In the Union budget 2020-21, Finance Minister Nirmala Sitharaman rejigs in personal tax rates, sops to lift real estate, an extension of LTCG threshold and removal of dividend distribution tax and improvement in spending on infrastructure and reduction in GST with respect of automobile.
Individual tax slabs rejigged
Those earning up to Rs 5 lakhs are exempt from paying taxes
10% tax for everyone earning Rs 5-7.5 lakh against the current 20%
15% tax for everyone earning Rs 7.5- 10 lakhs against current 20%
20% tax for everyone earning Rs 10-12.5 lakhs against current 30%
25% tax for everyone earning Rs 12.5-15 lakhs against the current 30%
30% tax for income above Rs 15 lakh (Those earning more than Rs 15 lakhs get no exemptions)
These rates will be applicable to individuals who will give up all the exemptions and deductions prevailing under the income tax laws.
Optional: New income tax rates will be optional, says FM.
Income tax rates will be significantly reduced for those who forego reliefs,
exemptions.
Highlights:
- Govt. extends additional Rs.1.5 lakh tax benefit on interest paid on affordable housing loans to March 2021.[In the previous budget 2019-20, the maximum amount of interest paid on a housing loan eligible for tax benefit was increased to Rs 3.5 lakh from Rs 2 lakh earlier (i.e. an increase of Rs 1.5 lakh for a house valued up to Rs.45 lakh).The deduction was allowed only for the year 2019-20. Now this deduction has been allowed for one more year.]
- Govt. proposes 100 pc tax concessions to sovereign wealth funds on investment in infra projects.
- More than 100 deductions provided currently under the I-T Act. The proposal is to remove 70 of them.
- Tax on Co-op societies to be reduced to 22% plus surcharge, as against current 30%
- Govt. proposes deferment of tax payment by employees on ESOPs from startups by 5 years
Other big announcements:
- Raised the deposit insurance coverage to Rs.5 lakh from the current Rs.1 lakh.
- DDT to be removed, Dividend to be taxed in hands of the recipient. The deduction allowed for dividends received by holding company from a subsidiary.
- Long term capital gain on equity mutual funds continues.
- Government to sell part holding in LIC
- IDBI bank will be privatized
- Govt. proposes amendments to facilitate the separation of govt. pension trust from PFRDA
- Divestment target for the year 2020-21 pegged at Rs.2.1 lakh crore
- Certain specified categories of government securities will be open fully for NRIs
- Govt. to amend the Banking Regulation Act to strengthen co-op banks
- Amendments to be made to enable NBFCs to extend invoice financing to MSMEs
- Health cess on import of medical equipment imposed in Budget
Other budget proposals:
Agriculture:
- Pradhan Mantri Kisan Urja Suraksha evem Utthan Mahabhiyan (PM KUSUM) to be expanded to provide 20 lakh farmers in setting up standalone solar pumps
- Will set up Kisan rail so that perishable farm goods can be quickly transported across the country
- Agricultural credit target has been set at Rs 15 lakh crore
- KUSUM scheme for solar pumps targets to cover 20 lakh farmers
- Rs.2.83 lakh crore has been made for Agri and allied activities. This includes agriculture, irrigation, rural development, Panchayati Raj.
- Help 15 lakh farmers solarize their grid-connected pump sets
- Rs.3.6 lakh crore for Jal Jeevan Mission has been approved. This will look at augmenting local water resources, desalination, water harvesting and renewing older sources in FY21.
- proposes raising fish production to 200 lakh tones by 2022-23
- Proposes to encourage balanced use of all fertilizers, a necessary step to change the incentive regime which encourages excessive use of chemical fertilizers.
- MGNREGA to be used to develop fodder farms
- Will encourage balanced use of all fertilizers, a necessary step to change the incentive regime which encourages excessive use of chemical fertilizers:
Healthcare:
- A total of Rs 69.000 crore has been provided for the healthcare sector of which PM Jan Arogya Yojana will get Rs 6,400 crore.
- proposes to expand Jan Aushadhi Kendras in all districts of the country to provide medicines at affordable rates
- Jan Aushadhi scheme to provide for all hospitals under Ayushmann Bharat by 2025
- PPP mode hospitals will be set up under viability gap funding to look at areas where there are no hospitals. This will be 112 aspirational districts where first priority will be given.
- Allocates Rs 12,300 cr for Swachh Bharat
Education:
- Introduction of ‘Ind-SAT’, an exam for Asian and African countries to help make India a higher education destination.
- Rs 99,300 crore outlay for the education sector in 2020-21 and Rs 3,000 crore for skill development
- propose National Police University and National Forensic University
- 5 archaeological sites in Haryana, UP, Assam, Gujarat and Tamil Nadu, to be developed with on-site museums.
Social welfare:
- Enhance allocation of Rs 9500 crores for senior citizens and ‘Divyang’
- Rs.53,700 cr for the welfare of scheduled tribes
- Govt. to set up a national recruitment agency for the recruitment of non-gazetted post
- Village Storage Scheme to be run by Self-Help Groups (SHGs); we want to restore women in villages as ‘Daanya Lakshmis’: FM Sitharaman
Infrastructure:
- Proposes setting up of a large solar-powered capacity alongside rail tracks
- Rs 6000 crore boost for internet connectivity. Fiber to Home connections under Bharat Net will be provided to 1 lakh gram panchayats this year itself.
- Delhi-Mumbai expressway and two other projects will be completed by 2023
- Proposes to monetize 12 lots of highway bundles of over 6,000km before 2024
- Over 6 lakh Anganwadi workers have been equipped with smartphones to upload the nutrition status of 10 crore households
- Govt. proposes discoms replace conventional meters with smart prepaid meters
- Allocation of Rs 30,757 crores for 2020-21 for Jammu and Kashmir and Rs 5,958 crores for Ladakh
- FM proposes to extend gas grid by 11,000 km
- 100 more airports will be developed by 2025 to support the UDAN scheme.
- Rs.4,400 cr solution to fix Delhi’s pollution
- Rs.2,500 crore to boost tourism
- Rs.20,000 crore for the renewable energy sector
- Data as the new oil: Policy soon to enable the private sector to build data center parks
- Rs 1,480 cr for National Textile Mission
- Five new smart cities to be developed
Export promotion:
- NIRVIK scheme to provide high insurance cover
for exporters. The insurance guaranteed under Export Credit Insurance scheme
could be up to 90% of principal and interest.