Budget 2020 bats for caring society, development, new Income Tax regime
The annual Budget for 2020-21 of the Modi government, presented by Union Finance Minister Nirmala Sitharaman in Parliament on Saturday, harped upon some key themes like aspirational India, economic development for all, ease of living, good governance, a caring society and trusting citizens.
The highlight of Ms Sitharaman’s second budget speech in a row was reduction in income tax rates. She proposed a new tax regime and a tax payers’ charter. In the new Income Tax regime those earning between Rs 5 lakh and 7.5 lakh per annum, will now pay 10 per cent as personal income tax as against the prevailing 20 per cent. The government has given an option to individual tax payers to join the new tax regime without claiming several tax exemptions or continue in the old rate and claim tax exemptions.
Prime Minister Narendra Modi said the Budget 2020 has vision and action and the new reforms announced by the Finance Minister will give a push to the economy.
Other key steps, she proposed to spend Rs 99,300 crore on skill development and also announced a reduction in corporate taxes with a view to make India a preferred investment destination. She also announced the government’s intention to sell stake in Life Insurance Corporation of India (LIC), the country’s largest insurer, through the Initial Public Offering (IPO) route to help generate revenue.
The Budget speech also had announcements pertaining to the welfare of SCs, OBCs and STs, education, agriculture, and Anganwadi workers.
Amid an economic slowdown, high unemployment rate, rising inflation, and a prediction of low growth rate for India coming from the International Monetary Fund (IMF), the Finance Minister set the fiscal deficit at 3.5 percent in Revised Estimates for 2020-21 as the government continued to look for measures to spruce up a sagging economy.
She said the fiscal deficit for the current year would widen to 3.8 percent in Budget Estimates of the Gross Domestic Product (GDP), up from the target of 3.3 percent.
Other big-ticket announcements include Rs 2.83 lakh crore for the agriculture sector, Rs 35,600 crore for nutrition-related programs.
The Finance Minister said the budget was aimed at boosting incomes and enhancing purchasing power, stressing that the economy’s fundamentals were strong and inflation was well contained.
Several items will become costlier, including imported medical equipment, cigarettes, and tobacco products. Ms. Sitharaman proposed the withdrawal of customs duty exemption on raw sugar, agro-animal based products, tuna bait, skimmed milk, certain alcoholic beverages, soya fibre and soya protein.
Some of the items which will see consumers coughing up more include footwear, furniture, wall fans, cigarettes, tobacco products, tableware/kitchenware made of porcelain or China ceramic, clay iron, steel, copper, catalytic converters, parts of commercial vehicles, selected electronic vehicles, selected toys, selected mobile equipment. Items for which consumers will have to pay less include raw sugar, skimmed milk, soya fibre, soya protein, certain alcoholic beverages, agro-animal based products, tuna bait, purified terephthalic acid (PTA), newsprint and lightweight coated paper.
The Finance Minister went on for 160 minutes without any break — the longest budget speech ever. She had to stop the speech abruptly because she felt unwell.
Ms Sitharaman had only two pages of her speech left unread when she appeared uneasy and was seen wiping sweat from her forehead.
She was offered throat soothers by her ministerial colleagues, but that did not help. The Minister chose to discontinue the speech and requested Speaker Om Birla to consider the remaining speech as read.
She had broken her own record of a 2-hour-17-minute-long Budget speech in July 2019.
As much anticipated announcement about tax relief has been doing the rounds, the Budget announced the personal Income tax regime with income between Rs 7.5 lakh and Rs 10 lakh can pay tax at 15 percent while with income between Rs 10 and Rs 12.5 lakh can pay tax at 20 percent against 30 percent earlier. Those with income between Rs 10 lakh and Rs 12.5 lakh will have to pay 20 per cent tax against earlier 30 per cent. People with an income of Rs 12.5 lakh to Rs 15 lakh will have to pay a 25 percent tax against 30 percent earlier.
She said those earning Rs 15 lakh per year and not availing any exemption will have to pay Rs 1.95 lakh in tax, getting a relief of Rs 78,000 as against the prevailing tax rates.
The new tax rate is same as the existing 30 percent for income above Rs 15 lakh.
The ‘Vivaad se Vishwas’ scheme provides a solution to direct taxpayers and gives more money into people’s hand, she told reporters, adding around 4.90 lakh cases of direct tax are still pending across the different courts of the country and the scheme guarantees them to sort them out in one go.
The Prime Minister said the new reforms announced in the Budget will work to accelerate the economy, financially empower every citizen of the country and strengthen the foundation of the economy in this decade.
Congress MP Rahul Gandhi, reacting to the Budget, said, “The main issue facing the economy is unemployment. I didn’t see any strategic, concrete idea that would help our youth get jobs. I saw tactical stuff but no central idea. It shows the mindset of the government, all talk, and talk but nothing happening. There is a lot of repetition, rambling.”
Congress leader and former Finance Minister P Chidambaram said, “Indian economy is demand-constrained and investment-starved. Finance Minister has not acknowledged these two challenges, and that is a pity. Consequently, she has proposed no measures or solutions to those two challenges.