The document summarizes key announcements from the Indian Union Budget 2020-21 across several sectors: - Individual tax proposals include a new optional simplified personal tax regime, changes to residency rules, and taxation of employer contributions to provident funds above Rs. 750,000. Dividend income will now be taxed in the hands of recipients. - Measures to stimulate growth include tax exemptions for sovereign wealth funds, no change in corporate tax rates but a reduced 15% rate for new power sector companies. Concessional borrowing rates were extended. - Key sectors highlighted include agriculture and food processing, education and skill development, and infrastructure, transport, and power, with increased allocations and policy initiatives outlined

1. 
Analysis
By:
-CA Sudhanshu Upadhyay

2. Sir R. K. Shanmukham Chetty
India’s First Finance Minister

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7. New Simplified Personal Tax Regime –for taxpayers who forego
deductions and exemptions such as:-
 Standard Deduction
 Leave Travel Allowance
 House Rent Allowance
 Interest and principal repayment in respect of self-occupied property
 PPF, insurance premium, mediclaim premium, NPS contribution
 Loss of benefit for subsequent years in event of failure to satisfy
conditions laid down in new regime
 Optional for tax payers
Individual tax proposals

8. 
Individual tax proposals
 Residency
 Threshold of residency for individuals visiting India reduced from 182
days to 120 days
• Any Indian citizen who is not liable to tax in any other country due to
his domicile, residence or any other criteria of similar nature shall be
deemed to be resident of India
 Aggregate contributions by employer towards recognized provident
fund, NPS, approved superannuation fund exceeding INR 750,000 is
now taxable. Interest accretion on contribution included as income is
also taxable

9. Dividend taxation
In the hands of the payer
 Now, DDT abolished and dividend payment will be subject to withholding tax at
applicable rates
 To remove cascading effect, set-off will be available in case of holding-subsidiary
companies
In the hands of the recipient
 Incidence of taxation shifted to recipients
 Only interest expense will be allowable as deduction against dividend income;
maximum deduction capped at 20% of the dividend income
This amendment is applicable to dividend declared, distributed or paid after 1
April 2020
Measures to stimulate growth

10. 
Measures to stimulate growth
Exemption for sovereign wealth funds
 Dividends, interest and long-term capital gains from investments in
specified infrastructure entities earned by sovereign wealth funds will
be exempt from tax
 The investment is required to be made before 31 March 2024 and held for at
least 3 years
No Change in Corporate Tax Rates
 Since the Corporate Tax rates were reduced late in 2019, the current Budget
doesn’t propose any changes.
 However, a concessional corporate tax rate of 15% to new domestic
electricity generation is proposed for companies similar to new
manufacturing companies to attract investment in the power sector.

11. 
Measures to stimulate growth
Extension of concessional tax rate for borrowings from outside India
 Concessional tax rate of 5% under Section 194LC on interest paid to
 non-residents on loan agreements, long-term bonds or rupee
denominated bonds extended from 1 July 2020 to 1 July 2023
 Lower tax rate of 4% will be applicable on interest on long-term
bonds or rupee denominated bonds listed on any IFSC
 Concessional tax rate of 5% under Section 194LD on interest paid to
Foreign Portfolio Investors on investments extended till 1 July2023

12. 
Rationalisation measures
TDS on e-commerce transactions
 E-commerce operator, whether resident or non-resident of India now liable
to deduct tax at source at the rate of 1% on payments made to e-
commerce participant being a resident in India, for sale of goods or
services, including digital product
 Where e-commerce participant does not have PAN or Aadhar, tax
deduction would apply at the rate of 5%
 Once tax has been deducted by e-commerce operator on the gross amount,
no further liability to deduct tax exists under any other provisions.

13. 
Rationalization measures
Rationalisation of provisions of start-ups
 Currently, start-ups with turnover less than or equal to INR 25
crores, are eligible to claim 100% tax deduction in 3 consecutive
years out of 7 for start-ups incorporated between 1 April 2016
and 1 April 2021
 The turnover limit has been enhanced to INR 100 crores
 The 7 year limit has been extended to 10 years

14. 
 Assessments/ Appeals
 Faceless e-assessment will apply even to best judgment assessment
 DRP route will cover all non-residents as against existing coverage of
only foreign companies
 Central government empowered to introduce e-appeal and e-penalty
scheme to eliminate interface between the tax payer and income-tax
authorities
 Tax payer to deposit at least 20% of the demand or furnish security of
equivalent amount in order to seek stay proceedings before the Income-tax
Appellate Tribunal
 Tax audit threshold limit increased to INR 5 crores as against INR 1 crores
for person carrying on business
 Return filing due date extended to 31 October from 30 September of the
assessment year
Ease of compliance

15. 
Ease of compliance
Dispute resolution scheme (to be notified) to clear litigation
 To avail scheme prior to 31 March 2020 – Pay taxes under
dispute with complete waiver of interest and penalty
 To avail scheme prior to 30 June 2020 – Pay taxes under
dispute and additional amount, as would be notified

16. Healthcare
The healthcare sector saw various updates in the budget of FY 20-21.
Here is a glimpse of the important announcements:
 The Finance Minister (FM) announced INR 690 billion for the
healthcare sector in the Budget 2020, inclusive of INR 64 bn for
‘Jan Arogya Yojana’.
 Mission ‘Indradhanush’ has been expanded to cover 12 diseases
with five new vaccines
 Government of India to launch a dedicated program to eradicate
Tuberculosis by 2025 with the slogan of ‘TB Harega, Desh Jitega’.
Sectorial Highlights

17. Target:
 Double farmer income by 2022.
 Double milk processing capacity by 2025, (108 million metric tonnes
(MT) from 53.5 million MT).
 Raise Fish production to INR 20 mn tonnes by 2022-23.
 Raise Fisheries export to INR 1 trillion by 2024-25.
Fund Allocation:
 INR 1.6 trillion– Agriculture, Irrigation Allied Activities.
 INR 1.23 trillion – Rural development.
Agriculture and Food Processing

18. Key Action points:
 Agriculture credit target of INR 15 trillion announced for the year
2020-21.
 Inclusion of 2 million farmers the for setup of Stand-alone Solar
Pumps.
 1.5 million farmers to be supported for solarizing their grid-
connected pump sets.
 Viability Gap funding for setting up efficient warehousing by land
support by State and PPP mode.
 The Food Corporation of India (FCI) and the Central Warehousing
Corporation (CWC) to undertake warehouse building on the relevant
land.
 Establishment of ‘Kisan Rail’ through PPP arrangement, with
refrigerated coaches in Express and Freight trains for perishables.

19. 
Fund Allocation:
 INR 0.99 trillion for the Education sector.
 INR 30 billion specifically for skill development.
Key Action Points:
 New Education Policy to be announced in the financial year.
 150 higher educational institutions to start apprenticeship
embedded courses by March 2021.
 Internship opportunities to new engineers in urban areas for
up to one year.
 Full-fledged, degree-level online education programs to be
introduced to enhance accessibility.
Education and Skill Development

20. 
Fund Allocation:
 INR 273 billion allocation for the development and
promotion of Industry and Commerce
Key Action Point:
 Investment Clearance Cell to provide ‘end to end’
facilitation and support, including pre-investment
advisory, information related to land banks, and
facilitating clearances at the Center and State levels
through the portal.
Industry and Commerce

21. 
Infrastructure, Transport, and Power
Proposed allocation of INR 27,300 crore for industry and commerce in FY21
 A total of 9,000 km of economic corridorto be set up
 Five new smart cities to be developed
 100 more airports to be developed by 2025 to make travel easier and
support the UDAAN scheme
 150 trains to run under the PPPmode
• Digitisation: INR 6,000 crore will be allocated for the BharatNet programme in
2020-21 to further enhance broadband connectivity in rural areas. BharatNet
will link 100,000 gram panchayats thisyear.

22. 
FM says entrepreneurship has always been the "strength of India“
• A proposal of deferment of tax payment by employees on ESOPs
from start-ups by five years
• The turnover limit raised from existing INR 25 crore to INR 100 crore
for an eligible start-up to avail a deduction of 100 percent of its profits
for three consecutive assessment years from a total of seven years
• The government to create a single investment cell to expedite the
grant of licences and promote entrepreneurship
Start-ups

23. 
MSME
• The government has asked the RBI to consider extending the
restructuring scheme for MSMEs by another year until 31 March
2021.
• National Logistics Policy will be launched soon to make MSMEs
more competitive.
• Amendments will be made to enable NBFCs to extend invoice
financing to MSMEs.

24. 
Questions