Finance Minister Nirmala Sitharaman presented the Union Budget in Parliament today. The budget is the expenditure and revenue forecast by the government for the financial year.

Here are some of the key highlights of Union Budget 2020.

Taxation

In order to simplify tax system and lower tax rates, around 70 of more than 100 income tax deductions and exemptions have been removed. The Finance Minister has changed income tax slabs and cut income tax rates for earnings up to INR 15 lakh per year, making it optional for taxpayers who will then have to let go of 70 exemptions. 

The new income tax slabs (mentioned below) will be available for those who forgo exemptions.

Up to INR 5 lakh: No tax

INR 5 - 7.5 lakh income: Reduced to 10% (from 20%)

INR 7.5 - 10 lakh income: Reduced to 15% (from 20%)

INR 10 - 12.5 lakh income: Reduced to 20% (from 30%)

INR 12.5 - 15 lakh income: Reduced to 25% (from 30%)
INR 15 lakh income: 30% (No change)

Dividend Distribution Tax (DDT) abolished. Companies will not be required to pay DDT. Dividend to be taxed only at the hands of recipients, at applicable rates.

To simplify tax system & lower tax rates, around 70 of more than 100 income tax deductions & exemptions have been removed. The Finance Minister has changed income tax slabs & cut income tax rates for earnings up to INR 15 lakh per year.

To boost investments, corporate tax for existing companies has been slashed to 22%. Government proposes 100% concession to sovereign wealth funds on investment in infra projects. Moreover, concessional tax rate of 15% extended to power generation companies.

Aadhaar-based verification of taxpayers is being introduced with instant online allotment of PAN on the basis of Aadhaar.

GST: Total of 60 lakh new taxpayers and 105 crore e-way bills generated under GST. It has resulted in efficiency gains in the transport and logistics sector and reduced corruption. Simplified new return to be introduced from April 1, 2020.

Also read: How to apply for GST refund on GST portal

Tax on Cooperative societies to be reduced to 22% plus surcharge and cess as against 30% at present.

‘Vivad se Vishwas’ scheme announced for direct taxpayers whose appeals are pending at various forum. 4.83 lakh direct cases pending in various appellate forums. Under the scheme, taxpayer to pay only amount of disputed tax. They will get complete waiver on interest and penalty if scheme is availed by March 31, 2020.

Startups and MSMEs

MSMEs account for about 45% of manufacturing output, more than 40% of exports, over 28% of gross domestic product (GDP). The Finance Minister said that more than 5 lakh MSMEs benefited from RBI’s restructuring of loans. “Government has asked RBI to consider extending window of debt structuring by one year to March 2021 for this purpose,” she added.

The government plans to extend the interest subvention scheme for MSMEs. The scheme aims at encouraging both manufacturing and service enterprises to increase productivity and provides incentives to MSMEs for onboarding on GST platform.

Amendments to be made to enable NBFCs (Non-Banking Financial Company) to extend invoice financing to MSMEs

The government plans to extend the interest subvention scheme for MSMEs. The scheme aims at encouraging both manufacturing and service enterprises to increase productivity and provides incentives to MSMEs for onboarding on GST platform.

To boost startups, tax burden on employees due to tax on Employee Stock Options to be deferred by five years or till they leave the company or when they sell, whichever is earliest.

Turnover threshold for audit of MSMEs to be increased from INR 1 crore to INR 5 crore, to those businesses which carry out less than 5% of their business in cash.

App-based invoice financing loans product to be launched, to remove problem of delayed payments and cash flow mismatches for MSMEs.

Government introduce a new scheme to encourage domestic manufacturing of mobile phones, electronic equipment and semiconductor packaging in order to make India a part of the global manufacturing chain and boost employment opportunities.

Finance Minister proposes to increase turnover of GeM (Government e-Marketplace) platform to INR 3 lakh crore.

Nirvik (Niryat Rin Vikas Yojana) scheme to provide enhanced insurance cover and reduce premium for small exporters.

INR 3,000 crore allocated for skill development.

Introduction of policy for private sector to build Data Centre Parks throughout the country.

Allocation of INR 27,300 crore for development of industry and commerce.

Also read: SME Speak: What to expect from Budget 2020

Infrastructure

To boost infrastructure, 9,000 km of economic corridor will be set up. Chennai-Bengaluru expressway to be started. Delhi-Mumbai expressway to be completed by 2023.

550 WiFi facilities have been commissioned at railway stations. 1 lakh gram panchayats to get optical fibre link. An allocation of INR 6,000 crore will be provided for BharatNet scheme.

100 more airports to be developed by 2025.

An allocation of INR 8,000 crore will be made for National Mission on Quantum Computing and Technology.

National Gas Grid to be expanded from 16,200 km to 27,000 km

22,000 crore rupees to be provided to power and renewable energy sector in 2020-21

Agriculture

Finance Minister listed 16-point action plan for farmers, towards the goal of doubling farmers' income by 2022. Agricultural credit target has been set at INR 15 lakh crore.  NABARD Refinancing Scheme to be further expanded.

Pradhan Mantri Kisan Urja Suraksha evem Utthan Mahabhiyan (PM KUSUM) to be expanded to provide 20 lakh farmers in setting up standalone solar pumps

2.83 lakh crore rupees allocated for agriculture and allied activities, irrigation and rural development

Government encourage balanced use of all fertilizers, a necessary step to change the incentive regime which encourages excessive use of chemical fertilizers

Krishi UDAN will be launched by the Ministry of Civil Aviation on international and national routes, improving value realization in North East and tribal districts

Milk processing capacity to be doubled by 2025

Health

The Budget provides an additional INR 69,000 crore for the health sector and proposes to expand Jan Aushadhi Kendras in all districts of the country to provide medicines at affordable rates.

Nominal health cess on import of medical equipment to be introduced, to encourage domestic industry and generate resources for health services

Other significant measures

Government to sell part holding in Life Insurance Corporation of India (LIC) through an initial public offering (IPO). Besides, government to also sell stake in IDBI Bank to private investors. The government’s move is a part of efforts to push through disinvestment and asset monetisation programme.

Five archaeological sites to be developed as iconic sites. 2,500 crore rupees to be allocated for tourism promotion, in 2020-21

Government to sell part holding in Life Insurance Corporation of India (LIC) through an initial public offering (IPO). 

Finance Minister proposes INR 4,400 crore to tackle Delhi’s air pollution problem.

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