Highlights of Union Budget for 2020

Presenting the Union Budget for 2020-21, Finance Minister Nirmala Sitharaman said, “In May 2019, Prime Minister Narendra Modi received a massive mandate to form the government again. People of India have unequivocally given their Janaadesh for not just political stability, but have also reposed their faith in our economic policy. This is a budget to boost their income and enhance their purchasing power.”

 Highlights of budget:

TAX:

A New Tax Slab has been announced. Those who want to be in the old regime with exemptions, can continue to pay at the old rates

 

Income	Tax
Between ₹5 lakh and ₹7.5 lakh	Reduced to 10% from the current 20%
Between ₹7.5 lakh to ₹10 lakh	Reduced to 15% from the current 20%
Between ₹10 lakh to ₹12.5 lakh	Reduced to 20% from the current 30%
Between ₹12.5 lakh to ₹15 lakh	Reduced to 25% from the current 30%
Above ₹15 lakh	Continue at 30%, but without exemptions

 

Around 70 deductions have been removed

Companies will no longer be required to pay Dividend Distribution Tax (DDT) Because Dividend is Now Taxable.

Aadhaar-based quick issuance of PAN announced

Aadhaar-based verification for GST compliance to be introduced

Under section 194J- fees for technical services, TDS has been reduced to 2% from 10%

Tax audit threshold has been increased from Rs 1 crore to Rs 5 crore provided turnover/ gross receipts in cash does not exceed 5% during the previous year. Also, payment made in the P.Y in cash does not exceed 5%. For such taxpayers, the due date for tax audit has been extended to the 31st of October from the 30th of September

Under Section 80EEA, the additional deduction of Rs.1.5 lakh for interest paid on home loans will now be allowed for the loans sanctioned till the 31st of March 2021

In the case of start-ups, employees possessing Employee Stock Option Plans (ESOPs) may defer paying taxes up to five years from the time of exercise, till the time they leave the start-up, or until they sell their shares, whichever is earlier

Eligible start-ups with a turnover of up to Rs 25 crore is permitted to deduct 100% of its profits for three continuous assessment years of seven years if the overall turnover is under Rs 25 crore. This limit is now increased to Rs 100 crore. Furthermore, the eligibility period to deduct is increased to 10 years from 7 years

Section 194: Dividend paid by Indian companies, to a shareholder, who is resident in India, TDS @ 10% if the dividend amount exceeds 5000 during the FY

Section 194K: Dividend paid by MF to a resident TDS 10% will be deducted only if the dividend amount exceeds 5000 during the FY

Section 194: Dividend on shares paid by company exceeding Rs 5000 will be subject to TDS @ 10%

Section 194-O: Any payment made by e-commerce operator to the participant, the operator will have to deduct 1% TDS only if the annual amount paid or credited exceeds Rs 5 lakh

Section 206AA: in relation to 194O has been amended to 5% instead of 20% in case of not furnishing the PAN

Section 234G (insertion of new section) relating to payment of fee of Rs 200 per day for default in furnishing statement or certificate under section 35 by research association, university, college, company or any other institution

Section 50C, in case of transfer of capital asset being land or building or both, if value adopted for the purpose of stamp duty does not exceed 110% of the actual consideration received, then consideration so received shall be deemed to be the full value of consideration for computing capital gains on transfer of such capital assets. Before the amendment it was 105% instead of 110%

Section 43CA, if value adopted for the purpose of stamp duty does not exceed 110% of the actual consideration received, then consideration so received shall be deemed to be the full value of the consideration for computing profits and gains on transfer of such asset other than capital assets. Before the amendment it was 105% instead of 110%

MSME’S

Amendments will be made to Factor Regulation Act, 2011.

Amendments to be made to enable NBFCs to extend invoice financing to MSMEs.

Provision of subordinated debt for MSMEs by Banks which is guaranteed by Credit Guarantee Trust. The debt will count as quasi-equity.

App-based financing loans will be introduced for MSMEs App-based invoice financing loans product to be launched, to obviate the problem of delayed payments and cash flow mismatches for MSME

 

Public Sector Banks (PSB’s)

Robust mechanism is in place to monitor and ensure health of all scheduled commercial banks and depositors’ money is absolutely safe

 

Economy and Finance:

Government to sell part of its stake in LIC via public offering

Bank deposit insurance cover had been increased from ₹1 lakh to ₹5 lakh per depositor

Eligibility limit for NBFCs for debt recovery under SARFAESI Act proposed to be reduced to asset size of Rs 100 crore or loan size of Rs 50 lakh

Government plans to amend the Companies Act to decriminalise civil offences

Separation of NPS Trust for government employees from PFRDAI

Proposal to sell balance holding of government in IDBI Bank

 

Education:

₹99,300 crore for education in 2021 and about ₹3,000 crore for skill development

About 150 higher educational institutions will start apprenticeship embedded courses

Urban local bodies to provide internship to young engineers for a year

Special bridge courses to improve skill sets of those seeking employment abroad

Ind-SAT to be conducted in Africa and Asia under study in India programme

A national police university and a national forensic science university is proposed to be setup

 

Agriculture:

A budget allocation of ₹2.83 lakh crore for the sector comprising agriculture & allied activities

Krishi UDAN on international and national routes

The government aims to double farmers’ income by 2022

KisanRail” and “KrishiUdaan” for seamless transport of perishable farm goods

Agri-credit availability set at ₹15 lakh crore for 2020-21

Comprehensive measures for 100 water stressed districts

Provide 20 lakh farmers to set up standalone solar pumps. Help another 15 lakh farmers to solarise their power grid

Village storage scheme proposed to be run by women SHGs

Raise fishery exports to Rs 1 lakh crore by 2024-25

Increasing coverage of artificial insemination to 70%

Water, Wellness, and Sanitation Goals

An allocation of ₹69,000 crore for the Health Sector

₹12,300 crore for Swachh Bharat this year

“TB Harega Desh Jeetega” campaign launched to end TB by 2025

Focus on liquid and greywater management along with waste management

Expansion of Jan AushadhiKendra Scheme to all districts by 2024

More than 20, 000 empanelled hospitals under PM Jan Arogya Yojana

Proposal to set up hospitals in Tier-II and Tier-III cities with the private sector using PPP

 

Infrastructure:

National Logistics Policy to be released soon

Aim to achieve electrification of 27,000 km of lines

Plan to have a large solar power capacity for Indian Railways

The government also proposes a Bengaluru suburban rail project at a cost of ₹18,600 crore

Govt to monetise 12 lots of national highways by 2024

Chennai-Bengaluru Expressway to be started

100 more airports will be developed by 2024 to support UDAN

Budget proposes to provide ₹1.7 lakh crore for transport infrastructure in 2021