Union Budget 2020 – Income Tax Rates Reduced Across Different Income Slabs!

Last Updated : Feb. 3, 2020, 10:22 a.m.

Finance Minister Nirmala Sitharaman has presented the Union Budget 2020 on the floor of the Parliament. The Minister said the budget, which revolves around Aspirational India, Economic Development for All and a Caring Society, aims to boost income and purchasing power. She reposes faith in the economy by saying its fundamentals are strong. Inflation has remained under control, said the minister. The GST has formalized the economy and integrated the nation in the process. Backing GST with statistics, the minister said the indirect tax reform has provided ₹1 lakh crore benefits to people. 16 lakh new tax payers have been added. She says, “India is the 5th LARGEST ECONOMY”. The FDI has reached 284 Billion now. Central govt’s debt has fallen to 48.7% in March 2019 from 52.2% in March 2014, said the minister. Let’s check out what she has given to you in this Budget.

Income Tax & Corporate Tax Related Announcements

• The corporate tax rate at 15% is lowest in the world, Sitharaman affirms.
• Propose to bring a new simplified personal tax regime.

The tax rate structure is as follows-

Notes to Keep in Mind

• To avail the reduced tax rate benefits in this optional tax regime, you need to forgo as many as 100 tax exemptions & deductions, including 80C

• The tax rate for individuals Post-Budget 2020 will be NIL for individuals earning upto ₹5 lakh a year. All those earning above 5 lakh will be taxed as per the slab shown in the table.

An individual earning Rs ₹15 lakh per anum and not availing any deductions will now pay ₹lakh tax in place of ₹2.73 lakh by virtue of these tax measures, affirmed the Minister

Other Tax Related Announcements

• Dividend Distribution Tax (DDT) removed in the hands of companies
• Taxes on ESOPs in startups deferred by 5 years
• Govt proposes 100% tax concession to sovereign wealth funds on investment in infra project s
• Tax holidays for affordable housing developers extended by 1 more year to 2021
• Concessional tax rate of 15% extended to power generation companies
• Turnover threshold for audit raised to ₹5 crores from ₹1 crore
• PAN to be instantly alloted in a soon to be launched scheme
• Proposes scheme to bring down litigation in the direct taxation scheme – 4.83 lakh direct cases pending in various appellate forums

Financial Sector Related Announcements

The financial architecture needs to improve to achieve 5 trillion dollar economy. To make the sector competitive, the Finance Minister announces the following measures.

• Robust mechanism to monitor the health of all scheduled commercial banks
• Deposit insurance threshold increased to ₹5 lakh from the existing ₹1 lakh
• Proposes amendments to the Factor Regulation Act
• Proposes a scheme to introduce subordinate debt for MSMEs
• APP based financing for MSMEs
• Partial credit guarantee for NBFCs
• NRIs can invest in certain government securities
• Proposes legislation for netting of financial contracts
• Proposes new debt ETF
• National Bullion Exchange in Gift City
• Government to sell a part of its stake in LIC via Initial Public Offer (IPO)
• Nominal growth of GDP estimated at 10% or 2020-21
• Fiscal deficit estimated at 3.8% for 2021

Economic Development for All Theme

The government plans to work on the following under this theme.

• The government proposes to set up investment clearance cell at centre and states for an end to end facilitation
• 5 new smart cities proposed in collaboration with states
• New scheme is in place to boost electronics manufacturing
• Digital refund of duties for exporters
• Plans to make every district an export hub
• National infrastructure pipeline worth ₹103 lakh crore launched, of which ₹22,000 crores is already given
• Large solar capacity alongside the railway track
• Aims to give a big push to infrastructure
• The government plans to build 2000 KM of strategic highways
• Plans to achieve 11,000 KM of track electrification
• High-speed Ahmedabad-Mumbai train
• Seaports need to be enhanced
• 100 more airports to be developed by 2024
• Plans to replace conventional meters with smart meters, which will allow the consumer to choose the supplier and the rate as per their requirements
• Proposes ₹22,000 crores for power & renewable energy sector
• Plans to reform stressed discoms
• Proposes to expand the national gas grid by 16200 KM
• National Logistics Policy to be launched soon
• 1480 crore for the textile sector
• ₹27300 crores for promotion of industry and commerce
• Data centre parks to be set up
• 1 lakh gram panchayats to be connected by Bharat Net
• Proposes ₹6000 crores for Bharat Net
• Digital connectivity for essential services
• Proposes ₹8000 crores for quantum technology for the next 5 years

Aspirational India Theme

The government plans to work on the following under this theme.

Agriculture Related Announcements

• The government wants to double the income of farmers by 2022
• Need to liberate farm markets
• The government is proposing 100 water stressed districts
• Scheme is place for 20 lakh farmers to set up solar pumps
• Government to encourage balanced use of fertilizers
• Geo tagging of existing warehouses
• Village storage scheme for farmers
• Krishi Udan Scheme to be launched
• Plans to launch Krishi Rail service
• Zero budget natural farming
• The government has set an agriculture credit target of ₹15 lakh core for 2020
• Plans to expand the NABARD re-finance scheme
• 108 million metric ton milk production by 2021
• The government allocates 2.83 lakh for agriculture and irrigation
• Proposes raising fish production to 200 lakh tons

Health Related Announcements

• Holistic vision for National Healthcare
• Proposal to set up more hospitals
• The government allocates ₹69,000 crores for the healthcare sector
• ₹12,300 crores allocated to Swach Bharat Mission 2020-21
• AI to be used for Ayushman Bharat Scheme
• ₹3.6 Lakh crore allocated for Jal Jeevan Mission

Education & Skills Related Announcements

• ₹99300 crores allocated for the education sector
• Internship for Engineers by urban bodies
• A fresh education policy proposed
• New courses in 150 universities by 2026
• Attach medical colleges to district hospitals
• Large hospitals to be entrusted for PG courses
• Proposes to set up National Police University

Caring Society Theme

The government plans to work on the following under this theme.

• Record enrollment under Beti Scheme
• Allocation ₹36,500 crores for nutritional programmes
• Proposes to end manual scavenging
• Proposes ₹85,000 crore for backward castes
• ₹53,700 crore for scheduled tribes
• Institute for heritage & conservation soon
• The government plans to develop 5 new archaeological sites
• Maritime Museum to be set up at Lothar
• Proposes to allocate ₹2,500 crores for tourism promotion
• The government allocates ₹4,400 crores for climate change policy
• Plans to introduce changes in the Companies Act
• National recruitment agency for the conduct of computer-based tests for non-gadgeted posts
• India will host the G-20 Presidency in 2022