|The Key Highlights of Union Budget 2020-2021|
|1) Major Action Points for Rural Development
Ø Kisan Rail to be setup by Indian Railways through PPP:
· To build a seamless national cold supply chain for perishables (milk, meat, fish, etc.
· Express and Freight trains to have refrigerated coaches.
Ø Krishi Udaan to be launched by the Ministry of Civil Aviation:
· Both international and national routes to be covered.
· North-East and tribal districts to realize Improved value of agri-products.
Ø One-Product One-District for better marketing and export in the Horticulture sector.
Ø Balanced use of all kinds of fertilizers – traditional organic and innovative fertilizers.
Ø PM-KUSUM to be expanded:
· Rs. 20 lakh farmers to be provided for setting up stand-alone solar pumps.
· Another Rs. 15 lakh farmers to be helped to solarise their grid-connected pump sets.
· Scheme to enable farmers to set up solar power generation capacity on their fallow/barren lands and to sell it to the grid.
|2) Wellness, Water and Sanitation
· 69,000 crore allocated for overall Healthcare sector.
· 6400 crore (out of Rs. 69,000 crore) for PM Jan Arogya Yojana (PMJAY):
· Rs. 3.60 lakh crore approved for Jal Jeevan Mission:
· 12, 300 crore allocation for Swachh Bharat Mission in 2020-21:
· Committment to ODF-Plus in order to sustain ODF behaviour.
· Emphasis on liquid and grey water management.
· Focus also on Solid-waste collection, source segregation, and processing.
|3) Education and Skills
· 99,300 crore for education sector and Rs. 3000 crore for skill development in 2020-21.
· New Education Policy to be announced soon.
· National Police University and National Forensic Science University proposed for policing science, forensic science, and cyber-forensics.
· Degree level full-fledged online education program by Top-100 institutions in the National Institutional Ranking Framework.
· Up to 1-year internship to fresh engineers to be provided by Urban Local Bodies.
· Budget proposes to attach a medical college to an existing district hospital in PPP mode.
· Special bridge courses to be designed by the Ministries of Health, and Skill Development:
o To fulfill the demand for teachers, nurses, para-medical staff and care-givers abroad.
o To bring in equivalence in the skill sets of the workforce and employers’ standards.
· 150 higher educational institutions to start apprenticeship embedded degree/diploma courses by March 2021.
· External Commercial Borrowings and FDI to be enabled for education sector.
· Ind-SAT proposed for Asian and African countries as a part of Study in India
|4) Economic Development
Ø Industry, Commerce and Investment
· 27,300 crore allocated for 2020-21 for development and promotion of Industry and Commerce.
· Investment Clearance Cell proposed to be set up:
o To provide “end to end” facilitation and support.
o To work through a portal.
· Five new smart cities proposed to be developed.
· Scheme to encourage manufacture of mobile phones, electronic equipment and semiconductor packaging proposed.
· National Technical Textiles Mission to be set up:
o With four-year implementation period from 2020-21 to 2023-24.
o At an estimated outlay of Rs 1480 crore.
o To position India as a global leader in Technical Textiles.
· New scheme NIRVIK to be launched to achieve higher export credit disbursement, which provides for:
o Higher insurance coverage
o Reduction in premium for small exporters
o Simplified procedure for claim settlements.
· Turnover of Government e-Marketplace (GeM) proposed to be taken to Rs 3 lakh crore.
· Scheme for Revision of duties and taxes on exported products to be launched.
o Exporters to be digitally refunded duties and taxes levied at the Central, State and local levels, which are otherwise not exempted or refunded.
· All Ministries to issue quality standard orders as per PM’s vision of “Zero Defect-Zero Effect” manufacturing.
· Rs. 100 lakh crore to be invested on infrastructure over the next 5 years.
· National Infrastructure Pipeline:
o Rs. 103 lakh crore worth projects; launched on 31st December 2019.
o More than 6500 projects across sectors, to be classified as per their size and stage of development.
· A National Logistics Policy to be released soon:
o To clarify roles of the Union Government, State Governments and key regulators.
o A single window e-logistics market to be created
o Focus to be on generation of employment, skills and making MSMEs competitive.
· National Skill Development Agency to give special thrust to infrastructure-focused skill development opportunities.
· Project preparation facility for infrastructure projects proposed.
o To actively involve young engineers, management graduates and economists from Universities.
· Infrastructure agencies of the government to involve youth-power in start-ups.
· Rs. 1.7 lakh crore proposed for transport infrastructure in 2020-21.
· Accelerated development of highways to be undertaken, including:
o 2500 Km access control highways.
o 9000 Km of economic corridors.
o 2000 Km of coastal and land port roads.
o 2000 Km of strategic highways.
· Delhi-Mumbai Expressway and two other packages to be completed by 2023.
· Chennai-Bengaluru Expressway to be started.
· Proposed to monetise at least 12 lots of highway bundles of over 6000 Km before 2024.
|7) Indian Railways:
Ø Five measures:
· Large solar power capacity to be set up alongside rail tracks, on land owned by railways.
· Four station re-development projects and operation of 150 passenger trains through PPP.
· More Tejas type trains to connect iconic tourist destinations.
· High speed train between Mumbai and Ahmedabad to be actively pursued.
· 148 km long Bengaluru Suburban transport project at a cost of Rs 18600 crore, to have fares on metro model. Central Government to provide 20% of equity and facilitate external assistance up to 60% of the project cost.
Ø Indian Railways’ achievements:
· 550 Wi-fi facilities commissioned in as many stations.
· Zero unmanned crossings.
· 27000 Km of tracks to be electrified.
· 100 more airports to be developed by 2024 to support Udaan scheme.
· Air fleet number expected to go up from present 600 to 1200 during this time.
· 22, 000 crore proposed for power and renewable energy sector in 2020-21.
· Expansion of national gas grid from the present 16200 km to 27000 km proposed.
· Further reforms to facilitate transparent price discovery and ease of transactions.
· Clean, corruption-free, policy driven, good in intent and most importantly trusting in faith.
· Taxpayer Charter to be enshrined in the Statute will bring fairness and efficiency in tax administration.
· Companies Act to be amended to build into statues, criminal liability for certain acts that are civil in nature.
o Other laws with such provisions are to be corrected after examination.
· Major reforms in recruitment to Non-Gazetted posts in Government and Public sector banks:
o An independent, professional and specialist National Recruitment Agency (NRA) for conducting a computer-based online Common Eligibility Test for recruitment.
o A test-centre in every district, particularly in the Aspirational Districts.
· A robust mechanism to be evolved for appointment including direct recruitment to various Tribunals and specialised bodies to attract best talents and professional experts.
· Contract Act to be strengthened.
· New National Policy on Official Statistics to:
o Promote use of latest technologies including AI.
o Lay down a road-map towards modernised data collection, integrated information portal and timely dissemination of information.
· A sum of Rs. 100 crore allocated to begin the preparations for G20 presidency to be hosted in India in the year 2022.
· Development of North East region:
o Improved flow of funds using online portal by the Government.
o Greater access to financial assistance of Multilateral and Bilateral funding agencies.
· Development of Union Territories of J&K and Ladakh:
o An amount of Rs. 30,757 crore provided for the financial year 2020-21.
o The Union Territory of Ladakh has been provided with Rs. 5,958.
|11) Financial Sector
· Reforms accomplished in PSBs :
o 10 banks consolidated into 4.
o 3,50,000 crore capital infused.
· Governance reforms to be carried out to bring in transparency and greater professionalism in PSBs.
· Few PSBs to be encouraged to approach the capital market to raise additional capital
· Deposit Insurance and Credit Guarantee Corporation (DICGC) permitted to increase Deposit Insurance Coverage to Rs. 5 lakh from Rs.1 lakh per depositor.
· Scheduled Commercial Bank’s health under monitoring through a robust mechanism, keeping depositors’ money safe.
· Cooperative Banks to be strengthen by amending Banking Regulation Act for:
o Increasing professionalism.
o Enabling access to capital.
o Improving governance and oversight for sound banking through the RBI.
· NBFCs eligibility limit for debt recovery reduced from:
o Rs. 500 crore to Rs 100 crore asset size.
o Rs. 1 crore to Rs 50 lakh loan size.
· Private capital in Banking system:
o Government to sell its balance holding in IDBI Bank to private, retail and institutional investors through the stock exchange.
· Easier mobility in jobs:
o Auto-enrolment in Universal Pension coverage.
o Inter-operability mechanism to safeguard the accumulated corpus.
· Pension Fund Regulatory Development Authority of India Act to be amended to:
o Strengthen regulating role of PFRDAI.
o Facilitate separation of NPS trust for government employees from PFRDAI.
o Enable establishment of a Pension Trust by the employees other than Government.
· Factor Regulation Act 2011 to be amended to:
o Enable NBFCs to extend invoice financing to the MSMEs through TReDS
· New scheme to provide subordinate debt for entrepreneurs of MSMEs by the banks
o Would be counted as quasi-equity.
o Would be fully guaranteed through the Credit Guarantee Trust for Medium and Small Entrepreneurs (CGTMSE).
o The corpus of the CGTMSE would accordingly be augmented by the government.
· Window for MSME’s debt restructuring by RBI to be extended by one year till March 31, 2021.
o More than five lakh MSMEs have already been benefitted.
· An app-based invoice financing loans product for MSMEs to be launched.
o To prevent the problem of delayed payments and consequential cash flows mismatches.
· Export promotion of MSMEs:
o For selected sector such as pharmaceuticals, auto components and others.
o An Rs 1000 crore scheme anchored by EXIM Bank together with SIDBI.
o Hand holding support for technology upgradations, R&D, business strategy etc.
· Government to sell a part of its holding in LIC by way of Initial Public Offer (IPO).
|13) Direct Tax
Ø Direct Tax Proposals – To stimulate growth, simplify tax structure, bring ease of compliance, and reduce litigations.
· Personal Income Tax:
o Significant relief to middle class taxpayers.
o New and simplified personal income tax regime proposed:
o Around 70 of the existing exemptions and deductions (more than 100) to be removed in the new simplified regime.
o Remaining exemptions and deductions to be reviewed and rationalised in coming years.
o New tax regime to be optional – an individual may continue to pay tax as per the old regime and avail deductions and exemptions.
o Measures to pre-fill the income tax return initiated so that an individual who opts for the new regime gets pre-filled income tax returns and would need no assistance from an expert to pay income tax.
o New regime to entail estimated revenue forgone of Rs. 40,000 crore per year.
· Corporate Tax:
o Tax rate of 15% extended to new electricity generation companies.
o Indian corporate tax rates now amongst the lowest in the world.
· Dividend Distribution Tax (DDT):
o DDT removed making India a more attractive investment destination.
o Deduction to be allowed for dividend received by holding company from its subsidiary.
o 25,000 crore estimated annual revenue forgone.
o Start-ups with turnover up to Rs. 100 crore to enjoy 100% deduction for 3 consecutive assessment years out of 10 years.
o Tax payment on ESOPs deferred.
· MSMEs to boost less-cash economy:
o Turnover threshold for audit increased to Rs. 5 crore from Rs. 1 crore for businesses carrying out less than 5% business transactions in cash.
o Parity brought between cooperatives and corporate sector.
o Option to cooperative societies to be taxed at 22% + 10% surcharge and 4% cess with no exemption/deductions.
o Cooperative societies exempted from Alternate Minimum Tax (AMT) just like Companies are exempted from the Minimum Alternate Tax (MAT).
· Tax concession for foreign investments:
o 100% tax exemption to the interest, dividend and capital gains income on investment made in infrastructure and priority sectors before 31st March, 2024 with a minimum lock-in period of 3 years by the Sovereign Wealth Fund of foreign governments.
· Affordable housing:
o Additional deduction up to Rs. 1.5 lakhs for interest paid on loans taken for an affordable house extended till 31st March, 2021.
o Date of approval of affordable housing projects for availing tax holiday on profits earned by developers extended till 31st March, 2021.
· Tax Facilitation Measures
o Instant PAN to be allotted online through Aadhaar.
o ‘Vivad Se Vishwas’ scheme, with a deadline of 30th June, 2020, to reduce litigations in direct taxes:
o Waiver of interest and penalty – only disputed taxes to be paid for payments till 31st March, 2020.
o Additional amount to be paid if availed after 31st March, 2020.
o Benefits to taxpayers in whose cases appeals are pending at any level.
o Faceless appeals to be enabled by amending the Income Tax Act.
o For charity institutions:
o Pre-filling in return through information of donations furnished by the done.
o Process of registration to be made completely electronic.
o Unique registration number (URN) to be issued to all new and existing charity institutions.
o Provisional registration to be allowed for new charity institutions for three years.
o CBDT to adopt a Taxpayers’ Charter.
· Losses of merged banks:
o Amendments proposed to the Income-tax Act to ensure that entities benefit from unabsorbed losses and depreciation of the amalgamating entities.
|14) Indirect Tax
o Cash reward system envisaged to incentivise customers to seek invoice.
o Simplified return with features like SMS based filing for nil return and improved input tax credit flow to be implemented from 1st April, 2020 as a pilot run.
o Dynamic QR-code capturing GST parameters proposed for consumer invoices.
o Electronic invoice to capture critical information in a centralized system to be implemented in a phased manner.
o Aadhaar based verification of taxpayers being introduced to weed out dummy or non-existent units.
o GST rate structure being deliberated to address inverted duty structure.
· Customs Duties:
o Customs duty raised on footwear to 35% from 25% and on furniture goods to 25% from 20%.
o Basic customs duty on imports of news print and light-weight coated paper reduced from 10% to 5%.
o Customs duty rates revised on electric vehicles and parts of mobiles.
o 5% health cess to be imposed on the imports of medical devices, except those exempt from BCD.
o Lower customs duty on certain inputs and raw materials like fuse, chemicals, and plastics.
o Higher customs duty on certain goods like auto-parts, chemicals, etc. which are also being made domestically.
· Trade Policy Measures
o Customs Act being amended to enable proper checks of imports under FTAs.
o Rules of Origin requirements to be reviewed for certain sensitive items.
o Provisions relating to safeguard duties to be strengthened to enable regulating such surge in imports in a systematic way.
o Provisions for checking dumping of goods and imports of subsidized goods being strengthened.
o Suggestions for reviews of exemptions from customs duty to be crowd-sourced.
· Excise duty proposed to be raised on Cigarettes and other tobacco products, no change made in the duty rates of bidis.
· Anti-dumping duty on PTA abolished to benefit the textile sector.
|15) Unprecedented Milestones and Achievements of Indian Economy
· India now the fifth largest economy of the world.
· India’s Foreign Direct Investment elevated to US$ 284 billion during 2014-19 from US$ 190 billion during 2009-14.