.2 per cent.
5. Sitharaman now starts putting out a 16-point guide to make India an aspirational economy. India is now 5th largest economy in world, the FM says.
6. Government to incentivise farmers to go solar. Over 6 crore farmers under Pradhan Mantri Fasal Bima Yojna have been insured. Pradhan Mantri Kisan Urja Suraksha and Utthan Mahabhiyan (PM KUSUM) to be expanded, providing 20 lakh farmers in setting up standalone solar pumps.
7. Railways will set up Kisan Rail through PPP model so that perishable goods can be transported quickly. Krishi Udaan scheme to transport agri products to national as well international destinations to be launched
8. Agri-credit target for the year 2020-21 has been set at Rs 15 lakh crore.
9. Rs 69,000 crores for allocated for the healthcare sector, says Finance Minister Nirmala Sitharaman.
10. Education and training: Rs 99,300 crore allocated for education in FY21. Govt will start Ind-Sat Exam to promote study in India and a degree-level online education programme for the deprived. A total of Rs 3,000 crore will be given for skill development.
11. Allocation for Swachh Bharat Mission for 2020-21 stands at Rs 12,300 crore. In further push to PM Modi’s ‘Nal se jaal’ scheme, govt proposes Rs 3.6 lakh crore towards piped water supply to households.
12. National Textile Mission to be launched with a proposed Rs 1,480 crore allocation, says FM Nirmala Sitharaman.
13. To boost infrastructure, Sitharaman says 9,000 km of economic corridor will be set up. “Chennai-Bengaluru expressway will also be started. Delhi-Mumbai expressway to be completed By 2023,” says FM.
14. 550 WiFi facilities have been commissioned at railway stations.
1 lakh gram panchayats to get optical fibre link, says FM Sitharaman. An allocation of Rs 6,000 crore will be provided for BharatNet scheme.
15. Allocation of Rs 27,300 crore for development of industry and commerce.
16. FM Nirmala Sitharaman announces Rs 20,000 crore for renewable energy sector in a bid to tackle pollution and climate change. A new scheme of smart meters will be launched, says Sitharaman.
17. 100 more airports to be developed by 2025, says Sitharaman. The FM also said 1,150 trains will run under the public private partnership (PPP) mode, also four stations will be redeveloped with the help of the private sector. Besides, the minister promised more Tejas type trains to connect tourist destinations. An allocation of Rs 8,000 crore will be made for National Mission on Quantum Computing and Technology.
18. Rs 35,600 crore allocated for nutritional related programme in FY21 while Rs 85,000 crore has been budgeted for the welfare of Scheduled Castes and other backward classes. Tourism promotion gets Rs 2500 crore.
19. Women schemes, senior citizens in Budget: Sitharaman says enrolment ration for girls under ‘Beti Bachao Beti Padhao ‘is higher than boys. “Gross enrollment of girls is 94.32 per cent in elementary levels, 81.32 per cent in secondary level and 59.7 per cent in higher secondary level,” she says. Further, Rs 28,600 crore will be allocated in FY21 for women-linked programmes. Allocation for senior citizens and ‘Divyang’ enhanced to Rs 9500 crore.
20. Here is something for Delhiites! Sitharaman proposes Rs 4,400 crore to tackle Delhi’s air pollution problem. Last year, the Supreme Court had termed the situation as “worse than Emergency” as air quality dipped to hazardous levels.
21. Your money gets safer! Insurance cover for bank depositors raised from Rs 1 lakh to Rs 5 lakh, says FM Nirmala Sitharaman.
Currently, in the (unlikely) event of a bank going bust in India, a depositor has claim to a maximum of Rs 1 lakh per account as insurance cover — even if the deposit in their account far exceeds Rs 1 lakh. Depositors holding more than Rs 1 lakh in their account have no legal remedy in case of the collapse of the bank.
22. Foreign direct investment (FDI) into the country has increased to $284 billion during 2014-19 from $190 billion in previous five years.
23. Nirvik (Niryat Rin Vikas Yojana) scheme to provide enhanced insurance cover and reduce premium for small exporters.
24. Focus on MSMEs: More than 5 lakh MSMEs benefited from RBI’s restructuring of loans, says FM Sitharaman. “Government has asked RBI to consider extending window of debt structuring by one year to March 2021 for this purpose,” she says.
25. Fiscal deficit target pegged at 3.8% of GDP for FY 2019-20. FY21 fiscal deficit target pegged at 3.5% of GDP. Fiscal deficit is considered the most important marker of a government’s financial health. Not letting the fiscal deficit go completely out of control has been one of the standout achievements of the Modi government.
26. Government to sell part holding in LIC. Besides, govt to also sell stake in IDBI Bank to private investors. That LIC has been identified as a candidate for a potential public listing by the government, was reported first by The Indian Express in July 2019. The government’s move is a part of efforts to push through an aggressive disinvestment and asset monetisation programme.
27. Nominal growth of GDP for 2020-21 has been estimated at 10 per cent, says Nirmala Sitharaman.
28. Cheer for the middle class! Sitharaman proposes new simplified tax regime soon. New income tax rates: 10% tax for income between 5 lakh-7.5 lakh; 15% tax for income between 7.5 lakh to 10 lakh; 20% tax for income between 10 lakh to 12.5 lakh; 25% tax for income between 12.5 lakh to 15 lakh; 30% tax for income above 15 lakh.
29. On account of the income tax relief, Sitharaman says it will cost the exchequer Rs 48,000 crore revenue loss. “Dividend Distribution Tax to be removed. Dividend shall be taxed at the hands of the recipients,” she said.
30. To boost investments and shore up the lagging economy, corporate tax for existing companies slashed to 22 per cent. Govt proposes 100 per cent tax concession to sovereign wealth funds on investment in infra projects. Moreover, concessional tax rate of 15 per cent extended to power generation companies.
31. Coming to affordable housing now: Finance Minister Nirmala Sitharaman extends additional Rs 1.5 lakh tax benefit on interest paid on affordable housing loans to March 2021. In another boost, Sitharaman proposes tax holiday to affordable housing developers.
32. ‘Vivad se Vishwas’ scheme announced by Sitharaman for direct tax payers whose appeals are pending at various forums. 4.83 lakh direct cases pending in various appellate forums;
“Under the scheme, taxpayer to pay only amount of disputed tax. They will get complete waiver on interest and penalty if scheme is availed by March 31, 2020,” Sitharaman said.
33. 15th Finance Commission has cut state share of central taxes by one percentage point to 41 per cent.
Finance Minister Nirmala Sitharaman today delivered the longest budget speech in six years of the Narendra Modi government. She started her address in the Parliament by paying homage to her predecessor, the late Arun Jaitley, and went on to announce key reforms that sought to address both economic and social aspects of the country.
The three prominent themes of Union Budget 2020-21 were:
• Aspirational India.
• Caring Society.
• Economic Development.
Here’s a look at the key highlights of Budget 2020:
Income Tax: Middle Class India Gets A Rs 40,000 Crore Boost
The Narendra Modi-led government offered an optional relief to individual taxpayers as it looked to bolster consumption and flagging economic growth. Union Budget 2020 Highlights
Taxpayers will now be able to avail a lower income tax rate on various slabs by foregoing certain deductions and exemptions, Sitharaman announced in the budget. The new regime will be optional and those who want to stick to claiming deductions will be allowed to do so.
The new income tax slabs and rates are as under:
• Rs 5-7.5 lakh per annum: 10 percent from 20 percent earlier.
• Rs 7.5-10 lakh per annum: 15 percent from 20 percent earlier.
• Rs 10-12.5 lakh per annum: 20 percent from 30 percent earlier.
• Rs 12.5-15 lakh per annum: 25 percent from 30 percent earlier.
• Above Rs 15 lakh per annum: 30 percent without any exemptions.
All income below Rs 5 lakh per annum will be tax-exempt in both the old and new regime. The changes will result in a loss of Rs 40,000 crore to the exchequer.
Real Estate: Benefits for Buyers and Makers of Affordable Housing
In order to boost affordable housing in India and further the government’s ‘Housing for All’ initiative, Budget 2020 has proposed to extend the date of loan sanction for availing additional deduction of Rs 1.5 lakh by one year to March 31, 2021.
Property developers will also get a tax holiday on the profit earned on affordable housing projects approved by March 31, 2020. The finance minister also proposed to extend the date of approval for affordable housing projects for availing this tax holiday by an additional year. Union Budget 2020 Highlights
Dividend Distribution Tax Abolished
In a move that will offer some relief to India Inc., the Narendra Modi-led government eliminated the dividend distribution tax that’s levied on dividends issued by companies.
So far, companies were required to pay DDT at 15 percent, though including surcharge and cess put the effective rate at 20.56 percent. DDT was introduced in 1997 at a 7.5 percent flat rate in an effort towards efficient tax collection.
Fiscal Deficit Target for 2020-21: ‘Escape Clause’ Invoked
India’s fiscal deficit settled at 3.8 percent in 2019-20 and is targeted at 3.5 percent in 2020-21, Finance Minister Nirmala Sitharaman said. Importantly, the government has decided to invoke the ‘escape clause’ provided for in 2018 amendments to the Fiscal Responsibility and Budget Management Act.
For 2019-20, the fiscal deficit was estimated at 3.3 percent in Budget 2019. For the next fiscal too, the government will deviate from an earlier set fiscal path and target a fiscal deficit of 3.5 percent.
PMC Bank Aftermath: Big Jump in Bank Deposit Insurance Cover
The government has proposed to hike the bank deposit insurance cover to Rs 5 lakh from the current Rs 1 lakh, to protect depositors in the event of a lender’s collapse.
“There is a robust mechanism to monitor the health of all scheduled commercial banks and we want to assure depositors that their deposits are absolutely safe,” Sitharaman said during her budget speech.
The decision comes after the collapse of PMC Bank that led to restrictions on deposit withdrawals. According to the Reserve Bank of India’s Financial Stability Report, the Deposit Insurance and Credit Guarantee Corporation has received total claims of about Rs 14,100 crore across defaulting cooperative banks.
LIC Listing Proposed Via an IPO
The government has proposed to sell a part of its stake in Life Insurance Corporation of India through an initial public offering, the finance minister said in her budget speech. While she didn’t divulge any details, the news of an LIC listing sent insurance stocks scurrying for cover. The state-run insurer was established in 1956 and is fully owned by the Government of India. Union Budget 2020 Highlights
100 New Airports, 5 New Smart Cities, 10,000-Km Gas Grid
In her Budget 2020, the finance minister allocated Rs 1.7 lakh crore for a National infra Pipeline that aims “to improve ease of living for every citizen of our country” and provides huge opportunity for employment.
“I propose to set up a project preparation facility for infra projects. This programme would actively involve young engineers, management graduates and economists. It is also proposed to divert all infrastructure agencies of the government to involve youth power and startups,” Sitharaman said. Union Budget 2020 Highlights
A national policy will soon be released, she said.
Key Highlights of the Plan:
• National infra pipeline of Rs 106 lakh crore addresses country’s needs.
• To set up project preparation facility for infrastructure projects.
• National logistics policy to be released soon.
• Logistics policy to create single-window e-logistics market.
• Delhi-Mumbai Expressway to be completed by 2023.
• To monetize 12 lots of highway bundles by 2024.
• Indian Railways commissioned 550 Wi-Fi facilities.
• Railways has small operating surplus.
• Solar power capacity to be set-up alongside rail tracks.
• Four station redevelopment projects to be done through PPP mode.
• More Tejas-like trains to connect iconic tourist destinations.
• 100 more airports to be developed by 2024.
• To provide 20% equity, external assistance for metro projects.
• To provide Rs 22,000 crore for power, renewable energy in FY21.
• To expand national gas grid to 27,000 km from 16,200 km.
• Aim policy to enable private sector to build data-centre parks.
• Fibre-to-home through Bharat Net to link 1 lakh gram panchayats.
• Propose to provide Rs 6,000 crore to Bharat Net.
• To initiate two national level science schemes.
Vivad Se Vishwas: Amnesty Scheme to Reduce Direct Tax Litigation
The finance minister announced the ‘Vivad Se Vishwas’ scheme for tax litigation under which only the disputed tax amount will have to be paid on or before March 31, 2020. No interest or penalty will be charged. People who pay after this deadline, but before June 30 will have to pay some charge, Sitharaman said during her speech. Union Budget 2020 Highlights
Key Highlights of the Vivad Se Vishwas Scheme
• ‘Vivad Se Vishwas’ scheme to reduce direct tax litigation
• To amend the Income Tax Act to enable faceless appeal.
• Under the scheme, assesse to pay only tax amount, not interest, penalty.
• March 31 deadline for paying tax claim, avoid interest, penalty.
• Those who avail after March 31 but before June 30 will have to pay some extra amount.
Government’s Disinvestment Target Doubled to a Lofty Rs 2.1 Lakh Crore
India has set itself the highest-ever disinvestment target for 2020-21 even as it missed its previous goal.
The central government aims to garner Rs 2.1 lakh crore through divestments in 2020-21, according to Union Budget 2020-21 documents. Of this, it expects to earn Rs 90,000 crore by selling stake in public sector banks and financial institutions, while the balance Rs 1.2 lakh crore will come by selling stake in central public sector enterprises. Union Budget 2020 Highlights
In 2019-20, the government had hoped to earn Rs 1.05 lakh crore through divestment receipts. That has now been revised lower at Rs 65,000 crore.
FPI Limit in Corporate Bonds Hiked
The government plans to increase the investment limit of foreign portfolio investors in corporate bonds from 9 percent to 15 percent, Sitharaman said. The finance minister said certain government securities will be open for foreign investors.
She also proposed debt-exchange traded funds comprising mainly government securities, while stating that Rs 22,000 crore has already provided as support to infrastructure project pipeline. Union Budget 2020 Highlights
Some Other Useful Links:
Three components of Aspirational India
- Agriculture, Irrigation, and Rural Development
- Wellness, Water, and Sanitation
- Education and Skills
Sixteen Action Points for Agriculture, Irrigation and Rural Development
- Rs. 2.83 lakh crore to be allocated for the following 16 Action Points:
- Rs. 1.60 lakh crore for Agriculture, Irrigation & allied activities.
- Rs. 1.23 lakh crore for Rural development & Panchayati Raj. –
- Agriculture credit:
- Rs. 15 lakh crore target set for the year 2020-21.
- PM-KISAN beneficiaries to be covered under the KCC scheme.
- NABARD Re-finance Scheme to be further expanded.
- Comprehensive measures for 100 water-stressed districts proposed.
- Blue Economy:
- Rs. 1 lakh crore fisheries’ exports to be achieved by 2024-25.
- Rs. 200 lakh tonnes fish production targeted by 2022-23.
- 3477 Sagar Mitras and 500 Fish Farmer Producer Organisations to involve youth in fisheries extension.
- Growing of algae, sea-weed and cage culture to be promoted.
- Framework for development, management and conservation of marine fishery resources.
- Kisan Rail to be setup by Indian Railways through PPP:
- To build a seamless national cold supply chain for perishables (milk, meat, fish, etc.
- Express and Freight trains to have refrigerated coaches.
- Krishi Udaan to be launched by the Ministry of Civil Aviation:
- Both international and national routes to be covered.
- North-East and tribal districts to realize Improved value of agri-products.
- One-Product One-District for better marketing and export in the Horticulture sector.
- Balanced use of all kinds of fertilizers – traditional organic and innovative fertilizers.
- Measures for organic, natural, and integrated farming:
- Jaivik Kheti Portal – online national organic products market to be strengthened.
- Zero-Budget Natural Farming (mentioned in July 2019 Budget) to be included.
- Integrated Farming Systems in rain-fed areas to be expanded.
- Multi-tier cropping, bee-keeping, solar pumps, solar energy production in non-cropping season to be added. Union Budget 2020 Highlights
- PM-KUSUM to be expanded:
- Rs. 20 lakh farmers to be provided for setting up stand-alone solar pumps.
- Another Rs. 15 lakh farmer 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.
- Village Storage Scheme:
- 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. Union Budget 2020 Highlights
- Doubling of milk processing capacity to 108 million MT from 53.5 million MT 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 – Rs. 5 crore households mobilized with 58 lakh SHGs for poverty alleviation.
Wellness, Water and Sanitation
- 69,000 crore allocated for overall Healthcare sector.
- 6400 crore (out of Rs. 69,000 crore) for PM Jan Arogya Yojana (PMJAY):
- More than 20,000 hospitals already empanelled under PM Jan Arogya Yojana (PMJAY).
- Viability Gap Funding window proposed for setting up hospitals in the PPP mode. Union Budget 2020 Highlights
- Aspirational Districts with no Ayushman empanelled hospitals to be covered in the first phase.
- Targeting diseases with an appropriately designed preventive regime using Machine Learning and AI.
- Jan Aushadhi Kendra Scheme to offer 2000 medicines and 300 surgicals in all districts by 2024.
- TB Harega Desh Jeetega campaign launched – commitment to end Tuberculosis by 2025.
- Rs. 3.60 lakh crore approved for Jal Jeevan Mission:
- Rs. 11,500 crore for the year 2020-21.
- Augmenting local water sources, recharging existing sources, and promoting water harvesting and de-salination.
- Cities with million-plus population to be encouraged to achieve the objective during the current year itself.
- 12, 300 crore allocation for Swachh Bharat Mission in 2020-21:
- Committment to ODF-Plus in order to sustain ODF behaviour.
- Emphasis on liquid and grey water management.
- Focus also on Solid-waste collection, source segregation, and processing. Union Budget 2020 Highlights
Education and Skills
- 99,300 crore for education sector and Rs. 3000 crore for skill development in 202021.
- New Education Policy to be announced soon.
- National Police University and National Forensic Science University proposed for policing science, forensic science, and cyber-forensics.
- Degree level full-fledged online education program by Top-100 institutions in the National Institutional Ranking Framework.
- Up to 1-year internship to fresh engineers to be provided by Urban Local Bodies.
- Budget proposes to attach a medical college to an existing district hospital in PPP mode.
- 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.
- 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.
- External Commercial Borrowings and FDI to be enabled for education sector.
- Ind-SAT proposed for Asian and African countries as a part of Study in India. Union Budget 2020 Highlights
Industry, Commerce and Investment
- 27,300 crore allocated for 2020-21 for development and promotion of Industry and Commerce.
- Investment Clearance Cell proposed to be set up:
- To provide “end to end” facilitation and support.
- To work through a portal.
- Five new smart cities proposed to be developed.
- Scheme to encourage manufacture of mobile phones, electronic equipment and semiconductor packaging proposed.
- National Technical Textiles Mission to be set up:
- With four-year implementation period from 2020-21 to 2023-24.
- At an estimated outlay of Rs 1480 crore.
- To position India as a global leader in Technical Textiles.
- New scheme NIRVIK to be launched to achieve higher export credit disbursement, which provides for:
- Higher insurance coverage
- Reduction in premium for small exporters
- Simplified procedure for claim settlements.
- Turnover of Government e-Marketplace (GeM) proposed to be taken to Rs 3 lakh crore.
- Scheme for Revision of duties and taxes on exported products to be launched.
- Exporters to be digitally refunded duties and taxes levied at the Central, State and local levels, which are otherwise not exempted or refunded.
- All Ministries to issue quality standard orders as per PM’s vision of “Zero Defect-Zero Effect” manufacturing. Union Budget 2020 Highlights
- Rs. 100 lakh crore to be invested on infrastructure over the next 5 years.
- National Infrastructure Pipeline:
- Rs. 103 lakh crore worth projects; launched on 31st December 2019.
- More than 6500 projects across sectors, to be classified as per their size and stage of development.
- A National Logistics Policy to be released soon:
- To clarify roles of the Union Government, State Governments and key regulators.
- A single window e-logistics market to be created
- Focus to be on generation of employment, skills and making MSMEs competitive.
- National Skill Development Agency to give special thrust to infrastructure-focused skill development opportunities.
- Project preparation facility for infrastructure projects proposed.
- To actively involve young engineers, management graduates and economists from Universities.
- Infrastructure agencies of the government to involve youth-power in start-ups. Union Budget 2020 Highlights
- Rs. 1.7 lakh crore proposed for transport infrastructure in 2020-21.
- Accelerated development of highways to be undertaken, including:
- 2500 Km access control highways.
- 9000 Km of economic corridors.
- 2000 Km of coastal and land port roads.
- 2000 Km of strategic highways.
- Delhi-Mumbai Expressway and two other packages to be completed by 2023.
- Chennai-Bengaluru Expressway to be started.
- Proposed to monetise at least 12 lots of highway bundles of over 6000 Km before 2024.
- Five measures:
- Large solar power capacity to be set up alongside rail tracks, on land owned by railways.
- Four station re-development projects and operation of 150 passenger trains through PPP.
- More Tejas type trains to connect iconic tourist destinations.
- High speed train between Mumbai and Ahmedabad to be actively pursued. Union Budget 2020 Highlights
- 148 km long Bengaluru Suburban transport project at a cost of Rs 18600 crore, to have fares on metro model. Central Government to provide 20% of equity and facilitate external assistance up to 60% of the project cost.
- Indian Railways’ achievements:
- 550 Wi-fi facilities commissioned in as many stations.
- Zero unmanned crossings.
- 27000 Km of tracks to be electrified.
Ports & Water-ways:
- Corporatizing at least one major port and its listing on stock exchanges to be considered. Union Budget 2020 Highlights
- Governance framework keeping with global benchmarks needed for more efficient seaports.
- Economic activity along river banks to be energised as per Prime Minister’s Arth Ganga
- 100 more airports to be developed by 2024 to support Udaan scheme.
- Air fleet number expected to go up from present 600 to 1200 during this time.
- “Smart” metering to be promoted.
- More measures to reform DISCOMs to be taken.
- 22, 000 crore proposed for power and renewable energy sector in 2020-21.
- Expansion of national gas grid from the present 16200 km to 27000 km proposed.
- Further reforms to facilitate transparent price discovery and ease of transactions. Union Budget 2020 Highlights
- To take advantage of new technologies:
- Policy to enable private sector to build Data Centre parks throughout the country to be brought out soon.
- Fibre to the Home (FTTH) connections through Bharatnet to link 100,000 gram panchayats this year.
- 6000 crore proposed for Bharatnet programme in 2020-21.
- Measures proposed to benefit Start-ups:
- A digital platform to be promoted to facilitate seamless application and capture of IPRs.
- Knowledge Translation Clusters to be set up across different technology sectors including new and emerging areas.
- For designing, fabrication and validation of proof of concept, and further scaling up Technology Clusters, harbouring test beds and small scale manufacturing facilities to be established.
- Mapping of India’s genetic landscape- Two new national level Science Schemes to be initiated to create a comprehensive database. Union Budget 2020 Highlights
- Early life funding proposed, including a seed fund to support ideation and development of early stage Start-ups.
- 8000 crore proposed over five years for National Mission on Quantum Technologies and Applications. Union Budget 2020 Highlights
- Focus on:
- Women & child,
- Social Welfare;
- Culture and Tourism
- Allocation of Rs. 35,600 crore for nutrition-related programmes proposed for the FY2020-21.
- 28, 600 crore proposed for women specific programs.
- Issue about age of a girl entering motherhood – proposed to appoint a task force to present its recommendations in six months’ time.
- Financial support for wider acceptance of technologies, identified by Ministry of Housing and Urban Affairs to ensure no manual cleaning of sewer systems or septic tanks, to be provided.
- 85, 000 crore proposed for 2020-21 for welfare of Scheduled Castes and Other Backward Classes.
- 53, 700 crore provided to further development and welfare of Scheduled Tribes. Union Budget 2020 Highlights
- Enhanced allocation of Rs. 9,500 crore provided for 2020-21 for senior citizens and Divyang.
Culture & Tourism
- Allocation of Rs. 2500 crore for 2020-21 for tourism promotion.
- 3150 crore proposed for Ministry of Culture for 2020-21.
- An Indian Institute of Heritage and Conservation under Ministry of Culture proposed; with the status of a deemed University.
- 5 archaeological sites to be developed as iconic sites with on-site Museums:
- Rakhigarhi (Haryana)
- Hastinapur (Uttar Pradesh)
- Shivsagar (Assam)
- Dholavira (Gujarat)
- Adichanallur (Tamil Nadu)
- Re-curation of the Indian Museum in Kolkata, announced by Prime Minister in January 2020. Union Budget 2020 Highlights
- Museum on Numismatics and Trade to be located in the historic Old Mint building in Kolkata.
- 4 more museums from across the country to be taken up for renovation and re-curation.
- Support for setting up of a Tribal Museum in Ranchi (Jharkhand).
- Maritime museum to be set up at Lothal- the Harrapan age maritime site near Ahmedabad, by Ministry of Shipping.
- State governments expected to develop a roadmap for certain identified destinations and formulate financial plans during 2021 against which specified grants to be made available to the States in 2020-21. Union Budget 2020 Highlights
Environment & Climate Change
- Allocation for this purpose to be Rs.4400 crore for 2020-21.
- Proposed to advise the utilities to close the running old thermal power plants with carbon emission above the pre-set norms.
- States that are formulating and implementing plans for ensuring cleaner air in cities above one million to be encouraged.
- PM launched Coalition for Disaster Resilient Infrastructure (CDRI) with Secretariat in Delhi. Second such international initiative after International Solar Alliance. Union Budget 2020 Highlights
- Clean, corruption-free, policy driven, good in intent and most importantly trusting in faith.
- Taxpayer Charter to be enshrined in the Statute will bring fairness and efficiency in tax administration.
- Companies Act to be amended to build into statues, criminal liability for certain acts that are civil in nature.
- Other laws with such provisions are to be corrected after examination.
- Major reforms in recruitment to Non-Gazetted posts in Government and Public sector banks: Union Budget 2020 Highlights
- An independent, professional and specialist National Recruitment Agency (NRA) for conducting a computer-based online Common Eligibility Test for recruitment.
- A test-centre in every district, particularly in the Aspirational Districts.
- A robust mechanism to be evolved for appointment including direct recruitment to various Tribunals and specialised bodies to attract best talents and professional experts.
- Contract Act to be strengthened.
- New National Policy on Official Statistics to:
- Promote use of latest technologies including AI.
- Lay down a road-map towards modernised data collection, integrated information portal and timely dissemination of information.
- A sum of Rs. 100 crore allocated to begin the preparations for G20 presidency to be hosted in India in the year 2022.
- Development of North East region:
- Improved flow of funds using online portal by the Government.
- Greater access to financial assistance of Multilateral and Bilateral funding agencies.
- Development of Union Territories of J&K and Ladakh:
- An amount of Rs. 30,757 crore provided for the financial year 2020-21. Union Budget 2020 Highlights
- The Union Territory of Ladakh has been provided with Rs. 5,958.
- Reforms accomplished in PSBs :
- 10 banks consolidated into 4.
- 3,50,000 crore capital infused.
- Governance reforms to be carried out to bring in transparency and greater professionalism in PSBs.
- Few PSBs to be encouraged to approach the capital market to raise additional capital
- Deposit Insurance and Credit Guarantee Corporation (DICGC) permitted to increase Deposit Insurance Coverage to Rs. 5 lakh from Rs.1 lakh per depositor.
- Scheduled Commercial Bank’s health under monitoring through a robust mechanism, keeping depositors’ money safe.
- Cooperative Banks to be strengthen by amending Banking Regulation Act for:
- Increasing professionalism.
- Enabling access to capital.
- Improving governance and oversight for sound banking through the RBI.
- NBFCs eligibility limit for debt recovery reduced from:
- Rs. 500 crore to Rs 100 crore asset size.
- Rs. 1 crore to Rs 50 lakh loan size.
- Private capital in Banking system:
- Government to sell its balance holding in IDBI Bank to private, retail and institutional investors through the stock exchange.
- Easier mobility in jobs:
- Auto-enrolment in Universal Pension coverage.
- Inter-operability mechanism to safeguard the accumulated corpus.
- Pension Fund Regulatory Development Authority of India Act to be amended to:
- Strengthen regulating role of PFRDAI.
- Facilitate separation of NPS trust for government employees from PFRDAI.
- Enable establishment of a Pension Trust by the employees other than Government.
- Factor Regulation Act 2011 to be amended to:
- Enable NBFCs to extend invoice financing to the MSMEs through TReDS
- New scheme to provide subordinate debt for entrepreneurs of MSMEs by the banks
- Would be counted as quasi-equity.
- Would be fully guaranteed through the Credit Guarantee Trust for Medium and Small Entrepreneurs (CGTMSE).
- The corpus of the CGTMSE would accordingly be augmented by the government. Union Budget 2020 Highlights
- Window for MSME’s debt restructuring by RBI to be extended by one year till March 31, 2021.
- More than five lakh MSMEs have already been benefitted.
- An app-based invoice financing loans product for MSMEs to be launched.
- To prevent the problem of delayed payments and consequential cash flows mismatches.
- Export promotion of MSMEs:
- For selected sector such as pharmaceuticals, auto components and others.
- An Rs 1000 crore scheme anchored by EXIM Bank together with SIDBI.
- Hand holding support for technology upgradations, R&D, business strategy etc.
- Deepening Bond Market.
- Certain specified categories of Government securities to be opened fully for non – resident investors also.
- FPI limit in corporate bonds increased to 15% from 9% of its outstanding stock. Union Budget 2020 Highlights
- New legislation to be formulated for laying down a mechanism for netting of financial contracts.
- Scope of credit default swaps to expand.
- Debt Based Exchange Traded Fund expanded by a new Debt-ETF consisting primarily of Government Securities.
- To give attractive access to retail investors, pension funds and long-term investors.
- A Partial Credit Guarantee scheme for the NBFCs formulated post the Union budget 2019-20 to address their liquidity constraints.
- New mechanism to be devised to further this.
- Government support to securities so floated.
- 103 lakh crore National Infrastructure Pipeline projects earlier announced. Union Budget 2020 Highlights
- Rs 22,000 crore to cater to the equity support to Infrastructure Finance Companies such as IIFCL and a subsidiary of NIIF.
- IFSC, GIFT city: full of potential to become a centre of international finance as well as a centre for high end data processing:
- An International Bullion exchange(s) to be set up as an additional option for trade by global market participants with the approval of regulator.
- Government to sell a part of its holding in LIC by way of Initial Public Offer (IPO).
- XV Finance Commission (FC):
- XV Finance Commission has given its first report for FY2020-21
- Recommendations accepted in substantial measure
- Its final report for five years beginning 2021-22 to be submitted during the latter part of the year.
- GST Compensation Fund:
- Balances due out of collection of the years 2016-17 and 2017-18 to be transferred to the Fund, in two instalments.
- Hereinafter, transfers to the fund to be limited only to collection by way of GST compensation cess.
- Overhaul of Centrally Sponsored Schemes and Central Sector Schemes necessary:
- To align them with emerging social and economic needs of tomorrow
- To ensure that scarce public resources are spent optimally
- On the recent debate over transparency and credibility of projected fiscal numbers, it is assured that procedure adopted is compliant with the FRBM Act.
- For the FY 2019-20:
- Revised Estimates of Expenditure: at Rs.26.99 lakh crore
- Revised Estimates of Receipts: estimated at Rs.19.32 lakh crore.
- For year 2020-21:
- Nominal growth of GDP estimated at 10%.
- Receipts: estimated at Rs.22.46 lakh cr
- Expenditure: at Rs.30.42 lakh cr.
- Significant tax reforms for boosting investments recently undertaken. However, expected tax buoyancy expected to take time.
- Fiscal deficit of 3.8% estimated in RE 2019-20 and 3.5% for BE 2020-21. It comprises two ingredients;
- 3% for year 2019-20 and 3% for the 2020-21 budget estimate.
- Deviation of 0.5%, consistent with Section 4(3) of FRBM Act, both for RE 2019-20 and BE 2020-21. (Section 4 (2) of the FRBM Act provides for a trigger mechanism for a deviation from the estimated fiscal deficit on account of structural reforms in the economy with unanticipated fiscal implications.)
- Return path, committing to fiscal consolidation without compromising needs of investment out of public funds, is laid in Medium Term Fiscal Policy cum Strategy Statement.
- Market borrowings: Net market borrowings: Rs.4.99 lakh crore for 2019-20 and Rs.5.36 lakh crore for 2020-21.
- A good part of the borrowings for the financial year 2020-21 to go towards Capital expenditure that has been scaled up by more than 21%.
Direct Tax Proposals – To stimulate growth, simplify tax structure, bring ease of compliance, and reduce litigations. Union Budget 2020 Highlights
- Personal Income Tax:
- Significant relief to middle class taxpayers.
- New and simplified personal income tax regime proposed:
|Taxable Income Slab (Rs.)||Existing tax rates||New tax rates|
|Above 15 Lakh||30%||30%|
- Around 70 of the existing exemptions and deductions (more than
100) to be removed in the new simplified regime.
- Remaining exemptions and deductions to be reviewed and rationalised in coming years.
- New tax regime to be optional – an individual may continue to pay tax as per the old regime and avail deductions and exemptions.
- Measures to pre-fill the income tax return initiated so that an individual who opts for the new regime gets pre-filled income tax returns and would need no assistance from an expert to pay income tax.
- New regime to entail estimated revenue forgone of Rs. 40,000 crore per year.
- Corporate Tax:
- Tax rate of 15% extended to new electricity generation companies.
- Indian corporate tax rates now amongst the lowest in the world.
- Dividend Distribution
- DDT removed making India a more attractive investment destination.
- Deduction to be allowed for dividend received by holding company from its subsidiary.
- 25,000 crore estimated annual revenue forgone.
- Start-ups with turnover up to Rs. 100 crore to enjoy 100% deduction for 3 consecutive assessment years out of 10 years.
- Tax payment on ESOPs deferred.
- MSMEs to boost
- Turnover threshold for audit increased to Rs. 5 crore from Rs. 1 crore for businesses carrying out less than 5% business transactions in cash.
- Parity brought between cooperatives and corporate sector.
- Option to cooperative societies to be taxed at 22% + 10% surcharge and 4% cess with no exemption/deductions.
- Cooperative societies exempted from Alternate Minimum Tax (AMT) just like Companies are exempted from the Minimum Alternate Tax (MAT).
- Tax concession for
- 100% tax exemption to the interest, dividend and capital gains income on investment made in infrastructure and priority sectors before 31st March, 2024 with a minimum lock-in period of 3 years by the Sovereign Wealth Fund of foreign governments.
- Affordable housing:
- Additional deduction up to Rs. 1.5 lakhs for interest paid on loans taken for an affordable house extended till 31st March, 2021.
- Date of approval of affordable housing projects for availing tax holiday on profits earned by developers extended till 31st March, 2021.
Tax Facilitation Measures
- Instant PAN to be allotted online through Aadhaar.
- ‘Vivad Se
Vishwas’ scheme, with a deadline of 30th June, 2020, to reduce litigations in
- Waiver of interest and penalty – only disputed taxes to be paid for payments till 31st March, 2020.
- Additional amount to be paid if availed after 31st March, 2020.
- Benefits to taxpayers in whose cases appeals are pending at any level.
- Faceless appeals to be enabled by amending the Income Tax Act.
- For charity
- Pre-filling in return through information of donations furnished by the done.
- Process of registration to be made completely electronic.
- Unique registration number (URN) to be issued to all new and existing charity institutions.
- Provisional registration to be allowed for new charity institutions for three years.
- CBDT to adopt a Taxpayers’ Charter.
- Losses of merged banks:
- Amendments proposed to the Income-tax Act to ensure that entities benefit from unabsorbed losses and depreciation of the amalgamating entities.
- Cash reward system envisaged to incentivise customers to seek invoice.
- Simplified return with features like SMS based filing for nil return and improved input tax credit flow to be implemented from 1st April, 2020 as a pilot run.
- Dynamic QR-code capturing GST parameters proposed for consumer invoices.
- Electronic invoice to capture critical information in a centralized system to be implemented in a phased manner.
- Aadhaar based verification of taxpayers being introduced to weed out dummy or non-existent units.
- GST rate structure being deliberated to address inverted duty structure.
- Customs Duties:
- Customs duty raised on footwear to 35% from 25% and on furniture goods to 25% from 20%.
- Basic customs duty on imports of news print and light-weight coated paper reduced from 10% to 5%.
- Customs duty rates revised on electric vehicles and 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.
- Trade Policy Measures
- Customs Act being amended to enable proper checks of imports under FTAs.
- Rules of Origin requirements to be reviewed for certain sensitive items.
- Provisions relating to safeguard duties to be strengthened to enable regulating such surge in imports in a systematic way.
- Provisions for checking dumping of goods and imports of subsidized goods being strengthened.
- Suggestions for reviews of exemptions from customs duty to be crowd-sourced.
- Excise duty proposed to be raised on Cigarettes and other tobacco products, no change made in the duty rates of bidis.
- Anti-dumping duty on PTA abolished to benefit the textile sector.
Unprecedented Milestones and Achievements of Indian Economy
- India now the fifth largest economy of the world.
- 4% average growth clocked during 2014-19 with inflation averaging around 4.5%.
- 271 million people raised out of poverty during 2006-16.
- India’s Foreign Direct Investment elevated to US$ 284 billion during 2014-19 from US$ 190 billion during 2009-14.
- Central Government debt reduced to 48.7% of GDP (March 2019) from 52.2% (March 2014).
- Two cross-cutting developments:
- Proliferation of technologies (Analytics, Machine Learning, robotics, Bio-informatics and Artificial Intelligence).
- Highest ever number of people in the productive age group (15-65 years) in India.
- GST removed many bottlenecks in the system.
Future Aim for sustaining India’s unique global leadership, driven by Digital Revolution
- Seamless delivery of services through Digital Governance.
- Improvement in physical quality of life through National Infrastructure Pipeline.
- Risk mitigation through Disaster Resilience.
- Social security through Pension and Insurance penetration.
|Union Budget 2020-21 KEY NUMBERS (in Rs. Crore)|
|2018-19 (Actuals)||2019-20 (Budget Estimates)||2019-20 (Revised Estimates)||2020-21 (Budget Estimates)|
|Effective Revenue Deficit||2,62,702||2,77,686||3,07,807||4,02,719|