Nirmala Sitharaman, Finance Minister of India, presented the Union Budget 2020-2021 on February 1 in the Lok Sabha. FM presented the union budget for the second time after the BJP came into power for the second term. The Union budget 2020 was surrounded by three main ideas – caring society, aspirational India, and Economic Development. Rs. 99,300 crore was provided for the educational sector in the financial year 2021. FM said the new education policy would be revealed soon.
Sitharaman also proposed new income tax slabs with lower rates during the budget. However, the new income tax rates are optional and are only available for the taxpayers who are willing to let go several exemptions and deductions.
Let’s now take a look at some union budget 2020 highlights.
Rebate in Tax
Tax is one of the significant issues for the middle class in India. They expect from every budget that there would be some tax exemptions announced in every budget. So, there is good news for them. The tax slabs are revised in this budget.
|Yearly Income||Old Tax Slab||New Tax Slab|
|Up to Rs. 5 lakh||Tax-free income||Tax-free income|
|Rs. 5-7.5 Lakhs||20% tax||10% tax|
|Rs. 7.5-10 lakh||20% tax||15% tax|
|Rs. 10-12.5 lakh||30% tax||20%|
|Rs. 12.5-15 lakh||30% tax||25%|
|Rs. 15 & above||30% tax||30%|
In the new tax slab regime, the taxpayer will get two options for filing taxes. As per their convenience, they can choose the earlier tax slab or the new one. It is as per the tax person’s discretion to decide any tax regime. However, the new tax system will benefit only those taxpayers who have not invested their money anywhere as they can’t take the benefits of tax exemption under the new regime.
It is worth mentioning that the taxpayer choosing the first tax slab will not get any tax exemption benefits. In simple terms, the taxpayer choosing the new tax system will have to pay less tax, but he will not be able to take any tax exemptions.
Good News for Start-ups
The BJP led government has always laid focus on the youth of the country that they should create jobs by becoming entrepreneurs, instead of seeking jobs. Prime Minister Narendra Modi has mentioned the same in his speeches several times. In view of the same, the Union budget 2020 has several benefits for MSMEs.
The government had earlier introduced several loan schemes for MSMEs, such as MUDRA loan, Start-up Scheme, and Stand-up India Scheme. Now a considerable discount is offered to the start-ups in the budget 2020. A start-up with annual turnover up to Rs. 100 crores will get tax exemptions for ten years.
Till now, only start-ups with annual turnover up to Rs. 25 crores used to get tax exemption. Under the new system, start-ups with turnover up to Rs. 100 crore will get tax exemption. Start-ups will not have to pay any tax on their profits for three years.
Benefits for MSMEs
The Finance Minister has announced to introduce soon a National Logistics Policy to create a single-window e-logistics market for MSMEs, promote employment generation, and make MSMEs competitive among themselves.
Along with announcing the formation of e-logistics market, she said that the roles of the central government, state governments and critical regulators would be clarified in the proposed policy. FM Sitharaman believes that this will create a single-window e-logistics market and make MSMEs more competitive. This will also boost employment generation.
6% Increase in Defence Budget
In the budget 2020, the defence budget is increased by the Finance Minister. It has been said that this time the defence budget is increased by 6%. The defence budget last year was Rs. 3.18 lakh crore annually. Now this budget has been increased to 3.37 lakh crores. If the pension budget is also added to this, then it increases to 4.7 lakh crores.
PM Narendra Modi’s say on Budget 2020
While praising the Union Budget 2020, Prime Minister Narendra Modi said that this budget would help in doubling the income of farmers. He further said that 16 Action Plans and Integrated Policy for Agriculture Sector had been adopted in this budget.
According to Narendra Modi, this budget will work to give momentum to the economy. This will empower every citizen of the country financially. He said that the main areas of the budget are agriculture, infrastructure, textiles and employment.