Mumbai:Highlights of Union Budget for 2020-21 Presented by Union Finance Minister Nirmala Sitharaman

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Mumbai:Highlights of Union Budget for 2020-21 Presented by Union Finance Minister Nirmala Sitharaman
union finance minister presenting union budget 2020-2021

Highlights:

FY21 ESTIMATES

  • Fiscal deficit seen at 3.5% of GDP
  • Net market borrowing pegged at 5.36 trln rupees
  • Gross market borrowing at 7.8 trin rupees
  • Pegs nominal GDP growth at 10%
  • Receipts seen at 22.46 trln rupees
  • Total spending seen at 30.42 trln rupees
  • ETNow: Pegs divestment target at 2.1 trln rupees

FY20 REVISED

  • Net market borrowing pegged at 4.99 trln rupees
  • Fiscal deficit seen at 3.8% of GDP
  • Receipts 19.32 trln rupees
  • Spending revised to 26.99 trln rupees

FISC HEALTH

  • Expected tax buoyancy will take time
  • Good part of govt borrowing to be used for capex
  • Fully provided for all flagship schemes of govt
  • To activate FRBM Act escape clause on structural reforms
  • Fundamentals of economy strong
  • Centre’s debt down to 48.7% of GDP Mar 2019 vs 52.2% Mar 2014

GROWTH, INFLATION

  • India now 5th largest economy in the world
  • FY14-19 average GDP growth 7.4%
  • Financial structure must keep evolving to become $5-trln economy
  • Stable, predictable business environment a key objective
  • Reliable, robust, clean financial sector critical for economy

DIRECT TAX

  • Looking at inverted duty structure under GST
  • Introducing Aadhaar-based verification for indirect taxes
  • Instant allotment of PAN on basis of Aadhaar
  • To amend Income Tax Act to help merged PSU banks to absorb losses
  • To waive interest on tax disputes if amount paid by Mar 31
  • Propose scheme to settle old direct tax cases
  • To amend laws to allow faceless tax appeals
  • Propose to abolish dividend distribution tax
  • Dividend to be taxed only in hands of recipient
  • Revenue forgone on dividend distribution tax 250 bln rupees
  • To review, rationalise tax exemptions over next few years
  • New power cos to attract 15% corporate tax
  • Cooperatives can be taxed at 22% without exemptions
  • Concessional 4% withholding tax on bonds listed in GIFT City
  • Proposes some tax sops on ESOPs of staff at startups
  • Deferring tax payment on sale of ESOP for 5 yrs in start-ups
  • Concessional 5% withholding tax extended to municipal bonds
  • Can avail new tax rates if not availing some exemptions
  • Tax holiday for affordable housing extended by 1 year
  • Turnover threshold for audit of MSMEs hiked to 50 mln rupees
  • Tax on income above 1.5 mln rupees at 30%
  • Person with income of 1.5 mln rupees to get 78,000-rupee relief
  • No tax on income below 500,000 rupees
  • Cut tax on income of 1.25-1.50 mln rupees to 25%
  • Cut tax on income of 1.00-1.25 mln rupees to 20%
  • Cut tax on income of 750,000-1 mln rupees to 15%
  • Cut tax on income of 500,000-750,000 rupees to 10%
  • New direct tax scheme optional for taxpayers
  • Large benefits for taxpayers under new direct tax regime
  • Propose to significantly reduce income tax in new regime
  • To bring simplified personal income tax regime
  • Tax proposals to bring ease of compliance, reduce litigation
  • Tax proposals focused on simulating growth
  • Want to enshrine taxpayers’ charter into statute
  • Tax harassment can’t be tolerated
  • 100% tax exemption on sovereign wealth funds’ infra investment
  • Removed 70 of 100 income tax exemptions in new regime
  • Revenue foregone on income tax cut at 400 bln rupees/year

INDIRECT TAX

  • Propose nominal health cess on import of medical devices
  • Customs duty on footwear, furniture raised
  • To review remaining customs duty exemptions
  • Some customs duty exemptions being withdrawn
  • To review rules of origin for imports under free trade deal
  • Amending laws to ensure no undue gains for imports under FTA
  • To transfer FY17, FY18 cess balance to GST compensation fund
  • GST compensation to states to be limited to cess collection
  • GST helped add 6 mln tax payers in 4 years
  • Average household saves 4% of monthly spend due to GST
  • Effective tax for all commodities came down due to GST
  • GST did face certain challenges
  • Turnaround time for trucks cut by 20% due to GST
  • Inspector Raj has vanished due to GST
  • GST has resulted in efficiency gains
  • GST has been gradually maturing
  • GST h

News Edit by KVRaman

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