On February 1, 2020, Finance Minister Nirmala Sitharaman presented her second Union Budget on behalf of the NDA-2 government.
In the longest Union Budget announcement in history, Sitharaman presented a mixed bag, with significant relief for the middle-income tax payer under a new simplified tax regime. However, for the tax payer to benefit from the new tax regime, he/she has to forgo all tax deductions.
The revised expenditure estimate for FY20 has been set at Rs. 26.99 lakh crore, while the revised receipts for the same fiscal year is Rs. 19.32 lakh crore.
In a surprise announcement, she also stated that the government plans to sell parts of its holdings on Life Insurance Corporation (LIC) through an initial public offering (IPO).
Also Read Union Budget 2020 LIVE: Major Relief For Taxpayers, Tax Slabs Rejigged
Here are the top highlights from her speech:
1. Taxation
- New simplified personal tax regime to be introduced.
- For those earning between Rs. 5 lakh - Rs. 7.5 lakh, income tax slashed from 20% to 10%.
- For those earning between Rs. 7.5 lakh - 10 lakh, income tax reduced from 20% to 15%.
- For those earning between Rs. 10 lakh - Rs. 12.5 lakh, income tax reduced from 30% to 20%.
- For income above Rs. 15 lakh - 30% income tax retained. No income tax for income below Rs. 5 lakh.
- New tax regime for those who choose to forgo all tax deductions.
- Around 70 out of 100 income tax exemptions to be removed, remaining to be reviewed to simplify the system.
- Dividend distribution tax to be removed to boost investment.
- Corporate tax cut for power generation companies - reduced tax rate of 15%.
- Rate of withholding tax extended to 2023 for FPIs.
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2. Finance
- Deposit insurance cover will be hiked from Rs. 1 lakh to Rs. 5 lakh. "All deposits are safe", says Sitharaman.
- Government to sell part of its holdings on LIC through an IPO.
- FPI Limit in corporate bonds will be raised from 9% to 15%.
3. Agriculture, Irrigation, Rural Welfare
- Double farmer income by 2022
- 6.11 crore farmers insured under Pradhan Mantri Fasal Bima Yojana
- PM Kusum Scheme reduced dependency on diesel and kerosene and increased reliance on solar energy
- 20 lakh farmers can set up standalone solar pumps
- Government can help build 15 lakh solarised grid-connected pump sets
- Rs. 2.83 lakh crore allocated for agriculture, irrigation and rural welfare
4. Water, Sanitation, Healthcare
- Mission Indradhanush has been extended to cover new diseases and new vaccines, Fit India introduced as a part of it.
- 20,000 hospitals to be built under Ayushman Bharat in Tier 2/3 cities.
- Tuberculosis to be eradicated by 2025.
- Rs. 3.6 lakh crore approved for Jal Jeevan Mission for augmenting local water resources, desalination, water harvesting and renewing older sources
- Rs 12,300 cr allocated for Swachh Bharat
- Rs. 69,000 crore provided for the healthcare sector, PM Jan Arogya Yojana will get Rs. 6,400 crore
5. Education, Skill Training
- New Education policy to be introduced soon.
- "ECB and FDI will be sought to deliver higher quality education," said Sitharaman.
- 150 higher education institutes will have apprenticeship programmes by March 2021
- Urban local bodies across the country will provide internship opportunities to new/young engineers.
- Top 100 NIRF institutes to provide online degrees
- IN-SAT exam to be held for Asian and African students for Study in India scholarships.
- Police Academies and University of Forensic Sciences to be set up.
- Rs. 3,000 crore allocated for skill development.
- Rs. 93,300 crore allocated for education.
6. Entrepreneurship, Commerce, Industries
- More opportunities for startup owners.
- Investment clearance cells to be set up for entrepreneurs, and assistance will be provided in the form of funding.
- Scheme to encourage manufacturing of mobile phones, semi conductor packaging and electronic equipments, including medical devices. Details to be released soon.
- New Nirvik scheme to be offered to exporters - lower premiums and faster claim settlements. To be launched this year.
- Allocation of Rs. 27,300 crore for development of industry and commerce in FY21.
7. Infrastructure
- 6,500 projects by National Infrastructure Pipeline.
- NSDC will help develop skills in the infrastructure sector.
- 9,000 km of economic corridor to be set up.
- Chennai-Bengaluru Expressway to start soon, Delhi-Mumbai Expressway to be completed by 2023.
- 12 lots of highway bundles to be monetised by 2024.
- 100 more airports to be developed by 2024 to support UDAN scheme.
- More Tejas Express-type trains to be set up for tourist destinations.
- Setting up of a governance framework for ports.
- Government to provide 20% equity for Bengaluru Suburban Transportation Project - a Rs. 18,600 crore project.
- Allocation of Rs. 1.7 lakh crore for transport infrastructure to be provided in FY21.
8. Energy, Climate Change
- New scheme of smart prepaid meters to be launched - consumers can choose supplier and rate as per their requirement.
- Allocation of Rs. 22,000 crore will be given to power and renewable sector.
- Allocation of Rs. 4,400 crore to encourage plans to have clean air by state governments.
9. Digital India, Connectivity
- Policy will be set up to build data centre parks throughout the country.
- Public institutions at Gram Panchayat levels to be provided with digital connectivity.
- BharatNet will link 100,00 Gram Panchayats in FY21, fibre to be provided to households. Rs. 6,000 crore allocated for BharatNet.
- Rs. 8,000 crore allocated to set up National Mission on Quantum Computing and Technology.
10. Women
- More than 6 lakh anganwadi workers are equipped to upgrade status of more than 10 crore housholds.
- Allocation of Rs. 35,600 crore for nutrition-related programmes in FY21.
- Rs. 28,600 crore to be allocated in FY21 for women-linked programmes.
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