The Government of India presented the union budget in 2020 on 1st February 2020. Finance Minister Nirmala Sitharaman said that the budget is aimed towards boosting the income and purchasing power of the Indians. Once the world’s fasting growing economy has now been dipped to an 11 year low and the new budget is aimed towards restarting the economic growth of the country. The Finance Minister during the presentation of the budget said that the budget is aimed towards boosting the purchasing power of the citizens, stressing that the economy’s fundamentals are strong and that the inflation is well contained.
The new union budget suggested various new schemes and introduced various new plans. The changes brought benefitted some industries while there might be few other sectors that might not get such benefits. The main aim of the budget, as emphasized by the Finance Minister, seems to be the increase of income and boosting of purchasing power. Here is a list of few changes brought in by the new union budget.
- Introduction of a new tax regime.
- Taxpayer gave the option of choosing between the current tax regime and the new tax regime.
- Bank deposit insurance increased from Rs. 1 lakh to Rs. 5 lakh.
Union budget 2020-21
A new tax regime: The union budget has announced a new income tax regime. Those willing to continue the current tax regime will be allowed to do so. The new tax rates adopted by the government are as follows:
- Below Rs. 5 lakh: no tax.
- Rs. 5 lakh to Rs. 7.5 lakh: reduced to 10% from the current 20%.
- Rs. 7.5 lakh to Rs.10 Lakh: reduced to 15% from the current 20%.
- Rs. 10 lakh to Rs.12.5 Lakh: reduced to 20% from the current 30%.
- Rs. 12.5 lakh to Rs.15 Lakh: reduced to 25% from the current 30%.
- Above Rs. 15 lakh: continues at 30%, but without exemptions
Over 70 tax deductions have been removed in the new regime. Further, according to the new regime the companies no longer need to pay Dividend Distribution Tax (DDT). Moreover, Aadhaar based verification for GST compliance is also to be introduced. Aadhaar based quick issuance of PAN card also has been announced.
Economy and Finance: In the economy and finance section the changes brought are that bank deposit insurance cover has been increased from Rs. 1 lakh to Rs. 5 lakh. The Government is aiming to amend the Companies Act to decriminalize civil offenses. Also, the government is going to sell its stake in LIC via a public offering.
Education Sector: There has been an allocation of a total of Rs. 99,300 crore for the education sector. Rs. 3000 crore has been allocated for skill development programs. Further, the new budget provides for plans whereas the urban local bodies are to provide internships to young engineers for a year. Also, fully-fledged degree-level online education programs that are to be conducted by the institutions ranked in the top 100 in the NIRF rankings, this is done so that the underprivileged students can benefit. Moreover, there are plans to set up a National Police University and a National Forensic Science University, also the introduction of IND SAT exams for students in Asia and Africa for the promotion of the “Study in India” program.
Rural India: The new union budget is aimed at improving the agriculture sector of the country. With the total allocation of Rs. 2.83 trillion to the farm and rural sector the agricultural credit target for the next year is set at Rs. 15 trillion. The budget aims at doubling the farmer’s income by 2022, with plans to provide 20 lakh farmers to set up standalone solar pumps and help another 15 lakh to solarise their power grid. There is also news of a proposal to expand fisheries and create 500 fish farmer producer organizations. There has been an announcement that Indian Railways will be having refrigerated coaches’ capability “Kishan trains” for perishable items such as milk.
Edited by J. Madonna Jephi
Approved & Published – Sakshi Raje
1. Union Budget 2020-2021, https://www.indiabudget.gov.in/ (last visited 3rd February 2020, 4:58 PM)
2. The Hindu, https://www.thehindu.com/business/budget/highlights-of-union-budget-2020-21/article30711472.ece (last visited 3rd February 2020, 4:58 PM)