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AKGVG Budget Highlight

Preface

The Union Finance Minister Nirmala Sitharaman delivered budget speech breaking all previous records w.r.t. time. The budget speech began with a homage to late Mr Arun Jaitley with emphasis on Sabka Saath, Sabka Vikas, Sabka Vishwas.

FINMIN initiated the budget speech stating "the budget is to boost the income of people and enhance their purchasing power with focus on fundamental and structural reforms. For every member of the schedule caste and schedule tribe, for every woman, for every individual from minority section of the society, this budget aims to give wings to your aspirations. Our people should be gainfully employed, our businesses should be healthy."

FINMIN underlined the paradigm shift in the governance. As per the speech, an average household now saves about 4% of its monthly spend on account of reduced GST with 16 lakh new taxpayers added to the system. FINMIN informed that GST resulted in Rs 1 lakh crore gains to consumers, removed inspector raj and helped transport sector thereby integrating the country economically. A pill for your GST headache: A new and simplified GST return system coming this April.

The themes of this Budget: Aspiration, development, compassion

  • Aspirational India in which all sections of the society seek better standard of living
  • Economic development for all
  • Ours shall be a caring society: Caring and compassionate
Talking on quantitative fronts, FINMIN informed:
  • Govt's debt has come down to 48.7% in March, 2019 from 52.2% in March, 2014.
  • FY21 fiscal deficit target pegged at 3.5% of GDP.
  • FY21 divestment target pegged at Rs 2.1 lakh crore.
  • Nominal GDP growth for FY21 revised to 10%.
  • RE (Revised Estimates) expenditure for FY20 at Rs 26.99 lakh crore, receipts at Rs 19.32 lakh crore.
  • India is now fifth largest economy in the world.

Sectorial Highlights

Agriculture and farmers welfare

Agriculture and farmers’ welfare

  • Pradhan Mantri Kisan Urja Suraksha evem Utthan Mahabhiyan (PM KUSUM) to be expanded to provide 20 lakh farmers in setting up standalone solar pumps.
  • Agricultural credit target has been set at Rs 15 lakh crore.
  • Govt to build up the seamless national cold supply chain for perishables Kisan Rail through PPP (Public-Private Partnership) model so that perishable goods can be transported quickly.
  • Krishi Udaan will be launched by MoCA on international and national routes.
  • Zero budget natural farming.
  • Plans to help farmers use proper manure and little water.
  • Food Corporation of India and Warehousing Corporation of India to build warehousing facility on their land.
  • Kisan credit card (KCC) scheme launched.
  • MGNREGA to be used to develop fodder farms.
Rural sector

Rural sector

  • Action plan to ease India's water problems starts with helping 100 districts.
  • Additional Rs 69,000 crore for the health sector.
  • 'Jal Jeevan Mission' for safe water and sanitation programme 'Swachh Bharat Yojna' launched.
  • Total allocation for Swachh Bharat Mission is Rs 12,300 crore in 2020-21.
Social sector

Social sector

  • Anti-TB campaign to be launched to eliminate TB by 2025.
  • Expansion of Jan Aushadhi Kendras in all districts of country to provide medicines at affordable rates.
  • Govt intends to eliminate Foot and Mouth Disease.
  • Govt to expand Mission Indradhanush, add 100 hospitals to Ayushman Bharat.
  • Rs 20,000 crore for the renewable energy sector.
  • Policy to enable private sector to build data centre parks throughout the country.
  • Rs 35,600 crore for nutrition-related programmes in 2020-21.
  • One lakh gram panchayats will be connected to the optical fibre programme.
  • Discoms to replace conventional meters with smart pre-paid meters.
  • Rs 9,500 crore for senior citizens and 'Divyang'.
  • Rs 53,700 crore for development and welfare of Scheduled Tribes.
  • Rs 85,000 crores allocated for SC & OBC.
  • Suitable technology to eliminate manual cleaning of sewer systems and septic tanks.
  • NIRVIK: A scheme to provide high insurance cover for exporters to be introduced.
  • Insurance cover increased to Rs 5 lakh per depositor from existing Rs 1 lakh.
Education

Education

  • Rs 99,300 crore outlay for education sector in 2020-21 and Rs 3,000 crore for skill development.
  • Degree-level full-fledged online education programme to be offered by the top 100 institutions.
  • 'Ind-SAT', an exam for Asian and African countries launched.
  • National Police University and National Forensic University proposed.
Infrastructure

Infrastructure

  • Rs 27,300 crore for the development and promotion of industry and commerce in 2020-21.
  • Rs 1.7 lakh crore provided for transport infrastructure in 2020-21.
  • Rs 1,480 cr for National Textile Mission allocated.
  • Accelerated development of highways will be undertaken with Delhi-Mumbai expressway and two other projects will be completed by 2023.
  • Govt proposes to monetize 12 lots of highway bundles of over 6,000km before 2024.
  • 100 more airports to be built by 2025.
  • Rs 8,000 crore outlay over 5 years for National Mission of Quantum Technology and Application.
  • A new infra road map to lend a cutting edge to flagship NIP scheme.
  • Five new smart cities to be developed.
  • Bharat Net: Rs 6000 crore boost for internet connectivity provided.
Railways

Railways

  • Setting up solar power capacity.
  • Station redevelopment projects & operation of 150 new trains through PPP mode.
  • More Tejas like trains for tourist places.
  • Bengaluru suburban transport project to be launched.
MSME Incentives

MSME Incentives

  • More than 5,00,000 MSMEs benefited from RBI's restructuring of loans.
  • New scheme to provide subordinate debt to MSMEs.
  • Banks to extend restructuring MSME NPAs for one more year, which has a deadline of March, 2020.
  • Amendments to be made to enable NBFCs to extend invoice financing to MSMEs.
Miscellaneous

Miscellaneous

  • Non-residents can invest in certain government securities.
  • Taxpayers' charter to be institutionalized.
  • Govt to set up national recruitment agency for recruitment of non-gazetted posts.
  • Universal pension coverage to have auto-enrolment.
  • Government to sell part holding in LIC via IPO.
  • New investment clearance cell for entrepreneurs to be introduced.
  • Five archaeological sites to be developed at iconic sites with on-site museums.

Direct Taxation Highlights

  • Major relief to taxpayer. New optional tax slab for those who forego deductions:
Income New Regime - with exemptions# New Regime - without deductions#
Upto 250,000 Nil Nil
250,000 - 500,000* 5% 5%
500,000 - 750,000 10% 20%
750,000 - 1,000,000 15% 20%
1,000,000 - 1,250,000 20% 30%
1,250,000 - 1,500,000 25% 30%
Above 1,500,000 30% 30%
# Surcharge and Education Cess extra
*Deduction upto Rs.12,500 for taxable income upto Rs. 500,000
  • Out of more than 100 exemptions, around 70 exemptions scrapped and balance to be rationalized.
  • Dividend Distribution Tax (DDT) scrapped. Dividend to be taxed in the hands of the recipient.
  • Concessional tax rate of 15% extended to power generation companies.
  • 100% tax exemption on investment made upto 31 March 2024 in infra projects (with a lock-in period of 3 years).
  • Lower withholding tax rate of 5% under Section 194LC and Section 194LD also extended to interest on municipal bonds and time limit extended till 30 June 2023.
  • Deferment of taxation of ESOPs from startups by 5 years.
  • 3 years tax exemption extended to start-ups with turnover upto Rs. 100 crores.
  • Optional tax rate provided to Co-operative societies of 22% plus 10% surcharge plus 4% education cess as against current 30%. AMT scrapped.
  • To incentivize digital transactions, turnover threshold for audit raised to Rs 5 crore from Rs 1 crore, if less than 5% turnover is undertaken in cash.
  • Govt extends additional Rs 1.5 lakh tax benefit on interest paid on affordable housing loans to March 2021.
  • The limit of 5% differential in sales consideration to circle rate extended to 10% for applicability of Section 50C.
  • Ease in registration for charitable institutions under Income tax.
  • 'Vivad se Vishwas' scheme for direct taxpayers whose appeals are pending at various forum introduced. Under the stated scheme, taxpayer to pay only amount of disputed tax, will get complete waiver on interest and penalty, if scheme is availed by March 31, 2020. If availed by 30 June 2020, some additional liability will be payable.
  • Income Tax Act to be amended to allow faceless appeals against tax orders on lines of faceless assessment.

Indirect Taxation Highlights

  • Customs duty will be raised on items such as footwear & furniture.
  • Customs duty on tableware/kitchenware made of porcelain or China ceramic, clay iron, steel, copper doubled to 20%.
  • National calamity contingent duty on cigarettes, tobacco products to be introduced.
  • Health cess on import of medical equipment.
We trust you will find this journal informative as well as useful.
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Disclaimer: The entire contents of this journal have been prepared on the basis of relevant provisions and information existing at the time of preparation. The observations of the author are personal view and the author does not take any responsibility of the same and this cannot be quoted without the written consent of the author.

Best Regards!
Knowledge Updates Team
AKGVG & Associates
(Chartered Accountants)

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