- Date : 01/02/2020
- Read: 4 mins
With cuts to personal tax, the Finance Ministry aims to simplify the tax regime and provide relief to the middle and lower-middle-class households
Finance Minister Nirmala Sitharaman announced the Union Budget 2020-21, with three prominent themes, that focusses on ‘aspirational India, economic development for all, and caring society that is both humane and compassionate.’
What is announced in Budget 2020?
The budget announced by the FM focusses on inclusive growth and generation of employment through increased expenditure on education, rural economy, infrastructure, healthcare and MSMEs.
Indian government to raise funds by taking LIC public. The Finance Minister announced that the government will sell a partial stake in LIC via an IPO. She also said nominal GDP for 2020-21 is estimated at 10%.
On the personal tax front, the Finance Ministry aims to simplify the tax regime and provide relief to the middle and lower-middle-class households with the removal of Dividend Distribution Tax (DDT) and benefits from the optional exclusion of deductions.
Related: Biggest IPOs of 2019: The Hits And The Misses
What are the changes to personal taxation?
Personal tax rates have been further reduced from the previous year.
New tax slabs:
- ₹5 lakh – ₹7.5 lakh - 10% (20% earlier)
- ₹7.5 lakh - ₹10 lakh - 15% (20% earlier)
- ₹10 lakh to ₹12.5 lakh - 20% (30% earlier)
- ₹12.5 lakh - ₹15 lakh - 25% (30% earlier)
- Above ₹15 lakh – 30% (No change)
Note: The Nil rate of tax is applicable up to an income of Rs 5 lakh for those who forgo reliefs and exemptions. Dividend Distribution Tax (DDT) will be taxable in the hands of the recipient at applicable tax rates. Also, tax rates mentioned above will be optional, so taxpayers can choose between the existing income tax regime and a new regime.
Related: How Is Taxable Income Calculated?
What does the allocation look like?
Agriculture
- Budgetary allocation for agriculture and allied actives: Rs 2.83 lakh crore
- Availability of agricultural credit to the tune of Rs 15 lakh crore
- 20 lakh farmers to be provided with stand-alone solar pumps
- Additional assistance for 15 lakh other farmers for farm solarisation
- The budget plans to expand women self-help groups (SHGs) to manage farm produce at the village level. These SHGs will be able to leverage loans from the National Bank for Agriculture and Rural Development (NABARD) under the MUDRA scheme.
Healthcare
- Budgetary allocation for the health sector: Rs 69,000 crore
- Swachch Bharat mission to get Rs 12,300 crore
- Proposal to set up hospitals in Tier II and Tier III cities using the PPP model
- Plans to expand Jan Aushadhi Kendra.
Education
- Budgetary allocation for the education sector: Rs 99,300 crore
- Rs 3,000 crore earmarked for skill development
- Proposal for FDI and ECI in the education sector
- 150 institutions of higher learning to offer apprenticeships
- Fresh engineers to get internship opportunities with Urban Local Bodies.
- Proposal for a full-time online degree-level education programme to help students of deprived sections.
- A PPP model proposed to attach a medical college to existing district hospitals to allay shortage of qualified doctors.
Related: Government Initiatives For Education And Skills: How To Apply For One?
Infrastructure
- Allocation to transport infrastructure: Rs 1.7 lakh crore
- Allocation to power and renewable energy: Rs 22,000 crore
- Five new smart cities to be developed
- The government intends to develop 2000 km of highways, 9000 km of eco-development corridors, 200 coastal ports and roads, and over 100 new airports.
Social development
- Allocation for nutrition related programmes: Rs 35,600 crore
- Allocation for SC and OBC development: Rs 85,000 crore
- Allocation for ST development: Rs 53,700 crore
- Allocation for Senior citizens and persons with disabilities: Rs 9,000 crore
- Allocation to Ministry of Culture: Rs 3,150 crore
- Promotion of clean air: Rs 4,400 crore
What is the vision?
As per this year’s Economic Survey, the economy is expected to rebound to 6% to 6.5% growth, and the government aims to achieve seamless delivery of services through digital governance, bring ease of living for every citizen and hopes to meet the aspirations of all the sections of the society. Take a look at the highlights and recommendations from last year's Economic Survey in July 2019 for a better comparison between the two.
Finance Minister Nirmala Sitharaman announced the Union Budget 2020-21, with three prominent themes, that focusses on ‘aspirational India, economic development for all, and caring society that is both humane and compassionate.’
What is announced in Budget 2020?
The budget announced by the FM focusses on inclusive growth and generation of employment through increased expenditure on education, rural economy, infrastructure, healthcare and MSMEs.
Indian government to raise funds by taking LIC public. The Finance Minister announced that the government will sell a partial stake in LIC via an IPO. She also said nominal GDP for 2020-21 is estimated at 10%.
On the personal tax front, the Finance Ministry aims to simplify the tax regime and provide relief to the middle and lower-middle-class households with the removal of Dividend Distribution Tax (DDT) and benefits from the optional exclusion of deductions.
Related: Biggest IPOs of 2019: The Hits And The Misses
What are the changes to personal taxation?
Personal tax rates have been further reduced from the previous year.
New tax slabs:
- ₹5 lakh – ₹7.5 lakh - 10% (20% earlier)
- ₹7.5 lakh - ₹10 lakh - 15% (20% earlier)
- ₹10 lakh to ₹12.5 lakh - 20% (30% earlier)
- ₹12.5 lakh - ₹15 lakh - 25% (30% earlier)
- Above ₹15 lakh – 30% (No change)
Note: The Nil rate of tax is applicable up to an income of Rs 5 lakh for those who forgo reliefs and exemptions. Dividend Distribution Tax (DDT) will be taxable in the hands of the recipient at applicable tax rates. Also, tax rates mentioned above will be optional, so taxpayers can choose between the existing income tax regime and a new regime.
Related: How Is Taxable Income Calculated?
What does the allocation look like?
Agriculture
- Budgetary allocation for agriculture and allied actives: Rs 2.83 lakh crore
- Availability of agricultural credit to the tune of Rs 15 lakh crore
- 20 lakh farmers to be provided with stand-alone solar pumps
- Additional assistance for 15 lakh other farmers for farm solarisation
- The budget plans to expand women self-help groups (SHGs) to manage farm produce at the village level. These SHGs will be able to leverage loans from the National Bank for Agriculture and Rural Development (NABARD) under the MUDRA scheme.
Healthcare
- Budgetary allocation for the health sector: Rs 69,000 crore
- Swachch Bharat mission to get Rs 12,300 crore
- Proposal to set up hospitals in Tier II and Tier III cities using the PPP model
- Plans to expand Jan Aushadhi Kendra.
Education
- Budgetary allocation for the education sector: Rs 99,300 crore
- Rs 3,000 crore earmarked for skill development
- Proposal for FDI and ECI in the education sector
- 150 institutions of higher learning to offer apprenticeships
- Fresh engineers to get internship opportunities with Urban Local Bodies.
- Proposal for a full-time online degree-level education programme to help students of deprived sections.
- A PPP model proposed to attach a medical college to existing district hospitals to allay shortage of qualified doctors.
Related: Government Initiatives For Education And Skills: How To Apply For One?
Infrastructure
- Allocation to transport infrastructure: Rs 1.7 lakh crore
- Allocation to power and renewable energy: Rs 22,000 crore
- Five new smart cities to be developed
- The government intends to develop 2000 km of highways, 9000 km of eco-development corridors, 200 coastal ports and roads, and over 100 new airports.
Social development
- Allocation for nutrition related programmes: Rs 35,600 crore
- Allocation for SC and OBC development: Rs 85,000 crore
- Allocation for ST development: Rs 53,700 crore
- Allocation for Senior citizens and persons with disabilities: Rs 9,000 crore
- Allocation to Ministry of Culture: Rs 3,150 crore
- Promotion of clean air: Rs 4,400 crore
What is the vision?
As per this year’s Economic Survey, the economy is expected to rebound to 6% to 6.5% growth, and the government aims to achieve seamless delivery of services through digital governance, bring ease of living for every citizen and hopes to meet the aspirations of all the sections of the society. Take a look at the highlights and recommendations from last year's Economic Survey in July 2019 for a better comparison between the two.
