This budget aims to comprehensively address key areas without major reforms. Surprisingly, markets reacted negatively with a 2.5% fall. A new optional personal income tax regime introduces tax slabs of 0%, 5%, 10%, 15%, 20%, 25%, 30% for incomes up to 1.5 lakhs and above respectively, which could save taxpayers up to Rs. 78,000 annually compared to the old system. The dividend distribution tax is abolished. Disinvestment targets are doubled to Rs. 2.1 lakh crores including potential sales of LIC and IDBI. Infrastructure receives Rs. 103 lakh crores allocation while agriculture receives Rs. 1.54 lakh crores.

1. Dr Raju Indukoori 1

2. Indian Budget 2020
 This is a typical Modi style budget to make it simple
and comprehensive touching all the areas to the
maximum extent without knee jerk statements and big
bang reforms.
 Surprisingly markets reacted negatively with biggest
budget day fall of the decade with 2.5% slump in both
NSE and BSE.
 Economic survey was kept aside as the anxiety on
slowdown and recovery were not touched.
Dr Raju Indukoori 2

3. Cash Flows for 2020-21
(in Rs Cr)
Tax Revenue
Other Receipts
Total Receipts
Total Expenditure
Fiscal Deficit
Fiscal Deficit
16,35,909
3,84,387
20,20,296
30,42,230
7,96,337
3.5%
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4.  Flat tax scheme is introduced with the absence of tax exemptions.
 Existing tax scheme continues in the absence of 70 deductions
including standard deductions, 80C investments, interest on home loan,
interest on savings account, medical insurance premium, LTA and
house rent allowance.
 In comparison, Rs 78,000 of tax will be saved on an annual income of
Rs 15 Lakhs under the new tax scheme. This happens if one doesn’t
consider any deductions in the existing tax scheme. This hints that
deductions will disappear in future.
 New scheme is beneficial for low income levels.
 Option to be with old regime or new scheme.
 Indians who are not residents of any country will be taxed.
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Personal Income Tax

5.  Even tax slab of Rs 2,50,000 is introduced.
 Tax rate has a range from 0% to 30%.
 Incremental tax rate of 5% is introduced for every
tax slab.
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Personal Income Tax
Slabs and Rates

6. Personal Income Tax
Slabs and Rates
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Annual Income Slabs Tax rate
From To Old New
0 250,000 0% 0%
250,000 500,000 5% 5%
500,001 750,000 20% 10%
750,001 1,000,000 20% 15%
1,000,001 1,250,000 30% 20%
1,250,001 1,500,000 30% 25%
Above 1,500,000 30% 30%

7. Investors
 FPI limit in corporate bonds increased from 9% to 15%.
 Bank Deposit Insurance cover for Rs 5 Lakh deposits (earlier Rs 1
Lakh).
 100% tax exemption on sovereign wealth fund.
 ELSS SIPs and life insurance premiums may take a nosedive due to
withdrawal of tax exemptions.
 More sops for bond market funds and participants including 100% tax
exemption for sovereign wealth funds in infrastructure and other
specified.
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8. Financial Markets
 Debt ETFs for Government Securities for retail and
pension funds.
 Netting of financial contracts to cut down credit defaults.
 Rupee derivatives traded in GIFT city Gujarat.
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9. Dividend Distribution Tax (DDT)
 DDT was deducted by the companies paying dividend to
their share holders.
 Share holders had double taxation with DDT and Personal
Income tax.
 In budget 2020, DDT is abolished.
 More money in investors or shareholders pockets.
 This makes domestic investors at par with foreign
investors where DDT is not levied.
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10. MSMEs
 Sub ordinated loans to MSMEs with quasi equity guaranteed by…
 MSME tax 28% reduction is expected as people will prefer 11% tax
for listed stocks is very low.
 App based invoice financing.
 Tax payment on ESOPs deferred for 5 years or Employee leaving the
company or ESOPs sold whichever is earlier.
 Audit turnover limit enhanced from Rs 1 Cr to Rs 5 Cr.
 Turnover limit for Income tax deduction claim increased to Rs 100 Cr.
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11. Amendments
 Companies Act
 PFRDA disintegrated from Government Employee trust.
 New section in Income Tax Act 1961 to bring sellers on
Ecommerce platform in tax bracket.
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12. Disinvestment
 LIC disinvestment proposed through IPO.
 Capital
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In Rs Lakh Crores
Capital 31.11
Income 2018-19 5.61
E Claim Payments 1.63

13. Disinvestment
 Targeted to disinvest Rs 2.1 Lakh Crores in 2020-21 which
is double the target of 2019-20 target.
 100% exit in IDBI.
 Disinvestment in mighty LIC through IPO in second half
of the financial year.
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14. Sectoral distribution
Infrastructure
 Allocation: Rs 103 Lakh Crores
 Infrastructure Transport: Rs 1.74 Lakh Crores.
Agriculture
 Allocation: Rs 1.54 Lakh crores.
 Agro credit at Rs 15 Lakh crores.
Health Sector
 Allocation : Rs 69,000 Crore
 Set up hospitals in tier I and Tier II Cities through PPP
 Swatch Bharat 12,300 cr
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15. Education
 Rs 99,300 Cr for education sector.
 RS 3,000 Cr for Skill development.
 Engineers internship in local bodies.
 Online Courses to underprivileged students
through top ranked colleges of NIRF.
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16. Regional distribution
 22 New airports in Northern part of the country.
Not even one in South India.
 Southern states gets the least.
 Rs 30,757 Cr to Kashmir.
 Rs 5,958 Cr to Ladak.
 No special status to AP.
 No Railway Zone for Visakhapatnam.
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17. Miscellaneous
 Niryat Rin Vikas Yojana (NIRVIK) Scheme to Enhanced
insurance cover and reduce premium for small exporters.
 Hike in basic customs duty making imports costly.
 Hike in import of electric vehicles to encourage production
and assembly in India.
 Aadhar based PAN issue.
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18. Happy Financial Year
Thank You