Budget 2020

Budget 2020 at a Glance

Experiencing heat of the economic slowdown, Budget 2020 was much awaited for economy revival by different sectors. As scheduled, On 1st February 2020, the Union Finance Minister Nirmala Sitharaman came up with the Union Budget 2020. During her budget speech in the Parliament, she announced for multi-sector reforms, policies for the agricultural & education sector and some upcoming flagship programs of government especially proposed for the development of society in PPP (public-private partnership) format.

With the inclined vision of government i.e to uplift the economic sectors and boost the purchasing power of people, FM expressed the overall Budget 2020 to be based on three prominent themes: Aspirational India, Economic Development in India and Caring India.

Key takes from the FM Budget 2020 

Under its Aspirational India theme, the Budget 2020 affirms: 

  • To allocate Rs 2.83 lakh crore towards Agriculture, Irrigation, Rural Development, and other allied activities.
  • To set a target of Rs 15 lakh crore for Agricultural credit and cover PM KISAN beneficiaries in the same.
  • To achieve the set target of Rs 1 lakh crore in the export of fisheries by 2024-2025 and to set up new Sagar Mitras and Farmer producer organizations
  • To set up new Kisan Rail through PPP, the national cold supply chain for perishables and incorporate refrigerated coaches in the Express and freight trains for seamless movement of farm produce.
  • To initiate Krishi Udaan for the transport of Agri products.
  • To initiate One – Product, One – District for better exports in horticulture, balanced use of fertilizers and for the issue of new measures of organic and integrated farming.
  • To strengthen the organic product market through flagships like Jaivik Kheti and Zero Budget Natural Farming.
  • To allocate funds to farmers for setting solar pumps, grid-connected pump sets and enable solar generation capacity, all under PM KUSUM.
  • To allocate Rs 69,000 crore for the health care sector, devoted to health care facilities and building of medical structures through flagships like JAN Aushadi Kendra’s, Jal Jeevan mission, TB harega desh jitega, etc.
  • To allocate Rs 99,300 crore and Rs 3000 crore for education and skill development respectively, including setting up of new education policy, policy for attaching medical colleges with hospitals through PPP and enable FDI for the education sector.

Under its Economic Development in India theme, the Budget 2020 affirms: 

  • To allocate Rs 27,300 crore for development and promotion of Industry and Commerce.
  • To place Investment clearance cells, five smart cities, facilities for electronics manufacturing.
  • To introduce new flagship programs National Technical Textiles Mission (for growth of the textile industry) and NIRVIK for higher export credit disbursement.
  • To allocate Rs 100 lakh crore for infrastructural development, building a new National infrastructural pipeline, a new National logistic policy, and a new National Skill development agency.
  • To accelerate the development of express highways, re-development of 4 railway stations, electrification of railways, operation of 150 passenger trains.
  • To create a framework for formalizing port activities and building efficiency of seaports.
  • To develop 100 more airports, electrify cities with Smart Meters and generation of renewable energy.
  • To develop new Datacenter parks, use BharatNet to link gram panchayats and benefit start-ups through new digital platforms for IPR applications.

Under the Caring Society theme, the Budget 2020 affirms: 

  • To focus on safety, well being of Women & children and on the promotion of culture and tourism.
  • To keep aside funds for nutritional related programs, development of 5 archaeological sites, re-curation of museums.
  • To form and implement policies for the environment and climate changes.

New Propositions in Budget 2020 binding above themes: 

Tax Proposals 

Annual Income Tax Rate
Upto 2.5 lakhs NIL
2.5-5 lakhs 5%
5-7.5 lakhs 10%
7.5-10 lakhs 15%
10-12.5 lakhs 20%
12.5-15 lakhs 25%
Above 15 lakhs 30%
  •  Removed about 100 exemptions and deductions from existing tax rules.
  • Inclusion of auto-population measures in income tax filing, reduction in the corporate tax rate to 15% being the lowest in the world, removal of Dividend distribution tax.
  • 100% deduction to start-ups with turnover up to Rs 100 crore for 3 consecutive years, deferred tax payments on ESOPs (Employee Stock option scheme ), increased audit threshold from Rs 1 crore to 5 crores.
  • Exempted cooperative societies from AMT (Alternate Minimum Tax ) and 100% tax exemption to foreign incomes if invested in a priority sector or infrastructure with a minimum lockin period of 3 years.
  • Issue of Instant PAN (Permanent Account Number ) through Aadhaar online, the solution to pending tax litigations through Vivad se Vishwas Scheme, faceless assessment and appealing before tax department.
  • Adoption of taxpayer charter by CBDT and registration, return filing & automated compliance filling for charity institutions.
  • Increments in Custom duty rates of footwear, auto parts, and chemicals and reduced for light paper imports, electrical vehicles, mobiles and raw materials like plastics, fuse, etc.
  • SMS based filling of Nill return in GST, a system for improved flow of ITC in GST, and Aadhaar based verification under GST.

Policy, Compliance, and Governance 

  • Improvements proposed in civil liabilities under Companies act, improvements in Contract Act, setting up of National Recruitment Agency (NRA) for government post recruitments. Deposit Insurance coverage incremented to Rs 5 lakh from Rs 1 lakh, Pension Fund Regulatory Development Authority of India Act more strengthened, a 1000 crore export promotion scheme to anchor by EXIM Bank with SIDBI.
  • New legislation to form for netting of financial contracts, IFSC and GIFT Cities to be made as data centers and centers of international finance.

Income estimated to be Rs. 19,62,761 crores generated from various departments such as:

  • 17% from Income Tax Department
  • 17% from Union Excise Duties
  • 18% from Corporation Tax
  • 6% from Non-debt capital receipt
  • 20% from borrowing and other liabilities
  • 10% from non-tax revenue
  • 4% from Custom Duty
  • 6% from  Goods & Service Tax 

Expenditure estimated to be Rs. 27, 86,349 Crores made on the following things such as:

  • 6% for pension
  • 9% to Centrally sponsored scheme
  • 6% for subsidies
  • 18% for interest payment
  • 13% to Central sector scheme
  • 10% to Finance commission & other transfers
  • 20% to State share of taxes & duties
  • 8% to defense
  • 10% for other expenditures.

Want to know more about taxes? 

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Also Read: RERA: Functioning of Grievance Redressal

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