What is Budget 2020?
Finance Minister, Mrs. Nirmala Sitharaman, presented the Union Budget 2020 on the first day of February, 2020. It is important to point out in the very beginning that government efforts to reach the goal of the $5 Trillion economy by the end of 2022 are clearly reflected from Budget 2020.
Through this new budget, the government has put great emphasis on capacity building and empowerment of the marginalized sections of our society. At the same time, it also seeks to protect the interests of the wealth creators, aiming to achieve a balance between the interests of all segments of the society.
While introducing the Annual Budget in the Lok Sabha, the Mrs. Sitharaman also stated that this year’s budget also aims at giving a boost to the income and purchasing power of the people.
The following points bring out the prominent themes in the Annual Budget, 2020:
1. Ease of living- The current budget largely focuses on the ‘Ease of living’, which can be understood as the ease by which people living in a time or place are able to satisfy their needs and/or wants. Both the governance and the financial sector focuses on this aspect. This the government aims to achieve through an ‘aspirational India’, economic development and by developing a caring society.
‘Aspirational India’ includes firstly, agriculture, irrigation and rural development, secondly, wellness, water and sanitation and thirdly, education and skill development. For economic development, the focus remained firstly, on industry, commerce and investment; secondly, on infrastructure and lastly, on developing a new, regulated economy. Finally, in order to develop a ‘caring society’, the government aims to focus firstly, on women, children and social welfare; secondly, on culture and tourism and lastly, on the environment and climate change.
2. Direct Taxes- A new income tax regime has been proposed that entails a significant change in the tax slabs rates. Under this new regime, the taxpayers have been provided with the of either paying their taxes according to the new regime or continue paying taxes according to the existing regime. However, certain taxpayers might not be able to switch back to the existing tax slabs once they’ve opted for the new ones.
In addition to that, tax audit threshold has been enhanced from Rs. 1 crore to Rs. 5 crore provided, the turnover/gross receipts in cash do not exceed 5% during the previous year and payments made in the previous year in cash do not exceed 5%. For such taxpayers, the due date for tax audit has also been extended from 30th September to 31st October of every financial year.
Furthermore, Dividend Distribution Tax (DDT) has been discontinued and instead of that, the recipients of the dividend would have to pay tax at their applicable rates.
3. Indirect taxes- The persons giving a fake ITC or befitting out of it would not have to pay a penalty of 100% on the amount of tax involved. Additionally, under the Composition scheme’ which is restricted to those taxpayers who make the inter-state supply of services, such supplies are not taxable under GST and supplies routed through e-commerce are TCS deductible.
The date of the debit note will be the only proof considered for availing input tax credit (ITC). Another thing that’s been updated is the applicability of 6% CGST rate on the supply of pulley, wheels and equipments used in agricultural machinery between 1st July 2017 to 31st December 2018. Also, the ‘Transfer of Business Assets’ entry in Schedule II to the CGST Act would now exclude transactions done without consideration received from it.
4. Micro Small & Medium Enterprises (MSMEs)- The following steps have been proposed in the latest Budget for the promotion and regulation of MSMEs:
· Amendments would be made to the Factories Regulation Act, 2011.
· Amendments would be made to enable Non-Banking Finance Companies (NBFCs) to extend invoice financing to such enterprises.
· To set up a provision of subordinate debt by banks, for giving it to such enterprises. This should be treated as quasi-equity and should be guaranteed by the Credit Guarantee Trust.
· Finally, App-based financing of loans should be introduced for such enterprises. Such financing products to be launched to reduce the problem of delayed payments and cash flow mismatches for such enterprises.
5. Agriculture- the following steps can be deduced for the benefit of the agricultural sector, from the annual budget, 2020:
· The government aims to double the income of the farmers by 2022.
· Help 15 lakh farmers install solar panels for their grid-connected pumps.
· Two projects are proposed by the government- “KisanRail” and “KrishiUdaan”, for smooth transport of perishable agricultural goods.
· Increasing the coverage of artificial insemination to 70%.
· Raise fishery exports to Rs. 1 lakh crore by the fiscal year 2024-25.
6. Education- For the furtherance of education, the latest budget proposes to start apprenticeship courses by about 150 higher educational institutions and also proposes special bridge courses to improve the skills of those seeking employment abroad. For those seeking to study in India, Ind-SAT is proposed to be conducted in Africa and Asia.
The government has also proposed to set aside Rs. 99,300 crores for the educational sector in the fiscal year 2020-21 and allocate of Rs. 3,000 crores for skill development.
7. Financial sector- The following directions have been given with respect to the financial sector, in the Budget 2020:
· The Deposit Insurance Coverage is set to increase from Rs. 1 lakh to Rs. 5 lakhs per depositor.
· The eligibility limit for NBFCs for debt recovery under the SARFAESI Act is proposed to be reduced to either the asset size of Rs. 100 crore or loan size of Rs. 50 lakhs.
· A separation of the NPS Trust for government employees from PFRDAI is also proposed.
· It is also proposed to sell balance holding of government held in IDBI Bank.
8. Water, Wellness, and Sanitation Goals-
· A total of more than 20, 000 empanelled hospitals under PM “Jan Arogya Yojana” are set to be established.
· “TB Harega Desh Jeetega” campaign has been launched to end TB by 2025.
· Expansion of the “Jan Aushadhi Kendra Scheme” to all districts by 2024 us also proposed.
· Focus on liquid and greywater management along with waste management can also be seen as a major focus of the government.
This is a summary of a few of the numerous measures that have been proposed and changes that have been inculcated in Budget 2020.