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Theme of the Budget:

  • The Budget aimed at energizing the Indian economy through a combination of
    short-term, medium-term, and long-term measures.

Budget 2020 has three prominent themes:

  • 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.
  • It encouraged the state governments to undertake the implementation of following model laws issued by the central government

In Brief:

Under The Theme Of ‘Aspirational India’:

Three components of Aspirational India:

  • Agriculture, Irrigation, and Rural Development
  • Wellness, Water, and Sanitation
  • Education and Skills

Agriculture, Irrigation, and Rural Development:

Agriculture:

  • 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:

  • 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.
  • Integrated Farming Systems in rain-fed areas to be expanded.
  • 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. 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 – Tuberculosis by 2025.
  • Rs. 3.60 lakh crore approved for Jal Jeevan Mission:
    • 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.
    • Focus also on Solid-waste collection, source segregation, processing.

Education and Skills

  • New Education Policy to be announced soon.
  • National Police University and National Forensic Science University proposed 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.

Under The Second Theme “Economic Development”

  • Development of smart cities and promoting manufacturing to generate investment and employment opportunities
  • On the manufacture of network products and encouraging the electronics manufacturing industry
  • All ministries to issue quality standards and government to focus on adoption of technical standard.
  • For exporters, a new scheme Nirwik has been proposed that will digitally refund duties and taxes imposed locally; the scheme is to be launched from FY 2020-21.
  • Development of districts as export hubs and promotion of government e-marketplace (GEM).
  • A national logistics policy to be released with a single-window “e-logistics market”.
  • Monetization of 12 lots of highway bundles of over 6,000km before 2024.
  • Measures to set up large solar power capacity on land owned by railways.
  • Proposed to bringing in more TEJAS type trains, Bengaluru suburban train.
  • Increase in the number of airports to 100 by 2022 .
  • For power discoms – Introduction of prepaid smart meters within the next 3 years in all states and UTs; freedom to choose the supplier of electricity and the rate as per requirement.
  • FM proposes Rs. 22000 crore to power and renewable energy sector.
  • FM proposes to expand the national gas grid from 16,200 km to reach 27,000 km to deepen the gas markets in India.
  • Data is the new oil (Digital India announcements): Government has adopted technology to directly transfer the finances with the beneficiaries.
  • Policy to enable private sector to build data centre parks to be launched soon. FTTH connections will link 100,000 gram panchayats within the year. Rs 6,000 crore allocated for Bharat Net Program this year. Knowledge translation clusters will be set up across different sectors. Quantum Technologies opening up new frontiers. 8000 crores of outlay in next 5 years. Soon, policy for private sector to build Data Centre Parks throughout the country; our vision is that all public institutions be provided with digital connectivity

Women: Genetic mapping of Indian to be done through two new medical schemes.
Beti Bachao, Beti Padhao has yielded tremendous results.

Under The Third Theme ‘Caring Society’:

  • More than 600000 Anganwadi workers are equipped with smartphone to upload nutritional status of the students of India. Propose to provide Rs 35,600 crore for nutrition-related programmes in 2020-21.
  • Have identified suitable technology to eliminate manual cleaning of sewer systems and septic tanks. 85,000 crores for the welfare of SC and OBC; 85,000 crore rupees for Scheduled Castes and Other Backward Classes in 2020-21, 53,700 crore rupees for Scheduled Tribes.
  • Senior citizens: Enhanced allocation of 9,500 crore rupees for Senior citizens and Divyangs.
  • Culture: 5 archaeological sites would be developed as iconic sites with on site museum. Rakhigarhi (Haryana), Hastinapur (Uttar Pradesh), Shivsagar (Assam), Dholavira (Gujarat), Adichanallur (Tamil Nadu). A Tribal Museum to be set up in Raanchi, Jharkhand. New currency museum to be embedded in the Kolkata Mint – The oldest mint in India. Rs 3,150 crore allocated for the ministry of culture in 2020-21.
  • Environment and climate change: India to make good on the promises made at Paris accord form Jan 1st, 2021. PM launched Coalition for Disaster Resilient Infrastructure (CDRI) with Secretariat in Delhi. Second such international initiative after International Solar Alliance.

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
  • 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 31 st 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 30 th June, 2020, to reduce litigations in direct taxes:
    • Waiver of interest and penalty – only disputed taxes to be paid for payments till 31 st March, 2020.
    • Additional amount to be paid if availed after 31 st 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