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Saturday, February 1, 2020

Budget Highlights 2020: No Tax on less then 5 Lakh Income


Budget Highlights 2020: No Tax on Less then Rs 5 Lakh Income, announces Nirmala Sitharaman

New Delhi: On the second day of the Budget Session, finance minister Nirmala Sitharaman on Saturday presented theUnion Budget 2020-21 in the parliament.



Here are the highlights from Sitharaman's Budget 2020-21 speech:
The finance minister presents the full Budget of the second term of the Narendra Modi Government
Sitharaman begun her Budget speech by saying, "Under PM's leadership, we commit ourseleves to present the perople of India with all humility and dedication. People have reposed faith in out economic policy."


Watch budget live here


INCOME TAX

Upto Rs 5 Lakh: No Tax;

Rs 5-7.5 lakh income: reduced to 10 from 20%

Rs 7.5- 10 lakh income: reduced to 15 from 20%

Rs 10-12.5 lakh income: reduced to 20 from 30%

Rs 12.5-15 lakh income: reduced to 25 from 30%

Rs 15lakh income: 30% (No Change)

In a major announcement, the Narendra Modi government will sell part of its stake in Life Insurance Corporation (LIC), launching an IPO. Amid public fears over the PMC Bank scam, FM Nirmala Sithraman said in her budget speech that the insurance cover for each depositor will be increased from Rs 1 lakh to Rs 5 lakh. No relief on income tax slabs or rates has been announced yet. The government has also relaxed fiscal deficit for FY20 to 3.8 percent of the GDP and to 3.5 percent for FY21.

The Narendra Modi government has allocated Rs 85,000 crore for empowerment of Scheduled Caste and OBCs, and Rs 53,700 crore for Scheduled Tribes. A Chennai-Bangalore expressway will come up soon and 100 new airports will be built by 2024, Nirmala Sitharaman said earlier in her budget speech. The FM says this budget is meant to boost the income and spending power of people, raising hopes of tweaks in the income tax rates and slabs. 

The Narendra Modi government is likely to increase state spending on infrastructure and offer some income tax incentives, aiming to get growth back up from its lowest in a decade.

Nirmala Sitharaman says budget 2020 is broadly divided into three major themes - aspirational India, economic development and building a caring society that is humane. In its Economic Survey 2020 released on Friday, the Union government predicted that the economic growth would pick up to 6.0% to 6.5% in the fiscal year beginning April 1, but warned that it may have to exceed its deficit target to revive growth.

Budget time and date: Nirmala Sitharaman will begin her budget speech at 11am on February 1, Saturday. Last year, the Sitharaman’s budget in red cloth instead of the budget briefcase had garnered immense attention. The finance minister had said that the suggestion to use the red cloth to present the budget was given by her family. 

In a budget special, BSE Sensex is open on Saturday. The stock markets are generally closed on Saturdays and Sundays, except for special circumstances. In a circular, BSE said the stock markets would open for trading on February 1, Saturday, on account of Union Budget for the financial year 2020-21.

India, Asia's third-largest economy, is facing strong headwinds with a contraction in investments and manufacturing, and growth for the September-ended quarter coming in at 4.5 percent, the lowest in six years. India needs to create jobs for the 1.2 million new entrants to the labour market every month but unemployment levels have hit a four-decade high.

Nirmala Sitharaman, who will present her second full-year annual Budget in Parliament, could defer the earlier target of cutting the deficit to 3% of gross domestic product in 2020-21 by at least two years, government sources told Reuters. This will be on top of roughly $28 billion of spending from off-budget borrowings, as the government seeks to keep the deficit in check.

The Narendra Modi government is expected to announce plans to spend over Rs 102 trillion on roads, ports, airports, irrigation and other infrastructure over the next five years.

Facing widespread discontent over the Citizenship Amendment Act and facing Delhi elections after a string of losses in Assembly polls since the 2019 general elections, the BJP government may also announce an income tax amnesty, after collecting over Rs 350 billion from an amnesty this year to settle tax disputes on service and factory gate duties, the sources said.

Some experts said global trade tensions and the outbreak of coronavirus in China, which has killed more than 200 people so far, poses a new risk to economic recovery by hitting cross-border commerce and supply chains.

Finance Minister Nirmala Sitharaman announced a slew of reforms last year, including corporate tax rate cuts and an injection of funds into a nationwide infrastructure project. The report urged the government to relax its fiscal deficit target — currently 3.3 percent of GDP — to spark a revival.

India must spend about $1.4 trillion on infrastructure projects by 2025 to achieve its previously announced target of a $5 trillion economy, the Economic Survey said, adding that New Delhi needed to make it easier for entrepreneurs to start new businesses.

After the shock demonetization in 2016 which saw Rs 1,000 and old Rs 500 notes withdrawn from circulation, a botched nationwide Goods and Services Tax (GST) rollout and a liquidity crisis in the shadow banking sector, the government is struggling to generate revenues and received a $24 billion windfall from the Reserve Bank of India (RBI) last August.

New Delhi has also announced plans to sell its 100 percent stake in debt-crippled national carrier Air India after an earlier push to sell part of the airline found no takers. The government has also eased restrictions on foreign investment in four key sectors, including coal mining, in an effort to attract more capital from abroad.

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