UNION BUDGET OF INDIA 01 - FEBRUARY 2020 - JHS Associate
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UNION BUDGET OF INDIA
01 – FEBRUARY - 2020
1
UNION BUDGET 2020
INDEX • FOREWORD 3-4
• MAJOR ANNOUCEMENTS :
FOREWORD • TOURISM 05
• WOMEN EMPOWERMENT 06
• RAIL & INFRASTRUCTURE 07
• EDUCATION 08
• AGRICULTURE 09
• OTHERS 10
• INDIAN ECONOMY IN 2020 11
• CAPITAL MARKET 12
• DIRECT TAXES PROPOSALS 13-18
• INDIRECT TAXES PROPOSALS 19
• OUR PRESENCE 20
• DISCLAIMER 21
2
UNION BUDGET 2020
The backdrop of a slowing economy, with the gloomy clouds of the corona virus
FOREWORD looming large, were not a perfect setting for budget presentation in India. However
the Finance Minister, Ms. Nirmala Sitharaman has made a brave effort by proposing
a 3 pronged strategy of :-
FOREWORD 1. Aspirational India, with 16 plans related to (a) Agricultural – Rural Development,
(b) Water and Sanitation and (c) Education – Skills.
2. Economic Development and
3. Caring Society
“Aspirational India” includes a humongous Rs. 2.83 lakh crores on agriculture,
irrigation and allied activities; Rs. 69000 crores for the health care sector and
Rs.102,300 crores for education and skill development. What remains to be seen is
how quickly and effectively these huge sums trickle down to the grass roots.
Doubling of farm incomes in a couple of years, as stated by the Government, is
extremely unlikely.
The thrust on “Economic Development” includes Rs. 1.7 lakh crores on
transportation & infrastructure, investments in the “new economy” and 27,000
crores on the development of industry and commerce.
3
UNION BUDGET 2020
Under the “Caring Society” Rs. 35,600 crores are on nutrition related programmes,
28,600 crores on women’s welfare and 1,38,700 crores on development and
FOREWORD welfare of scheduled castes and tribes and other backward classes.
Taxation proposals including exemption to sovereign wealth funds, DDT, options for
FOREWORD individuals for lower simplified rates (without tax deductions), “Vivad se Vishwas”
scheme and faceless appeals, amongst others.
Proposals to convert certain “criminal” acts to “civil” will bring relief to corporates.
Measures to support MSMEs, NBFCs, Infrastructure Financing, Divestments and
Financial Markets are also expected to help these segments and the economy as
well.
Unfortunately, the stock markets were not too pleased with these efforts and the
BSE promptly fell by an unprecedented 980+ points by late afternoon. Corporate
India’s appreciation was also muted.
Has the Government spread itself too thin with this huge list of initiatives? Does it
have the bandwidth to implement all these noble aspirations?
Ultimately, it is effective implementation and resulting liquidity at the bottom of the
pyramid, which will make all the difference. Of course, the monsoon Gods and Geo-
political winds will also continue to also impact India’s economic growth. Are the
4
Gods listening?
UNION BUDGET 2020
Tourism
MAJOR ANNOUNCEMENTS
• Government has allocated Rs 3,150 crore for the ministry of culture, Rs
2,500 crore for the ministry of tourism.
FOREWORD
• Five archaeological sites in Haryana, UP, Assam, Gujarat and Tamil Nadu, to
be developed with on-site museums.
• Rs 85,000 crore allocated for SCs and OBCs in Budget for FY 2020-21.
• Tribal Museum: Sitharaman said a tribal museum would be set up in Ranchi,
Jharkhand.
• Government has proposed Rs 53,700 crores for welfare of schedule tribes
and Rs 9,500 crores for senior citizens and Divyangs for 2021-22.
• Rs 9,500 crore provided for senior citizens and Divyangs.
.
5
UNION BUDGET 2020
MAJOR ANNOUNCEMENTS Women Empowerment
• Govt allocates Rs 28,600 crore for programmes specifically for women.
FOREWORD
• Government will set up a task force to recommend the marriageable age for
women
• Rs 35,600 cr allocated for nutritional related programmes in FY21
• FM says 150 higher institutes to start apprentice training for general category
students.
6
UNION BUDGET 2020
MAJOR ANNOUNCEMENTS Rail and Infrastructure
• 1,150 trains will be run in PPP mode, also 4 stations to be redeveloped with
help of private sector. More Tejas type trains will connect tourist destinations,
FOREWORD
• Proposal for setting up large solar power capacity alongside rail track is under
consideration. The FM said that 550 wi-fi facilities have been commissioned at
railway stations.
• Delhi-Mumbai Expressway will be completed by 2023;Chennai-Bengaluru
Expressway to be launched soon.
• Government to set up project preparation facilities for infrastructure sector,
national logistic policy soon
• Rs 27,300 crore provided for development and promotion of industry and
commerce.
• Aviation sector gets a boost with 100 more airports and doubling of aircraft
fleet.
7UNION BUDGET 2020
Education
MAJOR ANNOUNCEMENTS
New Education Policy
• Government will soon announce a new education policy.
FOREWORD
• Rs 99,300 crore have allocated for education sector, Rs 3,000 crore for skill
development in FY21.
• New special bridge courses to be designed for teachers, nurses, paramedical
staff.
• A programme for urban local bodies to provide opportunities for internship to
young engineers to be started.
8UNION BUDGET 2020
Agriculture
Krishi Udaan For Farmers
MAJOR ANNOUNCEMENTS
• Krishi Udaan will be launched by Civil Aviation Ministry to transport agri-
products to national as well as international destinations.
FOREWORD • Self Help Groups will be allowed to set up village agri storage facilities.
• NABARD will map and geo-tab 162 mn tonne capacity agri warehouses across
country. FCI and Warehousing Corporation of India to build warehousing facility
on their land.
• One horticulture crop in one district on cluster basis will be promoted.
Kisan Rail in PPP mode for farmers
• Indian Railway to set up Kisan Rail in PPP mode for cold supply chain to
transport perishable good. Horticulture with 311 MT exceeds production of food
grains. Agri credit target set up at Rs 15 lakh cr for FY2020-21.
• NABARD refinance scheme will be expanded.
• States to adopt three central model laws on agricultural land leasing, marketing
and contract farming
9UNION BUDGET 2020
Others
Piped Water
MAJOR ANNOUNCEMENTS
• Government has proposed Rs 3.6 lakh crore towards piped water supply to
households. Allocation for Swachh Bharat for 2020-21 stands at Rs 12,300
FOREWORD crore
Stake in LIC
• Government announces partial stake sale in LIC through LIC.
• Robust mechanism in place to monitor the health of all commercial banks.
• Clean, reliable, robust financial sector required to achieve USD 5 trillion
economy.
• Modi government has proposed Rs 30,757 cr for Jammu and Kashmir, and
Rs 5,958 for Ladakh for fiscal 2020-21.
• Rs 100 crore allocated for hosting G-20 Summit.
• Govt proposes major reform in recruitment of non-gazetted staff
• Bank Deposit guarantee raised to Rs 5 lakh from the current Rs 1 lakh!
• Government debt reduced to 48.7% of GDP from 52.2 per cent in March
2014
• 6.11 crore farmers under insured Pradhan Mantri Fasal Bima Yojna
10UNION BUDGET 2020
Indian Economy in 2020-21
MAJOR ANNOUNCEMENTS
• The Indian economy has been struggling with a prolonged slowdown and GDP
growth in the September quarter dipped to 4.5 percent, lowest in over six years.
FOREWORD
• Foreign direct investment continued to rise in the last five years. India received
$34.9 billion in FDI as of September 2019 in FY20.
• Foreign institutional investors invested Rs 79,642 crore in the fiscal year 2020.
• As of December 2019, auto sales stood at 2,07,36,410 units in the current
fiscal. Retail auto sales dropped by nearly 15 percent to 1,606,002 units in
December 2019, the highest decline in the current financial year.
• Direct and indirect tax collections for FY20 is expected to about Rs 21 lakh
crore, lower than the Budget estimate of around Rs 25 lakh crore.
• In terms of disinvestment, the government could achieve only Rs 18,095 crore,
compared to the target of Rs 1.05 lakh crore
11UNION BUDGET 2020
CAPITAL MARKET
MAJOR ANNOUNCEMENTS
Indian stocks are set to rise further over the coming year, according to a Reuters
poll of equity strategists, but those gains will be limited as fiscal stimulus and easy
monetary policy fail to reverse an economic slowdown.
FOREWORD
The slew of measures announced by the government in recent months and the
Reserve Bank of India reducing rates should result in only a very gradual recovery
in demand over the next 12 months. As a result, the pace of economic recovery and
earnings growth is likely to be subdued over the next two years. This in turn should
cap stock market gains over the next 12-month period and beyond
Foreign portfolio investors (FPIs) have turned net buyers of Indian equities after
being net sellers in July and August. Capital inflows in domestic equities touched a
seven-month high in November, according to data from National Securities
Depository Ltd (NSDL).
"Buying opportunity enthused FPIs (are set) to look into the Indian market. FPIs are
expecting stable governance, and we are at the bottom of everything - whether it is
GDP, unemployment or consumption. From here, improvements are expected”.
12UNION BUDGET 2020
NEW TAXATION SCHEME FOR INDIVIDUALS :
DIRECT TAXES
• Optional taxation scheme proposed for Individual & HUF taxpayers
FOREWORD Resident Individual / HUF
Net Income Range Income-tax Rate
New Regime Old Regime
Upto Rs. 2,50,000 Nil Nil
Rs. 2,50,001 to Rs. 5,00,000 5% 5%
Rs. 5,00,001 to Rs. 7,50,000 10% 20%
Rs. 7,50,001 to Rs. 10,00,000 15% 20%
Rs. 10,00,001 to Rs. 12,50,000 20% 30%
Rs. 12,50,001 to Rs. 15,00,000 25% 30%
Above Rs. 15,00,000 30% 30%
13UNION BUDGET 2020
DIRECT TAXES • Under new regime almost no separate deductions / exemptions are allowed.
• New regime will come into effect from F.Y.2020-21.
FOREWORD • The above rates are subject to Surcharge and Cess.
PROPOSED CHANGE IN RATE OF TAX FOR RESIDENT CO-OPERATIVE SOCIETIES
Tax is reduced from 30% to 22%, however no deductions or exemptions are
available as well as AMT is not applicable if opted for lower rate of tax.
TAX CONCESSION FOR ELECTRICITY GENERATION COMPANIES
Concessional Corporate Tax rate of 15% is extended to new companies engaged
in generation of electricity.
14UNION BUDGET 2020
TAX CONCESSION FOR FOREIGN INVESTMENTS
DIRECT TAXES • 100% tax exemption for interest, dividend and long term capital gains income
earned by Sovereign Wealth Fund of Foreign Governments from investment made in
Infrastructure and other notified sectors before 31st 2024, with a minimum
FOREWORD blockage period of 3 years.
DIVIDEND DISTRIBUTION TAX
• Dividend Distribution Tax (DDT) removed but dividend will be taxed in the hands
of recipients at applicable rates Dividend received by Holding company shall be
eligible for deduction to the extent of dividend distributed by such holding company.
STARTUPs
• ESOPs taxability had been deferred for five years or till employee leave company
or employee sell their shares whichever is earlier as against present taxability as
perquisite which is at time of exercise of ESOP option. For claiming 100% deduction
by STARTUPs, the eligible turnover limit has increased from Rs.25 crores to Rs. 100
Crores.
15UNION BUDGET 2020
MEDIUM, SMALL AND MICRO ENTERPRISES
DIRECT TAXES • Turnover threshold for Tax audit, proposed to be raised upto 5 crores as against
existing limit of 1 crore, however such entity should have cash transactions less than
5%.
FOREWORD
AFFORDABLE HOUSING
• One year extension given for availing loan for additional deduction of
Rs.1,50,000/- for interest paid on loans taken for purchase of an affordable house.
Now loan can be taken before 31st March, 2021.
REAL ESTATE SECTOR
• Safe harbour margin has been increased from 5% to 10% for immovable
properties sold below stamp valuation rate (circle rate).
TAX DEDUCTION AT SOURCE
• Interest on monies borrowed in form of Bonds listed on any recognised stock
exchange located outside India or any municipal debt securities to a foreign entity
will be subject to TDS at 5%. TDS on e-commerce payments to e-commerce
participants @ 1% u/s 194O.
16UNION BUDGET 2020
CHARITY INSTITUTIONS
DIRECT TAXES • Donation to Charity Institution (donee) is allowed as deduction in computing the
taxable income of the donor. However, now, donee’s information will be available
pre-filled based on Donor’s compliance.
FOREWORD
• Fresh online registration process for all charitable institute is introduced.
NEW PROVISIONS OF PENALTY
• Penalty for false entry of invoice or omitted invoice @ 100% of such transaction
u/s 271AAD proposed.
• For 80G exemption, Donor to file annual statement of donation received, failure
will attract penalty of Rs. 200 per day or penalty of Rs. 10,000 to Rs. 100,000.
VIVAD SE VISHWAS SCHEME
• Under this scheme, tax payer can get rid of its litigations by paying only the
disputed tax amount whereas interest as well as penalty will be waived. This
needs to be done by 31st March, 2020. Additional payment will be required if the
tax payer wants to make payment up to 30th June, 2020.
17UNION BUDGET 2020
FACELESS APPEALS
DIRECT TAXES • Faceless appeal on the lines of Faceless assessment to be introduced.
STAY OF DEMAND
FOREWORD • Under the powers of ITAT, stay of demand can be granted if assesse provides
security of equivalent value of 20% of demand.
INSTANT PAN THROUGH AADHAAR
• A system will be launched under which PAN shall be instantly allotted online on
the basis of Aadhaar, without any requirement for filling up of detailed
application form.
RESIDENTIAL STATUS
• A person being citizen of India residing outside India comes to India and stays for
more than 120 days, will become resident in India.
• For resident but not ordinary resident, now test will be of non resident in seven
out of ten preceding years as against present condition of 9 out of 10 preceding
years.
18UNION BUDGET 2020
INDIRECT TAXES GOODS AND SERICE TAX
• Simplified GST return shall be implemented from the 1st April, 2020. It will
make return filing simple with features like SMS based filing for nil return,
FOREWORD return pre-filling, improved input tax credit flow and overall simplification.
• Dynamic QR-code is proposed for consumer invoices. GST parameters will be
captured when payment for purchases is made through the QR-code.
• E-Invoice will be implemented in Phased Manner.
CUSTOMS
• Customs Duty on Footwear and Like Industries to be raised.
• National Calamity Contingent Duty (NCCD) on Cigarettes and Tabacoo products
proposed to be increased. NCCD remains unchanged on Bidis.
• Health Cess of 5% on imports of specified medical equipment proposed.
• Basic Customs Duty on imports of news prints and light-weight coated paper is
proposed to be reduced from 10% to 5%.
• Rate of duty for specified furniture goods is proposed to be raised from 20% to
25%.
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