The FinanceMinister of India, Nirmala Sitharaman, presented the Union Budget for the term2020-21 in the Lok Sabha. This is the 2nd budget after the NationalDemocratic Alliance came to power for a second term. The Budget 2020 hasfocussed on three main points – Aspirational India, Economic Development, and acaring society.
Sitharamanproposed a new option personal income tax system. She also announcedmulti-billion-dollar farm, infra, and a healthcare package to revive growth inthe country. Let us have a look at some of the key takeaways and highlights ofthe 90th Union Budget presented by Nirmala Sitharaman.
Highlights of Budget 2020-21
We also callthe Union budget as the Annual Financial Statement. The key highlights of theAnnual Financial Statement of 2020 are mentioned below.
Everything about new income tax slabs
In the 90thUnion Budget, Nirmala proposed a new set of income tax rates for the section ofpeople earning up to 15 lakh a year.
Under that,she proposed a 10 percent tax on income between 5 lakhs and 7.5 lakhs from 20percent now.
For theincome between 7.5 lakhs to 10 lakhs a year, people will pay a tax of 15percent. The income tax has been reduced from 30 percent to 20 percent for thepeople having income between 10 lakhs to 12.5 lakhs a year.
The peoplewho are earning 12.5 lakhs to 15 lakhs annually are required to pay a tax of 25percent. And lastly, the people who are earning over 15 lakhs annually wouldcontinue to pay at the rate of 30 percent.
This new taxregime is optional and it is the taxpayer’s choice to opt for the structurethat is beneficial for him.
Moving on to Investment
Thegovernment is planning to sell part of its holding in LIC by way of InitialPublic Offering. Some categories of government securities will be open fullyfor NRIs, along with being open to domestic investors.
The FPIlimit in the corporate bonds raised to 15 percent from 9 percent.
The budgetproposed the divestment target to be doubled for the next fiscal at Rs. 2.1lakh crore.
Changes in the Indirect Tax
Forfootwear, the custom duty has been raised from 25 percent to 35 percent. Incase of furniture, it is increase to 25 percent from 20 percent.
The exciseduty got a raise on Cigarettes and other tobacco products. However, no changehas been made in the excise duty rates of bidis.
The basiccustom duty on import of news print as well as light-weighted coated paper isdecreased to 5 percent (earlier it was 10 percent). On the imports of medicaldevices (except those exempts from BCD) will face 5 percent health cess.
For traders, too, there have been a lot of things that will be changed. So get ready, your business might need updates in your GST billing software!
Lower customduty rates on products such as fuse, chemicals, and plastics. While the productslike auto-parts, chemicals, etc. which are also being made domestically, willface higher custom duty rates.
MSMEs
Thegovernment has proposed certain steps for the MSMEs. We will see amendments toFactor Regulation Act, 2011.
Changes willbe made to enable NBFCs to extend invoice financing to MSMEs. The budgetproposed a provision of subordinated debt for MSMEs by Banks. This debt wouldbe counted as quasi-equity.
App-basedfinancing loans to be presented to prevent the problem of late payments andcash flow mismatches for MSMEs.
The Power Sector
Sitharamanproposed an amount of ₹273 billion ($3.84 billion) for promotion of industryand commerce.
They havealso asked the organization using old thermal power plants to shut units ifemission norms are not met.
An amount of₹44 billion ($619.11 million) for clean air incentives in cities with over 1million people is allocated in the budget 2020.
Moving on to Education Sector
The FinanceMinister of India announced around 150 higher educational institutes to beginthe apprenticeship embedded courses.
The budgetalso proposed special bridge courses to enhance the skill sets of theindividuals who are seeking employment outside India.
Apart fromthat, the In-SAT exam will be conducted in Africa and Asia under study in Indiaprogramme.
An amount ofRs. 99,300 crores is allocated for the educational sector in the 90thUnion Budget. Along with that, Rs. 3,000 crores are allocated for the skilldevelopment.
Thestart-ups having a turn-over of up to Rs. 100 crores will get 100% deductionfor 3 consecutive assessment years out of 10 years.
Also, theturnover threshold for audit of MSMEs to be increased from Rs 1 crore to Rs 5crore.
Changes willbe made to enable NBFCs to extend invoice financing to MSMEs. The nominal GDPgrowth for the term 2020-2021 is estimated at 10 percent.
Let’s talk about economic development
The budgetproposed an Investment Clearance Cell to offer end-to-end facilitation andsupport.
Apart fromthat, 5 new smart cities have been proposed to be developed. The NationalTechnical Textiles Mission to be implement with the objective of positioningIndia as a global leader in Technical Textiles.
The NIRVIKScheme has the aim to achieve higher exposure credit disbursement.
The turnover of Government e-Marketplace (GeM) is asked to be taken to Rs. 3 lakh crores. A scheme will be launched to revise duties and taxes on exported products.
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