28.1 C
New Delhi
Friday, March 29, 2024

BUDGET 2020-21: New Income Tax Slabs, Major Thrust For Infra Sector

Union Finance Minister Nirmala Sitharaman yesterday unveiled the Union Budget 2020-21 in the Lok Sabha. This year’s budget revolves around three key ideas: ‘Aspirational India’, ‘Economic Development’, and ‘A Caring Society’. This year’s Economy Survey projected economic growth to rebound and hit 6%-6.5% in the next financial year starting 1 April 2020. [Cover Picture: The mountainous low-cost “Future Towers” designed by Dutch firm MVRDV in the outskirts of Pune to meet increasing urban housing demand from the ever burgeoning population of young professionals migrating to other cities for work. Photo credit: De Zeen (www.dezeen.com)]

Finance Minister Nirmala Sitharaman presenting the Union Budget 2020-21 in the Lok Sabha in New Delhi on 1 February 2020.

One of the much-awaited highlights was the new income tax slabs and lower rates. These rates are, however, optional and are available to those who are willing to forego some exemptions and some deductions. This optional scheme, the Finance Minister (FM) said, is expected to cost the exchequer Rs. 40,000 crore a year in foregone I-T revenues.

THE NEW INCOME TAX RATES

IncomeTax
Between ₹5 lakh and ₹7.5 lakhReduced to 10% from current 20%
Between ₹7.5 lakh to ₹10 lakhReduced to 15% from current 20%
Between ₹10 lakh to ₹12.5 lakhReduced to 20% from current 30%
Between ₹12.5 lakh to ₹15 lakhReduced to 25% from current 30%
Above ₹15 lakhContinue at 30%, but without exemptions

Another major change that will affect individual taxpayers is with respect to dividend distribution tax (DDT) currently imposed on companies or funds. Under DDT, companies or mutual funds pay 15% dividend income up to Rs. 10 lakh annually, an amount that is not added to a person’s taxable income. Dividend income will now become part of an individual’s taxable income, which, in effect, could mean being taxed up to 42.7%, the highest rate of tax including surcharges and cesses. The move is a big disincentive for those using investments as tax saving instruments.

Education to have an outlay of Rs. 99,300 crore for FY 2020-21.

NEW EDUCATION POLICY 

  • The government plans to provide  ₹99,300 crore for educational sector in FY21. FM Sitharaman said: “By 2030, India will have the largest working-age population in the world. This population needs both job and life skills. The new education policy to be announced soon.”
  • Government proposes to attach a medical college to existing district hospitals.

DEFENCE

The budget allocated Rs. 3.37 lakh crore for 2020-21, a marginal hike of 5.8% over the allocation for the sector for the current financial year. The revenue head will remain larger than capital outlay, mainly because of the number of pays and allowances, including increments, to be paid to defence personnel. The revenue head also takes care of repairs and transport of military equipment.

At Rs. 3.37 lakh crore for FY 2020-21, it marks only a marginal increase over last year’s budget.

GST

  • GST benefit of  Rs. 1 lakh crore has been extended to consumers.
  • Government to introduce simpler GST filing system from April 2020.
  • An average household now saves about 4% of its monthly spend on account of reduced GST, said the FM.
  • In the last two years, government added more than 60 lakh new tax payers.

SUBSIDY

  • Food subsidy projected at  Rs. 1.15 trillion in 2020/21.
  • Petroleum subsidy seen at  Rs. 409.15 billion in 2020/21.
  • Fertiliser subsidy  Rs. 713.09 billion in 2020/21.

GROWTH/DEFICIT

  • Nominal GDP growth in 2020/21 estimated at 10%
  • Fiscal deficit for 2019/20 seen at 3.8% of GDP
  • Fiscal deficit for 2020/21 seen at 3.5% of GDP
  • Fiscal deficit for 2021/22 seen at 3.3% of GDP
  • Fiscal deficit for 2022/23 seen at 3.1% of GDP
  • Revenue deficit seen 2.7% of GDP in FY21

INFRASTRUCTURE

₹100 lakh crore to be invested on infrastructure over the next 5 years.

National Infrastructure Pipeline

  • Rs. 103 lakh crore worth projects launched on 31 December 2019.
  • More than 6500 projects across sectors to be classified on the basis of their size and stage of development.
(Representational image): The transport sector likely to have an allocation of Rs. 1.7 lakh crore.

TRANSPORT INFRASTRUCTURE

Finance Minister Nirmala Sitharaman proposes to provide  Rs. 1.7 lakh crore for transport infrastructure in 2020-21:

  • 2500 access control highways.
  • 9000 km eco-development corridors.
  • 200 coastal and port roads.
  • 2000 km strategic highways.
  • Delhi-Mumbai expressway and 2 other corridors will be completed by 2023.
  • Central Government to provide 20% equity for Bengaluru Suburban Transportation Raj.
  • 100 more airports to be developed by 2024 to support Union government’s “Udaan” scheme.

MSME
• Focus on generation of employment, skills, and making MSMEs competitive
• National Skill Development Agency to give special thrust to infrastructure-focused skill development opportunities.
• Government to involve young engineers, management graduates, and economists from Universities.
• Government infrastructure agencies to involve youth in start-ups

WELFARE OF SENIOR CITIZENS/SC/ST/OBC

  • The budget has allocated  ₹9,000 crore for the welfare of senior citizens.
  • The budget has also allocated  ₹53,700 crore for the uplift of Scheduled Tribes, and  ₹85,000 crore for the welfare of Scheduled castes and Other Backward Classes.

AYUSHMAN BHARAT

Rs. 69,000 crore allocated for healthcare sector out of which ₹6,400 crore will be earmarked for Ayushman Bharat Yojna.

Companies operating old thermal power plants will be asked to shut down such units.

POWER & POLLUTION

  • India to provide  Rs. 273 billion or promotion of industry and commerce.
  • Companies operating old thermal power plants will be asked to shut units if emission norms not met. 
  • India’s commitment towards tackling climate change made at Paris Conference starts from 1 January 2021.
  • Rs. 4,400 crore allocated for states that work towards clean air.

SKILL INDIA INITIATIVE

Rs. 3,000 crore proposed for ‘Skill India’ to provide relevant skill training to youth. “There is a huge demand for teachers, paramedical staff and caregivers in foreign countries. However, their skills do not match in accordance to demand by employers. So, my government proposes  ₹3,000 crore for skill development,” FM Sitharaman said.

OFFLOADING STAKE

  • Government to sell govt stake in IDBI Bank to private investors.
  • Government also to offload stake in LIC through IPO.
  • FY21 fiscal deficit target pegged at 3.5% of GDP

BHARATNET

Rs. 6,000 crore allocated for BharatNet programme through which around 100,000 gram panchayats will be linked with BharatNet during the calendar year, according to the FM.

SWACHH BHARAT MISSION

Total allocation proposed for Swachh Bharat Mission is Rs. 12,300 crore. FM Sitharaman said the government is “committed to Open Defecation Free (ODF) plus in order to sustain ODF behaviour and to ensure no one is left behind.”

The Swachh Bharat Mission will have an allocation of Rs. 12,300 crore.

HEALTH SECTOR

An additional Rs. 69,000 crore allocated for the health sector, with the FM proposing to attach a medical college to a district hospital under the PPP model.

INDIAN RAILWAYS

  • Four station re-development projects in railways via PPP models
  • Indian railways to develop solar capacity.
  • More Tejas trains proposed to connect tourist locations.
  • Rs. 18,600 crore worth Bengaluru Suburban Transportation project to be launched.
spot_img

Must Read

- Advertisement -spot_img

Archives

Related news

- Advertisement -spot_imgspot_img