Union Budget 2020

Union Budget 2020

Union Budget 2020 

Union Budget 2020 Key Highlights:

  • Significant Relief for Individual Taxpayers
  • New Income Tax Regimes for 2020 are: 10%, 15%, 20%,25% and 30% respectively
  • Individuals are Now Taxed At:
  • Up to 5 lakh Annual Income-Zero/No Tax
  • Rs.5 lakh-7.5 lakh Annual Income: 10% Income Tax
  • Rs.7.5 lakh-10 lakh Annual Income: 15% Income Tax
  • Rs.10-12.5 lakh Annual Income:20%Income Tax
  • Rs.12.5-15 lakh Annual Income:25% Income Tax
  • Above Rs.15 lakh Annual Income:30% Income Tax
  • Simplified New Tax Return System in India will be Effective from 1st April,2020
  • Fintech Startups Get Tax Breaks,ESOP Tax Deferred by 5 Years
  • Threshold Limit from 1 crore to Rs.5 crore has increased for MSME
  • MSME Compliance Has Reduced and Encourages MSME to Transact Digitally 
  • Tax Rate for Existing Companies Brought Down to 22%. New Companies, Tax Rate Reduced to 15%
  • Budget will boost income and purchasing power of people: FM
  • Taxes on Exported Products from this Year
  • GST has integrated the country economy and 16 lakh new taxpayers added due to GST: FM
  • GST Saves 4% of Monthly Household Spends
  • GST has Been Gradually Maturing. It has Facilitated the Formalisation of the Economy: FM
  • Annual household saves 4% income of due to GST: FM
  • Estimated Nominal Growth of 10% for GDP in 2020: FM
  • New Law for Meeting Financial Contract
  • Fiscal Deficit of 3.5% for FY 20, 3.8% for FY 2021: FM
  • Removal of Dividend Distribution Tax
  • Union Budget is Focused on three core values: Aspirational India, Economic Development for All and Caring Society
  • Reducing Corporate Tax was Historic:FM
  • Kisan credit card scheme proposed
  • Economic Development for All is Government’s Vision: FM
  • Deposit Insurance Increased from Rs.1 lakh to 5 lakh Per Depositor
  • Need Transparency in Banks and Govt will Monitor Banks Health:FM
  • Aadhaar enough for PAN Card
  • Instant PAN Allotment
  • Push for Transparency in Banks
  • SBI limit for Corporate Bonds Increased to 15%
  • Liquidity Budget for NBFC
  • Remaining Govt Stake in IDBI Bank to be Sold
  • Investors can Access Govt Securities
  • Govt to sell a Part of its Holding in LIC
  • Partial Credit Guarantee for NBFCs
  • Extending Restructuring Window for MSMEs by a Year
  • Pension Body to be Reformed
  • Rs.3.50 lakh Crore for Public Sector Banks
  • Farm Loan Waiver will be Allowed
  • Goal is to Double the Income of Farmers by 2020: FM
  • Rs.12,300 budget allocated for Swachh Bharat Mission
  • Rs.69,500 crore for Jan Aroyga Yojana
  • Rs.3.6 lakh crore for Jal Jeevan Mission
  • Rs.2.83 lakh for Agriculture
  • Stress Would Be on External Commercial Borrowing
  • Rs.99,300 for education sector and above 3,500 crore on skill development
  • Invest Clearance Cell Proposed for entrepreneurs
  • Boost Startup Taxes on ESOP Deferred by 5 Years
  • Creation of 5 new Smart Cities
  • Schemes Focused on Encouraging Manufacturing of Mobile Phones 
  • National Tech Textile Mission 
  • Nir Vik Scheme for-Higher Insurance Cover
  • New Education Policy Soon
  • Rs.27,300 crore for development and promotion of Industry and Commerce 
  • 100 lakh crore for infra in next 5 cities
  • Youth power for startups
  • 100 new airports by 2024
  • Rs.1.7 lakh crore for Transport Infrastructure
  • Freedom to choose supplier and rates for electricity
  • Rs.22,000 crore power and renewable for Energy and Electricity Sector
  • New Economy Based on Innovation 
  • Policy for private sector-building data center parks
  • Digital connectivity for essential services and Digital platform for startups
  • Beti Padhao and Beti Bachao was a Grand Success: FM
  • Rs.85,000 crore for Development of SC/ST 
  • 5 Historical Cities will be Developed
  • Rs.3,150 crore for Ministry of Culture
  • Settling up Tribal Museum in Ranchi
  • Rs.4,400 Allotted for Clean Air Schemes
  • Rs.2,500 for Tourism Sector
  • Rs.100 crore for G-20 Presidency Preps

Union Budget 2020-21 Key Update For a Common Man

Honorable Finance Minister Nirmala Sitharaman has finally presented the Union Budget 2020-21 today in the parliament. This was the second budget presented by her in Lok Sabha under Modi’s government, focusing on major sectors like health, education, banking, horticulture, agriculture & farming, government schemes, infrastructure, rural development, etc. She said that the Budget will boost income and purchasing power. 

In her speech, she also highlighted the benefits of GST by saying that 16 lakh new taxpayers added due to GST. The budget was focused on three themes:Aspirational India, Economic Development  for All and Caring Society. She mentioned in her speech that the Government’s focus would be on extending ease of living for all citizens. The government will come out with the Kisan Credit Card Scheme. She also focused on higher education by proposing a degree level online education program.

Let’s just see what this union budget 2020 has in store for a common man. 

Union Budget 2020 Income Tax Announcements

As per the announcement made by the Finance Minister, big tax relief is given to the individuals. As per the new income tax regime, 10%,15%  20%, 25%, 30% are the new tax slabs. An individual will now be paying the taxes under the same regime as per their annual income. 

New Income Tax Slabs

Annual Income (in Rs.)New Tax Slab
Up to 5 lakhNil
5-7.5 lakh10%
7.5 lakh-10 lakh15%
10-12.5 lakh20%
12.5-15 lakh25%
Above 15 lakh30%

With this new tax regime, an individual can have a good saving as earlier the tax slabs were high. Thus, the Finance Minister has reduced the current slabs ensuring to ease the tax burden for a common man. Know the Income Tax Calculations. 

What Expectation Fintech Startups Had from Union Budget 2020-21

With the fall of a major NBFC in 2018 and subsequent news of a couple of NBFCs defaulting, there has been a sustained liquidity crunch in the market and fintech players have seen their cost of funds go up. Though the government has intervened by introducing credit guarantee schemes, refinancing facilities, etc. to improve the liquidity situation, many players are yet to see the real benefits of the interventions. One of the key expectations Fintech Startups had from the Union Budget 2020 was to strengthen the financial services to avoid any further shocks and to ensure mechanisms are put into place to ensure that the steps that have already been taken are executed effectively and the smaller players lending to the unbanked segment benefit.

Talking about the Fintech industry, it plays an important role in the penetration of financial services with digitalization being the priority agenda for the government to enable financial empowerment across the country. Thus, India is likely to expect accelerated growth in the fintech sector with a consistent focus on ease of doing business and thrust towards the development of technological infrastructure in the country, wherein fintech will be able to gain much more momentum in the digitally-driven economy. 

Union Budget 2020 Expectations for MSMEs and GST

According to experts, Government needs to immediately address the decreasing consumer spending which is creating a demand problem in the economy. Low spending would not only affect the growth prospects of digital lenders but also affect the million of MSMEs which form the backbone of the economy. The growing demand is to lower the direct taxes to immediately unlock consumer demand, but won’t be an easy task for the government keeping in mind it has already lowered corporate taxes and is facing challenges maintaining fiscal discipline. However, there must be a balanced step taken to revive consumer spending.

While on the other hand, the fintech lending players were expecting trade financing and supply chain financing from the union budget 2020 as the next growth frontiers and the GST data would be crucial in this. 

Moreover, the GST information will not just help lenders better underwrite loans but also help prevent frauds which have been historically the biggest problem in supply chain financing. It was expected from the Government to further strengthen the GST framework to increase compliance and to avoid frauds which will build more confidence on this new indirect tax system.

Did Union Budget 2020 Budget Live Up to the Expectations of Fintech and MSME Industry?

For Fintech Startup

Announcement: A scheme to bring down litigation in direct taxation scheme. 100% deduction of profits for three consecutive assessment years out of seven for eligible startups having turnover of up to Rs 25 crore. “Moreover, considering the fact that in the initial years a startup may not have adequate profits to avail this deduction, I propose to increase the eligibility to claim this deduction from the existing 7 years to 10 years,” she said.

What’s Good: The fintech and startup sectors have appreciated the continued support from Nirmala Sitharaman’s budget. They welcome the tax deferment for ESOPS and believe this will enable greater wealth creation opportunity for the employees and attract high quality talent to the start-up ecosystem.

For MSME

Announcement: “I propose to raise, by 5 times, the auditing threshold from Rs.1 crore in turnover to Rs.5 crore. This would be applicable to only those MSMEs that transact less than 5% in cash’’: What’s Good:As per the MSME Ministry, the sector employs about 40% of India’s workforce. And, SME output is estimated to be 45% of the total Indian manufacturing output, while SME exports make up 40% of India’s total exports. Further, the sector accounts for 16% of bank lending business. Thus, encourages MSMEs to transact digitally. It also helps to boost businesses’ online presence, making it easier to adopt digital GST Return Filing, e-way bills and improve efficiency in logistics and manufacturing . 

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