V s p g budget highlights 2020

V S P G & Associates
(Chartered Accountants)
BUDGET HIGHLIGHTS 2020-21
(A Synopsys of Financial Bill 2020-21)

2 V S P G & Associates
Disclaimer
Budget 2020 proposal presented by the finance minister before the parliament are analyzed in
this document. It should not be relied upon as a subtitle for detailed advice or a basis for
formulating business decisions.
The proposals are subject to amendment as the Finance Bill is yet to be passed by the
parliament.
All reasonable care has been taken in preparing this document. V S P G and Associates,
accept no responsibility for any error it may contain, whether caused by the negligence, or
otherwise or any loss, however caused or sustained by the person on relying on it.
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Finance Minister Nirmala Sitharaman presents her Budget for the year 2020-21 in Parliament.
The budget is largely focused below:
Achievements of Government
 This budget is to boost income and enhance purchasing power, says finance minister.
 Vibrant India will be a caring economy and will attend to weak, old and vulnerable citizens,
 GST has integrated economically and has consolidated multiple taxes, says Nirmala
Sitharaman. GST has led to inspector raj vanishing, says FM. Average household now saves
4 percent of monthly spend due to reduced GST rates
 Total of 60 lakh new taxpayers and 105 crore e-way bills generated under GST
 Insurance protection, digital penetration, affordable housing and Ayushman Bharat as key
reforms of the government.
 Moved on from over 4 percent growth in 1950s to 7.4 percent to 2014-19 period
 India now is the fifth largest economy of the world. Central government debt reduced
to 48.7% of GDP in 2019 from 52.2%
 India was able to raise 271 million people out of poverty
 Technology like machine learning, robotics, AI alongwith number of productive age group
(15-65 years) are cross-cutting streams in India
 Inflation was 9% in the last two decades, she says. We are now the fifth largest economy in
the world
 First theme of budget is aspirational India. Second is economic development and third is
caring society.
 A total of 6.11 crore farmers insured under Fasal Bima Scheme
 PM Kusum Scheme reduced dependence on diesel and kerosene and relied on social energy
 Within 100 days of the governments formation, it has eliminated unmanned level crossings,
and aimed to achieve electrification of 27000 km of lines.
 Within 100 days of assumption of this government, it has commissioned 550 wi-fi facilities
in as many stations.
 The Jal Vikas Marg on National Waterway-1 will be completed. Further, the 890 Km
Dhubri-Sadiya connectivity will be done by 2022.
 Financing on negotiable warehousing receipts has already crossed ₹6,000 crore.
 58 lakh SHGs have been mobilised to alleviate poverty.

 India's tourism sector grew at 7.8 per to 1.88 lakh crore from 1.75 lakh crore.
 Coalition for Disaster Resilient Infrastructure launched from September 2019. Its
implementation will be from January 2021.
 Foreign direct investment (FDI) into the country has increased to USD 284 billion during
2014-19
 More than 5 lakh MSME benefited from debt restructuring last year
 Revised expenditure estimate for FY20 at Rs 26.99 lakh crore, says FM. Revised receipts for
FY21 at Rs 19.32 lakh crore.
 Fiscal deficit on 3.8 percent of GDP in FY20 and 3.5 percent for BEFY21
 FY21 total expenditure at Rs 30.42 lakh crore, says FM. Net Market Borrowing for FY20 at
Rs 4.99 lakh crore and net market borrowing for FY21 at Rs 5.36 lakh crore
 India has moved up from rank 65 in 2014 to 34 in 2019 in the Travel & Tourism
Competitive Index (World Economic Forum).
 Foreign exchange earnings grew 7.4% to `1.88 lakh crores for the period January to
November 2019 from `1.75 lakh crores
Agriculture
 Pradhan Mantri Kisan Urja Suraksha avem Utthan Mahabhiyan (PM KUSUM) to be
expanded to provide 20 lakh farmers in setting up standalone solar pumps. will be helped
with solar energy.
 Our government is proposing comprehensive measures for 100 water-stressed districts in the
country
 The Indian Railways will set up Kisan Rail for cold storage of perishable goods through the
PPP model. Krishi UDAN will be launched by the Ministry of Civil Aviation on
international and national routes.
 For the horticulture sector, with its current produce of 311 million metric tonnes exceeds the
production of food grains. For better marketing and exports we will support States which
support ‘one product, one district’.
 Agricultural credit target has been set at ₹15 lakh crore. All eligible beneficiaries of PM
Kisan will be covered under Kisan Credit Card scheme
 MNREGA will be dovetailed to create fodder farms.
 By 2022-23, she proposes raising fish production to 200 lakh tonnes.
 Agri and allied activities an allocation of Rs 2.83 lakh crore has been made for FY21. This
includes agriculture, irrigation, rural development, Panchayati Raj.
 Doubling of milk producing capacity will be to 108 MT by 2025 from 53.5 MT
 Coverage of artificial insemination shall be increased from the present 30% to 70%.

Health
 Indhradhanush scheme to cover more diseases. Safe water Jal Jeevan mission and sanitation
mission to enhance the health condition of the poor
 20,000 hospitals empanelled under Ayushman Bharat. We need more hospitals in tier 2 and
3 cities to benefit poor in these areas. This will be 112 aspitational districts where first
priority will be given
 TB Harega, Desh Jeetega campaign will be strengthened to end TB by 2025 in the country.
A total of Rs 69.000 crore has been provided for the healthcare sector of which PM Jan
Arogya Yojana will get Rs 6,400 crore.
 Rs 3.6 lakh crore for Jal Jeevan Mission has been approved. This will look at augmenting
local water resources, desalination, and water harvesting and renewing older sources
in FY21.
 Government will encourage plans to have clean air by the state governments with allocation
of Rs 4,400 crore.
 Expand Jan Aushadhi Kendra Scheme to all districts offering 2000 medicines and 300
surgical by 2024.
 Total allocation for Swachh Bharat Mission is about `12,300 crore in 2020-21.
Education:
 The New Education Policy will be announced soon.
 150 higher education institutions to start apprenticeships. Urban Local Bodies to provide
internships opportunities for fresh engineers for a year.
 In order to provide quality education to students of deprived sections, it is proposed to start a
degree level full-fledged online education programme.
 Degrees can be taken online soon and will be offered by the Top 100 NIRF ranked institutes
 There is a huge demand for teachers, nurses, paramedical staff and care givers abroad.
However, their skill-sets do not match standards and needs to be improved, says FM. A total
of Rs 3000 crore will be given for skill development
 There is a shortage of qualified medical doctors. For this, it is proposed to attach a medical
college to existing district hospitals under PPP mode.
 Rs 99,300 crores for the education sector in 2020-21 and Rs 3,000 crores for skill
development,

Industry / Commerce
 Government e-Marketplace (GeM) is moving ahead for creating a Unified Procurement
System in the country for providing a single platform for procurement of goods, services and
works. Each district is to become an export hub, she says. Budget to provide ₹27,300 crore
for development and promotion of industry and commerce in 2021
 A policy will be set up to build data centre parks throughout the country. All public
institutions at Gram Panchayat levels will be provided with digital connectivity. Fiber to
home through BharatNet will link 100,000 Gram Panchayats in FY21 itself. An allocation of
Rs 6,000 crore will be provided for BharatNet
 An allocation of Rs 8,000 crore has been set up for the National Mission on Quantum
Computing and Technology.
 Thermal power plants that cannot meet emission targets should shut down
 Subordinate debt for entrepreneurs of MSMEs will be provided and will be treated as quasi-
equity, Government has asked RBI to consider extending window of debt structuring by one
year to March 2021 for this purpose.
 A debt ETF consisting of government securities will be launched. For NBFCs and HFCs,
liquidity constraints will be addressed. The FPI Limit in corporate bonds will be raised to
15% from 9%.
 National Technical Textiles Mission with an outlay of ₹1,480 crore over 4 years to cut down
imports.
Infrastructure/ Railway
 Budget proposes to provide ₹1.7 lakh crore for transport infrastructure in 2021. Aircraft fleet
size will increase to 1,200 planes by 2024.
 Govt to monetize 12 lots of national highways by 2024. 100 more airports will be developed
by 2024 to support UDAN.
 More Tejas Express -type trains will be set up for tourist destinations,
 Government will provide 20% equity for Bengaluru Suburban Transportation Project. This
will be a Rs 18,600 crore project.
 Govt urges the States to replace the existing energy meters with prepaid smart meters.
 Electrification to be done more vigorously. Delhi-Ahmedabad Bullet train to be pursued.
Solar panel to be set up alongside the railway tracks on the land owned by the rail
departments
 104 more airports to be added under UDAN scheme, aircraft fleet to be doubled
 Budget to provide ₹22,000 crore to power and renewable energy sector.
 The govt proposes to expand the national gas grid from 16,200 km to 27,000 km.

Beti Bachao Beti Padho
 Gross enrollment of girls under Beti Bachao Beti Padhao is higher than boys. Here, she says
that gross enrollment of girls is 94.32 percent in elementary levels, 81.32 percent in
secondary level and 59.7 prercent in higher secondary level.
 She adds that women are a priority especially pregnant women and lactating women. More
than 6 lakh anganwadi workers are equipped to upload status of more than 10 crore
households This scale is unprecedented.
 There are imperatives to lower maternal mortality rates. FM proposes task-force on six
months on this matter
 An allocation of Rs 35,600 crore for nutrion-related programmes in FY21.
 Further, Rs 28,600 crore will be allocated in FY21 by government for women-linked
programmes.
 SC/OBC relief, a proposal of Rs 85,000 crore for FY21. For STs, Rs 53,700 crore will be
provided. Allocation of Rs 9,500 crore for senior citizens and persons with disabilities for
FY21
Culture and Tourism
 Five archaeological sites will be set up with museums on site in Rakhi Gadi in Haryana,
Hastinapur in UP, Dholavira in Gujarat, Shivsagar in Assam and Adichanallur in Tamil
Nadu.
 A tribal museum will be set up in Ranchi, Jharkhand. Maritime site will be set up in Lothal.
 A total of Rs 3,100 crore has been set aside for Culture Ministry in FY21.
 A 100 more airports will be developed under UDAN by 2024.
 A total of Rs 2,500 crore will be allocated for tourism promotion in FY21.
 India will host G-20 residency in 2022 during 75th year of India's independence. During this
event, India would be drive global economic advantage and an allocation of Rs 100 crore has
been done for this purpose.
Banking:
 A clean, reliable and robust financial sector is critical for robust economy, she says. Infused
Rs 3.5 crore capital into PSU banks
 Deposit insurance cover will be hiked to Rs 5 lakh from Rs 1 lakh. She reiterated that all
deposits are safe.

Taxation:
Direct Tax:
 A taxpayer charter is to be enshrined in the statutes to avoid citizen harassment. There is a
debate on building criminal liabilities for civil acts. Companies Act will be amended to
correct this
 New Income Tax Slab Rates Option to Individual without around 70 exemptions/
Deductions (With 1.5L Ch VIA Deductions):
Particulars Old New
0-2.5 Lakh Exempt Exempt
2.5 Lakh to 5 Lakh 5% 5%
5 lakh-7.5 lakh 20% 10%
7.5 lakh-10 lakh 20% 15%
Rs 10-12.5 lakh 30% 20%
12.5 lakh-15 lakh 30% 25%
Above 15 Lakhs 30% 30%
 Dividend distribution tax abolished, says FM. Companies will no longer be required to pay
DDT. A total of Rs 25,000 crore is revenue foregone due to DDT abolition
 More than 100 exemptions provided in I-T Act. Now around 70 of them have been removed
in the simplified regime. Remaining will be reviewed over the coming years to simplify the
system
 Concessional 5% withholding tax has been extended to municipal bonds. Cooperatives are
taxed at 30 percent now. FM says cooperatives can choose a 22 percent tax with 10 percent
surcharge and 4 percent cess with no exemptions
 Affordable housing, the deduction of Rs 1, 50,000 will be extended to loan sanction by one
year.
 Tax holiday on profits of developers involved in affordable housing projects will be
extended by one year to March 2021.
 Ease deduction donation it is proposed to pre-fill information of those donating. This will
result in hassle free claims for the individuals claiming tax exemptions.
 Amend I-T Act to enable faceless appeals on the lines of faceless assessments.
 New direct tax dispute settlement under 'Vivad se Vishwaas Scheme'. No penalty will be
charged if taxpayers pay by March 31, 2020.Here, only disputed tax amount has to be paid.

 Concessional corporate tax of 15% cut to be extended to new domestic companies engaged
in power generation
 No audit for persons with (up to) Rs 5 crore turnover in case where aggregate of all receipts
and payments in cash during the financial year does not exceeds 5 percent will improve ease
of doing business
 100% tax exemption to their interest, dividend and capital gains income in respect of
investment made in infrastructure and other notified sectors before 31st March, 2024 and
with a minimum lock-in period of 3 years.
 Proposed to extend the period of concessional withholding rate of 5% under section 194LC
for interest payment to non-residents in respect of moneys borrowed and bonds issued up to
30th June, 2023.
 Start up Eligibility limit has been increased to Rs. 100 crores form existing limit of Rs. 25
Crores.
 proposed to extend the period up to 30th June, 2023 for lower rate of withholding of 5%
under section 194LD for interest payment to Foreign Portfolio Investors (FPIs) and
Qualified Foreign Investors (QFIs)

Indirect Taxes:
 Refund process has been simplified and has been made fully automated with no human
interface.
 Electronic invoice is another innovation wherein critical information shall be captured
electronically in a centralized system will be implemented in phased manner,
Disinvestment
Government to list LIC on the stock exchanges. Big news on Life Insurance Corporation of
India which is the largest institutional investor.
Others
PFRDA Act will be amended to separate NPS Trust of government employees from PFRDA
Government is fully committed to supporting new UTs of J&K and Ladakh; Allocation of Rs
30,757 crores for 2020-21 for Jammu and Kashmir and Rs 5,958 crores for Ladakh

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