KEY HIGHLIGHTS OF UNION BUDGET 2020-21
Presenting the first Union Budget of the third decade of 21st century, Finance Minister Smt. Nirmala Sitharaman, today unveiled a series of far-reaching reforms, aimed at energizing the Indian economy through a combination of short-term, medium-term, and long-term measures.
The Key Highlights of Union Budget 2020-21 are as follows:
Three prominent themes of the Budget
- Aspirational India – better standards of living with access to health, education and better jobs for all sections of the society
- Economic Development for all – “Sabka Saath , Sabka Vikas , Sabka Vishwas”.
- Caring Society – both humane and compassionate; Antyodaya as an article of faith.
- Three broad themes are held together by:
- Corruption free, policy-driven Good Governance.
- Clean and sound financial sector.
- Ease of Living underlined by the three themes of Union Budget 2020-21.
Three components of Aspirational India
- Agriculture, Irrigation, and Rural Development
- Wellness, Water, and Sanitation
- Education and Skills
Sixteen Action Points for Agriculture, Irrigation and Rural Development
- Rs. 2.83 lakh crore to be allocated for the following 16 Action Points:
- Rs. 1.60 lakh crore for Agriculture, Irrigation & allied activities.
- Rs. 1.23 lakh crore for Rural development & Panchayati Raj. –
- Agriculture credit:
- Rs. 15 lakh crore target set for the year 2020-21.
- PM-KISAN beneficiaries to be covered under the KCC scheme.
- NABARD Re-finance Scheme to be further expanded.
- Comprehensive measures for 100 water-stressed districts proposed.
- Blue Economy:
- Rs. 1 lakh crore fisheries’ exports to be achieved by 2024-25.
- 200 lakh tonnes fish production targeted by 2022-23.
- 3477 Sagar Mitras and 500 Fish Farmer Producer Organisations to involve youth in fisheries extension.
- Growing of algae, sea-weed and cage culture to be promoted.
- Framework for development, management and conservation of marine fishery resources.
- Kisan Rail to be setup by Indian Railways through PPP:
- To build a seamless national cold supply chain for perishables (milk, meat, fish, etc.
- Express and Freight trains to have refrigerated coaches.
- Krishi Udaan to be launched by the Ministry of Civil Aviation:
- Both international and national routes to be covered.
- North-East and tribal districts to realize Improved value of agri-products.
- One-Product One-District for better marketing and export in the Horticulture sector.
- Balanced use of all kinds of fertilizers – traditional organic and innovative fertilizers.
- Measures for organic, natural, and integrated farming:
- Jaivik Kheti Portal – online national organic products market to be strengthened.
- Zero-Budget Natural Farming (mentioned in July 2019 Budget) to be included.
o Integrated Farming Systems in rain-fed areas to be expanded.
o Multi-tier cropping, bee-keeping, solar pumps, solar energy production in non-cropping season to be added.
- PM-KUSUM to be expanded:
- 20 lakh farmers to be provided for setting up stand-alone solar pumps.
- Another 15 lakh farmers to be helped to solarise their grid-connected pump sets.
- Scheme to enable farmers to set up solar power generation capacity on their fallow/barren lands and to sell it to the grid.
- Village Storage Scheme:
- To be run by the SHGs to provide farmers a good holding capacity and reduce their logistics cost.
- Women, SHGs to regain their position as Dhaanya Lakshmi.
- NABARD to map and geo-tag agri-warehouses, cold storages, reefer van facilities, etc.
- Warehousing in line with Warehouse Development and Regulatory Authority (WDRA) norms:
- Viability Gap Funding for setting up such efficient warehouses at the block/taluk level.
- Food Corporation of India (FCI) and Central Warehousing Corporation (CWC) to undertake such warehouse building.
- Financing on Negotiable Warehousing Receipts (e-NWR) to be integrated with e-NAM.
- State governments who undertake implementation of model laws (issued by the Central government) to be encouraged.
- Livestock:
- Doubling of milk processing capacity to 108 million MT from 53.5 million MT by 2025.
- Artificial insemination to be increased to 70% from the present 30%.
- MNREGS to be dovetailed to develop fodder farms.
- Foot and Mouth Disease, Brucellosis in cattle and Peste Des Petits ruminants (PPR) in sheep and goat to be eliminated by 2025.
- Deen Dayal Antyodaya Yojana – 0.5 crore households mobilized with 58 lakh SHGs for poverty alleviation.
Wellness, Water and Sanitation
- Rs. 69,000 crore allocated for overall Healthcare sector.
- Rs. 6400 crore (out of Rs. 69,000 crore) for PM Jan Arogya Yojana (PMJAY):
- More than 20,000 hospitals already empanelled under PM Jan Arogya Yojana (PMJAY).
- Viability Gap Funding window proposed for setting up hospitals in the PPP mode.
- Aspirational Districts with no Ayushman empanelled hospitals to be covered in the first phase.
- Targeting diseases with an appropriately designed preventive regime using Machine Learning and AI.
- Jan Aushadhi Kendra Scheme to offer 2000 medicines and 300 surgicals in all districts by 2024.
- TB Harega Desh Jeetega campaign launched – commitment to end Tuberculosis by 2025.
- Rs. 3.60 lakh crore approved for Jal Jeevan Mission:
- Rs. 11,500 crore for the year 2020-21.
- Augmenting local water sources, recharging existing sources, and promoting water harvesting and de-salination.
- Cities with million-plus population to be encouraged to achieve the objective during the current year itself.
- Rs.12, 300 crore allocation for Swachh Bharat Mission in 2020-21:
- Committment to ODF-Plus in order to sustain ODF behaviour.
- Emphasis on liquid and grey water management.
o Focus also on Solid-waste collection, source segregation, and processing.
Education and Skills
- Rs. 99,300 crore for education sector and Rs. 3000 crore for skill development in 2020-21.
- New Education Policy to be announced soon.
- National Police University and National Forensic Science Universityproposed for policing science, forensic science, and cyber-forensics.
- Degree level full-fledged online education program by Top-100 institutions in the National Institutional Ranking Framework.
- Up to 1-year internship to fresh engineers to be provided by Urban Local Bodies.
- Budget proposes to attach a medical college to an existing district hospital in PPP mode.
- Special bridge courses to be designed by the Ministries of Health, and Skill Development:
- To fulfill the demand for teachers, nurses, para-medical staff and care-givers abroad.
- To bring in equivalence in the skill sets of the workforce and employers’ standards.
- 150 higher educational institutions to start apprenticeship embedded degree/diploma courses by March 2021.
- External Commercial Borrowings and FDI to be enabled for education sector.
- Ind-SAT proposed for Asian and African countries as a part of Study in India program.
Economic Development
Industry, Commerce and Investment
- Rs. 27,300 crore allocated for 2020-21 for development and promotion of Industry and Commerce.
- Investment Clearance Cell proposed to be set up:
o To provide “end to end” facilitation and support.
o To work through a portal.
- Five new smart cities proposed to be developed.
- Scheme to encourage manufacture of mobile phones, electronic equipment and semi-conductor packaging proposed.
- National Technical Textiles Mission to be set up:
o With four-year implementation period from 2020-21 to 2023-24.
o At an estimated outlay of Rs 1480 crore.
o To position India as a global leader in Technical Textiles.
- New scheme NIRVIK to be launched to achieve higher export credit disbursement, which provides for:
o Higher insurance coverage
o Reduction in premium for small exporters
o Simplified procedure for claim settlements.
- Turnover of Government e-Marketplace (GeM) proposed to be taken to Rs 3 lakh crore.
- Scheme for Revision of duties and taxes on exported products to be launched.
o Exporters to be digitally refunded duties and taxes levied at the Central, State and local levels, which are otherwise not exempted or refunded.
- All Ministries to issue quality standard orders as per PM’s vision of “Zero Defect-Zero Effect” manufacturing.
Infrastructure
- Rs.100 lakh crore to be invested on infrastructure over the next 5 years.
- National Infrastructure Pipeline:
o Rs. 103 lakh crore worth projects; launched on 31st December 2019.
o More than 6500 projects across sectors, to be classified as per their size and stage of development.
- A National Logistics Policy to be released soon:
o To clarify roles of the Union Government, State Governments and key regulators.
o A single window e-logistics market to be created
o Focus to be on generation of employment, skills and making MSMEs competitive.
- National Skill Development Agency to give special thrust to infrastructure-focused skill development opportunities.
- Project preparation facility for infrastructure projects proposed.
o To actively involve young engineers, management graduates and economists from Universities.
- Infrastructure agencies of the government to involve youth-power in start-ups.
- Rs.1.7 lakh crore proposed for transport infrastructure in 2020-21.
Highways:
- Accelerated development of highways to be undertaken, including:
o 2500 Km access control highways.
o 9000 Km of economic corridors.
o 2000 Km of coastal and land port roads.
o 2000 Km of strategic highways.
- Delhi-Mumbai Expressway and two other packages to be completed by 2023.
- Chennai-Bengaluru Expressway to be started.
- Proposed to monetise at least 12 lots of highway bundles of over 6000 Km before 2024.
Indian Railways:
- Five measures:
o Large solar power capacity to be set up alongside rail tracks, on land owned by railways.
o Four station re-development projects and operation of 150 passenger trains through PPP.
o More Tejas type trains to connect iconic tourist destinations.
o High speed train between Mumbai and Ahmedabad to be actively pursued.
o 148 km long Bengaluru Suburban transport project at a cost of Rs 18600 crore, to have fares on metro model. Central Government to provide 20% of equity and facilitate external assistance up to 60% of the project cost.
- Indian Railways’ achievements:
o 550 Wi-fi facilities commissioned in as many stations.
o Zero unmanned crossings.
o 27000 Km of tracks to be electrified.
Ports & Water-ways:
- Corporatizing at least one major port and its listing on stock exchanges to be considered.
- Governance framework keeping with global benchmarks needed for more efficient sea-ports.
- Economic activity along river banks to be energised as per Prime Minister’s Arth Ganga concept.
Airports:
- 100 more airports to be developed by 2024 to support Udaan scheme.
- Air fleet number expected to go up from present 600 to 1200 during this time.
Electricity:
- “Smart” metering to be promoted.
- More measures to reform DISCOMs to be taken.
Power:
- Rs.22, 000 crore proposed for power and renewable energy sector in 2020-21.
- Expansion of national gas grid from the present 16200 km to 27000 km proposed.
- Further reforms to facilitate transparent price discovery and ease of transactions.
New Economy
- To take advantage of new technologies:
o Policy to enable private sector to build Data Centre parks throughout the country to be brought out soon.
o Fibre to the Home (FTTH) connections through Bharatnet to link 100,000 gram panchayats this year.
o Rs.6000 crore proposed for Bharatnet programme in 2020-21.
- Measures proposed to benefit Start-ups:
o A digital platform to be promoted to facilitate seamless application and capture of IPRs.
o Knowledge Translation Clusters to be set up across different technology sectors including new and emerging areas.
o For designing, fabrication and validation of proof of concept, and further scaling up Technology Clusters, harbouring test beds and small scale manufacturing facilities to be established.
o Mapping of India’s genetic landscape- Two new national level Science Schemes to be initiated to create a comprehensive database.
o Early life funding proposed, including a seed fund to support ideation and development of early stage Start-ups.
- Rs.8000 crore proposed over five years for National Mission on Quantum Technologies and Applications.
Caring Society
- Focus on:
o Women & child,
o Social Welfare;
o Culture and Tourism
- Allocation of Rs. 35,600 crore for nutrition-related programmes proposed for the FY2020-21.
- Rs.28, 600 crore proposed for women specific programs.
- Issue about age of a girl entering motherhood – proposed to appoint a task force to present its recommendations in six months’ time.
- Financial support for wider acceptance of technologies, identified by Ministry of Housing and Urban Affairs to ensure no manual cleaning of sewer systems or septic tanks, to be provided.
- Rs. 85, 000 crore proposed for 2020-21 for welfare of Scheduled Castes and Other Backward Classes.
- Rs. 53, 700 crore provided to further development and welfare of Scheduled Tribes.
- Enhanced allocation of Rs. 9,500 crore provided for 2020-21 for senior citizens and Divyang.
Culture & Tourism
- Allocation of Rs. 2500 crore for 2020-21 for tourism promotion.
- Rs.3150 crore proposed for Ministry of Culture for 2020-21.
- An Indian Institute of Heritage and Conservation under Ministry of Culture proposed; with the status of a deemed University.
- 5 archaeological sites to be developed as iconic sites with on-site Museums:
o Rakhigarhi (Haryana)
o Hastinapur (Uttar Pradesh)
o Shivsagar (Assam)
o Dholavira (Gujarat)
o Adichanallur (Tamil Nadu)
- Re-curation of the Indian Museum in Kolkata, announced by Prime Minister in January 2020.
- Museum on Numismatics and Trade to be located in the historic Old Mint building in Kolkata.
- 4 more museums from across the country to be taken up for renovation and re-curation.
- Support for setting up of a Tribal Museum in Ranchi (Jharkhand).
- Maritime museum to be set up at Lothal- the Harrapan age maritime site near Ahmedabad, by Ministry of Shipping.
- State governments expected to develop a roadmap for certain identified destinations and formulate financial plans during 2021 against which specified grants to be made available to the States in 2020-21.
Environment & Climate Change
- Allocation for this purpose to be Rs.4400 crore for 2020-21.
- Proposed to advise the utilities to close the running old thermal power plants with carbon emission above the pre-set norms.
- States that are formulating and implementing plans for ensuring cleaner air in cities above one million to be encouraged.
- PM launched Coalition for Disaster Resilient Infrastructure (CDRI) with Secretariat in Delhi. Second such international initiative after International Solar Alliance.
Governance
- Clean, corruption-free, policy driven, good in intent and most importantly trusting in faith.
- Taxpayer Charter to be enshrined in the Statute will bring fairness and efficiency in tax administration.
- Companies Act to be amended to build into statues, criminal liability for certain acts that are civil in nature.
- Other laws with such provisions are to be corrected after examination.
- Major reforms in recruitment to Non-Gazetted posts in Government and Public sector banks:
- An independent, professional and specialist National Recruitment Agency (NRA) for conducting a computer-based online Common Eligibility Test for recruitment.
- A test-centre in every district, particularly in the Aspirational Districts.
- A robust mechanism to be evolved for appointment including direct recruitment to various Tribunals and specialised bodies to attract best talents and professional experts.
- Contract Act to be strengthened.
- New National Policy on Official Statistics to:
- Promote use of latest technologies including AI.
- Lay down a road-map towards modernised data collection, integrated information portal and timely dissemination of information.
- A sum of Rs. 100 crore allocated to begin the preparations for G20 presidency to be hosted in India in the year 2022.
- Development of North East region:
- Improved flow of funds using online portal by the Government.
- Greater access to financial assistance of Multilateral and Bilateral funding agencies.
- Development of Union Territories of J&K and Ladakh:
- An amount of Rs. 30,757 crore provided for the financial year 2020-21.
o The Union Territory of Ladakh has been provided with Rs. 5,958.
Financial Sector
- Reforms accomplished in PSBs :
- 10 banks consolidated into 4.
- Rs. 3,50,000 crore capital infused.
- Governance reforms to be carried out to bring in transparency and greater professionalism in PSBs.
- Few PSBs to be encouraged to approach the capital market to raise additional capital
- Deposit Insurance and Credit Guarantee Corporation (DICGC) permitted to increase Deposit Insurance Coverage to Rs. 5 lakh from Rs.1 lakh per depositor.
- Scheduled Commercial Bank’s health under monitoring through a robust mechanism, keeping depositors’ money safe.
- Cooperative Banks to be strengthen by amending Banking Regulation Act for:
- Increasing professionalism.
- Enabling access to capital.
- Improving governance and oversight for sound banking through the RBI.
- NBFCs eligibility limit for debt recovery reduced from:
- Rs. 500 crore to Rs 100 crore asset size.
- Rs 1 crore to Rs 50 lakh loan size.
- Private capital in Banking system:
- Government to sell its balance holding in IDBI Bank to private, retail and institutional investors through the stock exchange.
- Easier mobility in jobs:
- Auto-enrolment in Universal Pension coverage.
- Inter-operability mechanism to safeguard the accumulated corpus.
- Pension Fund Regulatory Development Authority of India Act to be amended to:
- Strengthen regulating role of PFRDAI.
- Facilitate separation of NPS trust for government employees from PFRDAI.
- Enable establishment of a Pension Trust by the employees other than Government.
- Factor Regulation Act 2011 to be amended to:
- Enable NBFCs to extend invoice financing to the MSMEs through TReDS
- New scheme to provide subordinate debt for entrepreneurs of MSMEs by the banks
- Would be counted as quasi-equity.
- Would be fully guaranteed through the Credit Guarantee Trust for Medium and Small Entrepreneurs (CGTMSE).
- The corpus of the CGTMSE would accordingly be augmented by the government.
- Window for MSME’s debt restructuring by RBI to be extended by one year till March 31, 2021.
- More than five lakh MSMEs have already been benefitted.
- An app-based invoice financing loans product for MSMEs to be launched.
- To prevent the problem of delayed payments and consequential cash flows mismatches.
- Export promotion of MSMEs:
- For selected sector such as pharmaceuticals, auto components and others.
- An Rs 1000 crore scheme anchored by EXIM Bank together with SIDBI.
o Hand holding support for technology upgradations, R&D, business strategy etc.
Financial Market
- Deepening Bond Market.
- Certain specified categories of Government securities to be opened fully for non -resident investors also.
- FPI limit in corporate bonds increased to 15% from 9% of its outstanding stock.
- New legislation to be formulated for laying down a mechanism for netting of financial contracts.
- Scope of credit default swaps to expand.
- Debt Based Exchange Traded Fund expanded by a new Debt-ETF consisting primarily of Government Securities.
- To give attractive access to retail investors, pension funds and long-term investors.
- A Partial Credit Guarantee scheme for the NBFCs formulated post the Union budget 2019-20 to address their liquidity constraints.
- New mechanism to be devised to further this.
o Government support to securities so floated.
Infrastructure Financing
- Rs.103 lakh crore National Infrastructure Pipeline projects earlier announced.
- Rs 22,000 crore to cater to the equity support to Infrastructure Finance Companies such as IIFCL and a subsidiary of NIIF.
- IFSC, GIFT city: full of potential to become a centre of international finance as well as a centre for high end data processing:
o An International Bullion exchange(s) to be set up as an additional option for trade by global market participants with the approval of regulator.
Disinvestment
- Government to sell a part of its holding in LIC by way of Initial Public Offer (IPO).
Fiscal Management
- XV Finance Commission (FC):
o XV Finance Commission has given its first report for FY2020-21
o Recommendations accepted in substantial measure
o Its final report for five years beginning 2021-22 to be submitted during the latter part of the year.
- GST Compensation Fund:
o Balances due out of collection of the years 2016-17 and 2017-18 to be transferred to the Fund, in two instalments.
o Hereinafter, transfers to the fund to be limited only to collection by way of GST compensation cess.
- Overhaul of Centrally Sponsored Schemes and Central Sector Schemes necessary:
o To align them with emerging social and economic needs of tomorrow
o To ensure that scarce public resources are spent optimally
- On the recent debate over transparency and credibility of projected fiscal numbers, it is assured that procedure adopted is compliant with the FRBM Act.
- For the FY 2019-20:
o Revised Estimates of Expenditure: at Rs.26.99 lakh crore
o Revised Estimates of Receipts: estimated at Rs.19.32 lakh crore.
- For year 2020-21:
o Nominal growth of GDP estimated at 10%.
o Receipts: estimated at Rs.22.46 lakh cr
o Expenditure: at Rs.30.42 lakh cr.
- Significant tax reforms for boosting investments recently undertaken. However, expected tax buoyancy expected to take time.
- Fiscal deficit of 3.8% estimated in RE 2019-20 and 3.5% for BE 2020-21. It comprises two ingredients;
o 3.3% for year 2019-20 and 3% for the 2020-21 budget estimate.
o Deviation of 0.5%, consistent with Section 4(3) of FRBM Act, both for RE 2019-20 and BE 2020-21. (Section 4 (2) of the FRBM Act provides for a trigger mechanism for a deviation from the estimated fiscal deficit on account of structural reforms in the economy with unanticipated fiscal implications.)
o Return path, committing to fiscal consolidation without compromising needs of investment out of public funds, is laid in Medium Term Fiscal Policy cum Strategy Statement.
o Market borrowings: Net market borrowings: Rs.4.99 lakh crore for 2019-20 and Rs.5.36 lakh crore for 2020-21.
- A good part of the borrowings for the financial year 2020-21 to go towards Capital expenditure that has been scaled up by more than 21%.
Direct Tax
Direct Tax Proposals – To stimulate growth, simplify tax structure, bring ease of compliance, and reduce litigations.
- Personal Income Tax:
- Significant relief to middle class taxpayers.
- New and simplified personal income tax regime proposed:
Taxable Income Slab (Rs.) | Existing tax rates | New tax rates |
0-2.5 Lakh | Exempt | Exempt |
2.5-5 Lakh | 5% | 5% |
5-7.5 Lakh | 20% | 10% |
7.5-10 Lakh | 20% | 15% |
10-12.5 Lakh | 30% | 20% |
12.5-15 Lakh | 30% | 25% |
Above 15 Lakh | 30% | 30% |
-
- Around 70 of the existing exemptions and deductions (more than 100) to be removed in the new simplified regime.
- Remaining exemptions and deductions to be reviewed and rationalised in coming years.
- New tax regime to be optional – an individual may continue to pay tax as per the old regime and avail deductions and exemptions.
- Measures to pre-fill the income tax return initiated so that an individual who opts for the new regime gets pre-filled income tax returns and would need no assistance from an expert to pay income tax.
- New regime to entail estimated revenue forgone of Rs. 40,000 crore per year.
- Corporate Tax:
- Tax rate of 15% extended to new electricity generation companies.
- Indian corporate tax rates now amongst the lowest in the world.
- Dividend Distribution Tax (DDT):
- DDT removed making India a more attractive investment destination.
- Deduction to be allowed for dividend received by holding company from its subsidiary.
- Rs. 25,000 crore estimated annual revenue forgone.
- Start-ups:
- Start-ups with turnover up to Rs. 100 crore to enjoy 100% deduction for 3 consecutive assessment years out of 10 years.
- Tax payment on ESOPs deferred.
- MSMEs to boost less-cash economy:
- Turnover threshold for audit increased to Rs. 5 crore from Rs. 1 crore for businesses carrying out less than 5% business transactions in cash.
- Cooperatives:
- Parity brought between cooperatives and corporate sector.
- Option to cooperative societies to be taxed at 22% + 10% surcharge and 4% cess with no exemption/deductions.
- Cooperative societies exempted from Alternate Minimum Tax (AMT) just like Companies are exempted from the Minimum Alternate Tax (MAT).
- Tax concession for foreign investments:
- 100% tax exemption to the interest, dividend and capital gains income on investment made in infrastructure and priority sectors before 31st March, 2024 with a minimum lock-in period of 3 years by the Sovereign Wealth Fund of foreign governments.
- Affordable housing:
- Additional deduction up to Rs. 1.5 lakhs for interest paid on loans taken for an affordable house extended till 31st March, 2021.
- Date of approval of affordable housing projects for availing tax holiday on profits earned by developers extended till 31st March, 2021.
Tax Facilitation Measures
- Instant PAN to be allotted online through Aadhaar.
- ‘Vivad Se Vishwas’ scheme, with a deadline of 30th June, 2020, to reduce litigations in direct taxes:
- Waiver of interest and penalty – only disputed taxes to be paid for payments till 31st March, 2020.
- Additional amount to be paid if availed after 31st March, 2020.
- Benefits to taxpayers in whose cases appeals are pending at any level.
- Faceless appeals to be enabled by amending the Income Tax Act.
- For charity institutions:
- Pre-filling in return through information of donations furnished by the done.
- Process of registration to be made completely electronic.
- Unique registration number (URN) to be issued to all new and existing charity institutions.
- Provisional registration to be allowed for new charity institutions for three years.
- CBDT to adopt a Taxpayers’ Charter.
- Losses of merged banks:
- Amendments proposed to the Income-tax Act to ensure that entities benefit from unabsorbed losses and depreciation of the amalgamating entities.
Indirect Tax
- GST:
- Cash reward system envisaged to incentivise customers to seek invoice.
- Simplified return with features like SMS based filing for nil return and improved input tax credit flow to be implemented from 1st April, 2020 as a pilot run.
- Dynamic QR-code capturing GST parameters proposed for consumer invoices.
- Electronic invoice to capture critical information in a centralized system to be implemented in a phased manner.
- Aadhaar based verification of taxpayers being introduced to weed out dummy or non-existent units.
- GST rate structure being deliberated to address inverted duty structure.
- Customs Duties:
- Customs duty raised on footwear to 35% from 25% and on furniture goods to 25% from 20%.
- Basic customs duty on imports of news print and light-weight coated paper reduced from 10% to 5%.
- Customs duty rates revised on electric vehicles and parts of mobiles.
- 5% health cess to be imposed on the imports of medical devices, except those exempt from BCD.
- Lower customs duty on certain inputs and raw materials like fuse, chemicals, and plastics.
- Higher customs duty on certain goods like auto-parts, chemicals, etc. which are also being made domestically.
- Trade Policy Measures
- Customs Act being amended to enable proper checks of imports under FTAs.
- Rules of Origin requirements to be reviewed for certain sensitive items.
- Provisions relating to safeguard duties to be strengthened to enable regulating such surge in imports in a systematic way.
- Provisions for checking dumping of goods and imports of subsidized goods being strengthened.
- Suggestions for reviews of exemptions from customs duty to be crowd-sourced.
- Excise duty proposed to be raised on Cigarettes and other tobacco products, no change made in the duty rates of bidis.
- Anti-dumping duty on PTA abolished to benefit the textile sector.
Unprecedented Milestones and Achievements of Indian Economy
- India now the fifth largest economy of the world.
- 7.4% average growth clocked during 2014-19 with inflation averaging around 4.5%.
- 271 million people raised out of poverty during 2006-16.
- India’s Foreign Direct Investment elevated to US$ 284 billion during 2014-19 from US$ 190 billion during 2009-14.
- Central Government debt reduced to 48.7% of GDP (March 2019) from 52.2% (March 2014).
- Two cross-cutting developments:
- Proliferation of technologies (Analytics, Machine Learning, robotics, Bio-informatics and Artificial Intelligence).
- Highest ever number of people in the productive age group (15-65 years) in India.
- GST removed many bottlenecks in the system.
Future Aim for sustaining India’s unique global leadership, driven by Digital Revolution
- Seamless delivery of services through Digital Governance.
- Improvement in physical quality of life through National Infrastructure Pipeline.
- Risk mitigation through Disaster Resilience.
- Social security through Pension and Insurance penetration.
1.‘Vivad Se Vishwas’ scheme proposed to reduce litigations in direct taxes; scheme to remain open till 30th June, 2020
2.Faceless appeals proposed to eliminate human interface for imparting greater transparency in dispute settlement
CBDT to adopt a taxpayers’ charter; details to be notified soon
3.Pan to be allotted online on the basis of Aadhaar without any requirement of detailed application
The Union Budget has proposed ‘Vivad Se Vishwas’ Scheme (No dispute but trust) which aims at reducing litigations in the direct taxes payments. While presenting the Union Budget 2020-21 in Parliament today, the Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman said, “Taxpayers in whose cases appeals are pending at any level can benefit from this scheme.”
Under the proposed ‘Vivad Se Vishwas’ scheme, the Finance Minister said that a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided he pays by 31st March, 2020. Those who avail this scheme after 31st March, 2020 will have to pay some additional amount. The scheme will remain open till 30th June, 2020. Smt Sitharaman said, “I hope that taxpayers will make use of this opportunity to get relief from vexatious litigation process.”
The Finance Minister said that there are 4,83,000 direct tax cases pending in various appellate forums i.e. Commissioner (Appeals), ITATs, High Courts and the Supreme Court. Referring to several measures taken to reduce tax litigations, Smt Sitharaman said that in the last Budget, Sabka Vishwas Scheme was brought in to reduce litigation in indirect taxes. It resulted in settling over 1,89,000 cases, she said.
Faceless appeals
To impart greater efficiency, transparency and accountability to the assessment process, a new faceless assessment scheme has already been introduced. In order to take the reforms initiated by the Government to next level and to eliminate human interface, the Finance Minister proposed to amend the Income Tax Act so as to enable Faceless appeal on the lines of Faceless assessment.
Instant PAN through Aadhaar
The Finance Minister proposed to launch a system under which PAN shall be instantly allotted online on the basis of Aadhaar without any requirement for filling up of detailed application form. In the last Budget, the interchangeability of PAN and Aadhaar was introduced.
Taxpayer’s Charter
With the objective of enhancing the efficiency of the delivery system of the Income Tax Department, the Union Budget proposed to amend the provisions of the Income-tax Act to mandate the Central Board of Direct Taxes (CBDT) to adopt a Taxpayers’ Charter. The Finance Minister said, “The details of the contents of the charter shall be notified soon.” She emphasized that any tax system requires trust between taxpayers and the administration. She further said that this will be possible only when taxpayer’s rights are clearly enumerated.
Charity institutions
In order to ease the process of claiming deduction for donation to charitable institution, the Union Budget proposed to pre-fill the donee’s information in taxpayer’s return on the basis of information of donations furnished by the donee. The Finance Minister said that this would result in hassle-free claim of deduction for donations made by the taxpayer. In order to simplify the compliance for the new and existing charity institutions, Smt Sitharaman proposed to make the process of registration completely electronic under which a unique registration number (URN) shall be issued to all new and existing charity institutions. To facilitate the registration of the new charity institution which is yet to start their charitable activities, the Union Budget proposed to allow them provisional registration for three years. Acknowledging the important role played by the charitable institutions in the society, the Finance Minister said that the income of these institutions is fully exempt from taxation and donations made to these institutions is allowed as deduction in computing the taxable income of the donor. Currently, a taxpayer is required to fill the complete details of the done in the Income Tax return for availing deduction.
Losses of merged banks
In order to ensure that the amalgamated entities are able to take the benefit of unabsorbed losses and depreciation of the amalgamated entities, the Finance Minister proposed to make Necessary amendments in the provisions of the Income-tax Act. As a part of consolidation of the financial sector, the Minister said that the Government has brought out schemes for merger and amalgamation of public sector banks.
Budget Reaction Quotel
Mr. Ashok Mohanani, Chairman EKTA World & Vice President NAREDCO Maharashtra
“The budget focused more on Infrastructure upgrade of Chennai-Bengaluru and Delhi-Mumbai Expressway estimated to be completed by 2023. This will not only raise the skill development in the infrastructure sector but will also open new markets for builders along with residents. Proposing the development of 100 new airports to be built by 2024 under Uddan scheme will bring in NRIs to India and increase the investment in the country. To bring in indirect relief to the real estate sector proposal of spending Rs 100 lakh cr on infrastructure development in the span of five years is the biggest news for the sector keeping in mind the current state of huge crash crunch in the economy. With this the sector will be impacted towards expansion but the benefits will be observed in the later years. A support to the developers with the infusion of 22,000 crore to the Infrastructure Pipeline on the other hand setting a liquidity constraint on NBFCs and HFCs will be added in the future which will result in actions being limited and under the government jurisdiction. The new personal income tax regime for middle-class taxpayers by slashing the percentage to 10% from 20% is a big move and will eventually strengthen their buying power for investment in the real estate. The deduction of Rs 1.5 lakh for loan sanction with regards to affordable housing has been extended by one year which will minimally benefit both buyers and developers and give them some more time to pay back. The budget sentiment is positive and the funding has been spread across other sectors keeping a balance of inflation of the country.”
Mr. Anurag Mathur, Chief Executive Officer, Savills India
The single investment clearance cell will bring additional efficiencies. The extension of tax holiday for affordable housing is on the expected lines, given the pressure on the sector. Focus has been retained on urban development by committing to 5 additional smart cities. The focus to boost the primary sector, warehousing, infrastructure and PPP will be useful in the long term. Having said that, the Real Estate sector would have preferred additional benefits.
Clearly, the government has walked a tightrope to maintain the fiscal discipline while announcing several initiatives. Overall, the budget leaves a significant scope for extra-budgetary announcements similar to 2019.
Mr. Ashok Mohanani, Chairman EKTA World & Vice President NAREDCO Maharashtra
“The budget focused more on Infrastructure upgrade of Chennai-Bengaluru and Delhi-Mumbai Expressway estimated to be completed by 2023. This will not only raise the skill development in the infrastructure sector but will also open new markets for builders along with residents. Proposing the development of 100 new airports to be built by 2024 under Uddan scheme will bring in NRIs to India and increase the investment in the country. To bring in indirect relief to the real estate sector proposal of spending Rs 100 lakh cr on infrastructure development in the span of five years is the biggest news for the sector keeping in mind the current state of huge crash crunch in the economy. With this the sector will be impacted towards expansion but the benefits will be observed in the later years. A support to the developers with the infusion of 22,000 crore to the Infrastructure Pipeline on the other hand setting a liquidity constraint on NBFCs and HFCs will be added in the future which will result in actions being limited and under the government jurisdiction. The new personal income tax regime for middle-class taxpayers by slashing the percentage to 10% from 20% is a big move and will eventually strengthen their buying power for investment in the real estate. The deduction of Rs 1.5 lakh for loan sanction with regards to affordable housing has been extended by one year which will minimally benefit both buyers and developers and give them some more time to pay back. The budget sentiment is positive and the funding has been spread across other sectors keeping a balance of inflation of the country.”
Mr. Shishir Baijal, Chairman & Managing Director, Knight Frank India
Budget falls short of Real estate sector’s expectations
“With the economy in midst of a sharp slowdown, the Union Budget for FY21 was being awaited with high expectations to act as a growth booster. However, the budget fell short of industry expectations, with no major announcement for accelerating growth. Lowering of income tax rates with removal of exemptions, may not lead to any meaningful boost to consumption. As far as the real estate sector is concerned, the industry was hoping that the Government would come up with measures to boost housing demand. However, the removal of exemptions under the new income tax regime, implying no tax benefit on principal and interest for home loans would be a dampener for the sector. The extension of benefit for affordable housing for the developers as well as home buyers by one year is a step in the right direction. As far as the funding constraint for the real estate sector is concerned, the government spoke about enhancing the partial credit guarantee scheme for NBFCs, which again may not suffice for the ailing real estate sector.”
Mr. Shantanu Rooj, CEO & Founder, Schoolguru Eduserve Private Limited.
“The Finance Minister, in her Budget Speech, made certain important announcements for the Education Sector that can have significant impact. The roll out of Online Degree programs by Indian Universities shall help formal higher education reach out to the remotest parts of the country and bring about social inclusion for the deprived. The launch of apprenticeship linked degree programs by about 150 Universities in the country shall help make education more employable; Learning by Doing and Earning while Learning are powerful tools and these innovative programs shall help the students by providing on-job learning experience, a new pedagogy that emphasizes on practical hands-on skills apart from theoretical knowledge and shall also help corporates build a resilient people supply chain. These new courses shall also help attract a new set of learners who would have otherwise dropped out from the system going to financial stress in the family. The country has been long awaiting the implementation of the National New Education Policy and the assurance from the finance minister of its roll-out is reassuring. However, the budget disappointed on the meagre increase in the amount allocated to the sector, no relaxation on GST for online courses and no extra allocation towards subsidization of the stipend for apprentices that could have propelled more employers to partner with Universities in this initiative. The realization, that the tight control by the medical regulator which results in India producing far lesser doctors than what it needs, is a welcome step too.”
Mr. Sumit Kumar, Vice President – NETAP, TeamLease Skills University.
“This budget has been a promising one for the education sector and will surely address the skill deficit that India currently faces. Enabling higher education institutes to have apprenticeship programs by 2021 will improve youth employability and create a strong job ready workforce. Allocation of more funds for both education and skilling and funds generated through FDI’s should be used to improve quality of learning, upgrade teachers/trainers and strengthen the infrastructure. Additionally the proposal for a new educational policy will bring in some relief to the sector. The policy should focus on linking apprenticeships with degrees as well as meeting the 32% GER rate without compromising the quality of education. Another positive move is the proposed online degree programs offered by top NIRF institutes which will make education more accessible. However the government should also allow Skills Universities to provide these courses. The budget should have also focused on easing the regulations around online degree apprenticeship programs.”
Mr. Rohit Poddar, Managing Director, Poddar Housing and Development Ltd and Joint Secretary, NAREDCO Maharashtra.
The real estate sector was expecting to see big-ticket reforms from Union Budget 2020-21. While the Government had announced a slew of reforms last year, the real impact is yet to be seen on-ground. The government in Budget 2020-21 has provided a direction in which it wants to go in terms of infrastructure and rural development spends. Hopefully, over the next few months, the implementation will take place, which will revive India’s consumption-led econom
Ms Manju Yagnik, Vice Chairperson Nahar Group and Vice President NAREDCO (Maharashtra)
“The Union Budget 2020-21 is aimed at boosting income and enhancing expenditure, striving to make India a $5-trillion economy. The extension of tax breaks on affordable housing by one year is aligned towards realizing the government’s vision of ‘Housing for All by 2022’. Alongside this, the Rs103-lakh-crore National Infrastructure Pipeline (NIP) will provide momentum for the infrastructure projects such as railways, metros, roadways and other forms of transportation, boosting infrastructural growth across the country. Development of various highways that are to be undertaken, the Delhi-Mumbai, and Chennai-Bengaluru Expressway will allow easy connectivity across cities, making a revolutionary change in transport limitations. This will result in an increase in employment opportunities for young engineers within the sector and bring new residential clusters. The new tax regime which include new and simplified reduction among individual tax payers will here on surely encourage increase in expenditure rate among consumers, as well as investments in various financial services and personal assets will rise. In another positive move, the Budget has reduced income-tax on co-op societies to 22% plus surcharge, as against the current 30%. The budgets initiative to care for the climate, closing down old thermal power plants which cause higher amounts of carbon emission by allotting of a sum of Rs4,400 crore will surely help sustain the environment and air conditions. On a social front, with the many registrations for the ‘Beti padhao, beti bachao’ initiative and the additional allocation of budget towards women linked programmes is a great booster to promote women entrepreneurship in the country.”
Mr Sammeer Pakvasa Managing Director, Eleganz Interiors
Ms. Shweta Sastri, Managing Director, Canadian International School, Bangalore.
The budget 2020-21 has given a great boost to education with a massive outlay of around Rs 1 lakh crore and has specifically focussed on ‘Study in India’ campaign which will encourage foreign students to study in India. INDSAT exam will be held in Asian and African countries for scholarships to encourage students to seek education in India. The push for FDI in education too programme will give exposure to foreign students on India’s education prowess and make India an international education hub and bring a lot of foreign investment into Indian education. This increased allocation of fund will also ensure better quality government schools that educate majority of children in India.
The focus on degree level full-fledged online education program by institutions ranked in top 100 will help improve education levels and give a major push to digital education. A total of 150 higher education institutes will have apprenticeship programmes which will improve the skills of the unemployed. Urban local bodies will provide fresh engineers a job opportunity for one year and this will help engineers learn on the job. There is also a large focus on meeting the huge demand for teachers.
The announcement of the proposed new education policy will encourage the establishment of a rigorous education system in the country. Overall, the decision to treat education holistically is also a welcome move and will lend greater synergy in planning and execution of important schemes and programmes. This is a balanced budget as far as education sector is concerned. Overall, we feel that the measures taken should meet the expectations of the common man and will lead to increased focus on the education sector. Going forward, we feel that this right intent of the government can truly be attained if we also have long-term strategy and organisational structure in place and we also look forward to specific initiatives to promote investment in new-age trending technologies
Ms. Niru Agarwal, Trustee, Greenwood High.
Budget will lead to revitalisation of the education sector
The Union Budget 2020 has definitely proposed significant changes which have the capability to revitalise the education sector. The enhancement of budget allocation for education is an appreciating move. The status of education is often a healthy predictor of the country’s overall development and well-being and we are excited that the proposed INDSAT exam could be the game-changer in terms of internationalising Indian education. Special initiatives like ‘Study in India’ will attract foreign students, thus increasing awareness of the rich and diverse Indian culture. The push for FDI in education too programme will make India an international education hub. The focus on degree level full-fledged online education program by institutions ranked in top 100 will help improve education levels and give a push to digital education. The overall focus of the budget has been to make education employment-friendly. This is a very good move as it would secure the future of students who study with high aspirations and expectations. Going forward, we feel that there is an urgent need for the government to open up the crucial education sector to private enterprises to ensure quality-driven education.
Mr. Naveen K M, Managing Director, Trio World School
The Union Budget 2020 has proposed to allocate INR 99,300 crore toward skill development and quality education, out of which 3000 crore has been allocated for skill development which is a welcoming move.
Other than this, the other appreciable move taken my the finance ministry is to collaborate with private institutions and to bring in bridge course for developing the skills of the teachers, this would provide an advantageous platform for both private and government as well.
The education sector has also received a good boost by launching ‘Study in India’ program with Ind-Sat exam, this will bring in foreign students to India for higher education from Asian and African countries. The budget 2020, seems to give hope to a lot of educational institutes through Study in India program. This is a very- balanced budget and we believe that these were the much-needed steps that the government has taken to develop Indian education system. Overall, we believe that they have embarked upon a path in the right direction.
New decade’s first budget takes care of all sections of society
Focus on welfare of farmers & villagers
Rs.2.83 lakh crore earmarked for Agriculture allied sectors, irrigation & rural development
Government unveils 16 point programme to raise farmers’ income
Villages to be empowered with Rural Development schemes, – wholesome development with network of Infrastructure
Union Minister of Agriculture & Farmers’ Welfare, Rural Development and Panchayati Raj, Narendra Singh Tomar has hailed the Government’s Budget 2020-21, saying our government led by the Prime Minister Shri Narendra Modi has given priority to the common man besides farmers and the rural population. He said the first budget of the new decade paves the way for laying a network of Infrastructure leading to overall development and help achieve the target of $5 trillion economy by 2024-25. A 16 point plan has been unveiled reiterating the promise to double farmers’ income by the year 2022. The budget has provisioned Rs. 1.60 lakh crore for Agriculture and Farmers’ Welfare and Rs. 1.23 lakh crore towards Rural Development Ministry.
Tomar specially thanked the Prime Minister Narendra Modi and Finance Minister Smt. Nirmala Sitharaman for making adequate provision for the Ministries of Agriculture & Farmers’ Welfare, Rural Development and Panchayati Raj. Tomar said our government has already been giving special attention to villages, the poor and peasants and by allocating more funds for this purpose and more schemes, it has been proven that the Modi Government is committed to the goal of “Sabka Saath, Sabka Vikas, Sabka Vishwas”. Budget provisions offer a glimpse of “Ek Bharat, Ek Shresht Bharat”. The budget is a relief to all sections of society, including the Women and Middle Class. Government has paid equal attention to vital sectors such as Health, Education, Skill Development and safe Drinking Water.
Presenting the first budget of the third decade of the 21st century, Finance Minister Smt. Nirmala Sitharaman today rolled out several reforms to reach out to the remote regions, the objective of which is to energize Indian economy in the short term, medium and long terms. The Unin Budget has been drafted with the prime objective of “Ease of Livelihood”.
Tomar said the Central Government is implementing several schemes in the interest of crores of farmers and more funds have been allocated in the Financial Year 2020-21. A total sum of Rs. 2.83 lakh crore will be spent on Agriculture and allied sectors, Irrigation and Rural Development, reinforcing the Modi Government’s pro-farmer priority. Farmers have gained a lot out of the ‘Pradhan Mantri Kisan Samman Nidhi (PM-KISAN). The Union Government will transform our food producers to energy producers by further promoting the setting up of solar power plants besides solar powered pump sets in arid lands. For this purpose the government will help 20 lakh farmers set up solar pumps. Another 15 lakh farmers will be provided with grid connection pumps. Solar energy will be promoted. Those farmers who have vacant farmlands or arid lands will be able to set up solar energy generation units and sell off the generated power.
State governments will be encouraged to adopt the model laws drafted by the Central Government towards reforms in Agriculture sector. The government is also focused on improving irrigation facilities. Budget has laid emphasis on the ease of farmers’ livelihood; special attention has been paid on how farmers’ produce reaches the markets soon. The Railways will ply Kisan Trains for transportation of milk, meat and fish. This will boost agriculture in the Northeast and tribal areas.
The government has introduced a new scheme for creating clusters in Horticulture sector and promoting a product each in all districts. Provision has been made to mlre than double the milk production capacity by 2025. The scope of NABARD’s refinance scheme will be expanded. Budget has provisioned Rs. 15 lakh crore for Agriculture Credit. More allocation has been made for Interest Subsidy so that no farmer faces any difficulty.