Widening fiscal deficit target of 3.3% to 3.8% to boost the Indian economy, Finance minister Nirmala Sitharaman tabled the Union Budget 2020-21 in the Lok Sabha today. She announced the launch of a new personal income tax regime which can help the middle-class save taxes and also scrapped dividend distribution tax (DDT).
New income tax rates, slabs:
Finance Minister Nirmala Sitharaman today in Budget 2020 proposed new income tax slabs and lower rates. These income tax rates are optional and are available to those who are willing to forego some exemptions and some deductions. The new income tax rates will be significantly reduced for those who forego reliefs, exemptions, the finance minister said.
The government will forego ₹40,000 crores per annum in revenue from new income tax rates for individuals, she said.
Under the income tax rates, tax of only 10% will be charged to ₹5 lakh-7.5 lakh income as against prevailing 20% rate. From ₹7.5 lakh-10 lakh income, a tax rate of 15% against 20% prevailing rate. For income ₹10-12.5 lakh, a rate of 20% will be charged as against 30% earlier. For income between ₹12.5 lakh and ₹, 15 lakh will be taxed at 25% as against current levels of 30%. For those at ₹15 lakh plus income, the tax rate will remain at 30%.
The finance minister said a person earning ₹15 lakh per anum and not availing any deductions will now pay ₹1.95 lakh in tax in place of ₹2.73 lakh, a savings of ₹78,000, the finance minister said.
New income tax slabs
0 – 2.5 lakh – exempted
₹2.5 lakh – ₹5 lakh – 5%
₹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)
No change in tax rates above ₹15 lakh
Govt plans to raise funds through LIC IPO:
Finance Minister Nirmala Sitharaman today said that government plans to sell a partial stake in LIC through IPO or an initial public offer. In her Budget proposal, she proposed that will the government will sell its stake in IDBI Bank to private investors and also amend the Banking Regulation Act to strengthen co-op banks.
The finance minister also said that the deposit insurance coverage against bank failure will be increased to ₹5 lakh from ₹1 lakh.
She also proposed to expand exchange-traded fund by floating a Debt ETF, consisting primarily of government securities.
list of key budgetary allocations
FY21 agriculture allocation ₹1.38 lakh crore
FY21 rural development allocation ₹1.23 lakh crore
FY21 agriculture and rural allocation ₹2.83 lakh crore
FY21 agriculture credit target ₹15 lakh crore
FY21 education allocation at ₹99,300 crore
FY21 healthcare allocation at ₹69,000 crore
FY21 transport infra allocation at ₹1.7 lakh crore
-Budget 2020 removed 70 exemption from personal income tax
-For the MSME sector
Audit threshold for MSMEs raised to ₹5 crores from ₹1 crore
-More on the tax front
-100% tax exemption on Sovereign Wealth Funds’ Indra Investment.
-Concessional 5% withholding tax entended to municipal bonds, Nirmala Sitharaman
-FM Nirmala Sitharaman on the new tax regimes: Lowest, simplest, smoothest
-On DDT
Dividend Distribution Tax to be removed, companies will not be required to pay DDT, dividend to be taxed only at the hands of recipients at applicable rates
Skill India initiative
The government proposed ₹3,000 crores for ‘Skill India’ to provide relevant skill training to the youth in the country, said Finance Minister Nirmala Sitharaman on Saturday.
“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 crores for skill development,” she said during the 90th Budget presentation.
-Government to sell govt stake in IDBI Bank to private investors
Common Eligibility Test for recruitment to non-gazetted govt posts:
Finance Minister Nirmala Sithraman in Budget 2020 proposed a computer-based online common eligibility test for recruitment for non-gazetted government posts.
The government has also proposed to set up a National Police University and a National Forensic Science University.
Presenting the Budget for 2020-21, Sitharaman said ₹99,300 crores has been allocated for the education sector and ₹3,000 crores for skill development.
Sitharaman said the Narendra Modi government will soon announce a new education policy.
According to new proposals announced in the budget, urban local bodies will provide internship to young engineers for a year so that they get an idea about the functioning of the government.
Rail Budget:
-The Indian Railways will set up a Kisan Rail through the public-private partnership model. “Comprehensive measures for 100 water-stressed districts being proposed in this budget; agricultural credit target has been set at ₹15 lakh crore,” she said.
-High-speed train between Mumbai and Ahmedabad will be actively pursued.
-550 wi-fi facilities have been commissioned at railway stations.
-Large solar power capacity to be set up alongside rail tracks, on land owned by Railways
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