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UNION BUDGET OF INDIA

01 – FEBRUARY - 2020

FOREWORD

UNION BUDGET 2020

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INDEX • FOREWORD 3 - 4

• MAJOR ANNOUCEMENTS :

• TOURISM 05

• WOMEN EMPOWERMENT 06

• RAIL & INFRASTRUCTURE 07

• EDUCATION 08

• AGRICULTURE 09

• OTHERS 10

• INDIAN ECONOMY IN 2020 11

• CAPITAL MARKET 12

• DIRECT TAXES PROPOSALS 13-18

• INDIRECT TAXES PROPOSALS 19

• OUR PRESENCE 20

• DISCLAIMER 21

FOREWORD

UNION BUDGET 2020

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FOREWORDThe backdrop of a slowing economy, with the gloomy clouds of the corona virus

looming large, were not a perfect setting for budget presentation in India. However

the Finance Minister, Ms. Nirmala Sitharaman has made a brave effort by proposing

a 3 pronged strategy of :-

1. Aspirational India, with 16 plans related to (a) Agricultural – Rural Development,

(b) Water and Sanitation and (c) Education – Skills.

2. Economic Development and

3. Caring Society

“Aspirational India” includes a humongous Rs. 2.83 lakh crores on agriculture,

irrigation and allied activities; Rs. 69000 crores for the health care sector and

Rs.102,300 crores for education and skill development. What remains to be seen is

how quickly and effectively these huge sums trickle down to the grass roots.

Doubling of farm incomes in a couple of years, as stated by the Government, is

extremely unlikely.

The thrust on “Economic Development” includes Rs. 1.7 lakh crores on

transportation & infrastructure, investments in the “new economy” and 27,000

crores on the development of industry and commerce.

FOREWORD

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Under the “Caring Society” Rs. 35,600 crores are on nutrition related programmes,

28,600 crores on women’s welfare and 1,38,700 crores on development and

welfare of scheduled castes and tribes and other backward classes.

Taxation proposals including exemption to sovereign wealth funds, DDT, options for

individuals for lower simplified rates (without tax deductions), “Vivad se Vishwas”

scheme and faceless appeals, amongst others.

Proposals to convert certain “criminal” acts to “civil” will bring relief to corporates.

Measures to support MSMEs, NBFCs, Infrastructure Financing, Divestments and

Financial Markets are also expected to help these segments and the economy as

well.

Unfortunately, the stock markets were not too pleased with these efforts and the

BSE promptly fell by an unprecedented 980+ points by late afternoon. Corporate

India’s appreciation was also muted.

Has the Government spread itself too thin with this huge list of initiatives? Does it

have the bandwidth to implement all these noble aspirations?

Ultimately, it is effective implementation and resulting liquidity at the bottom of the

pyramid, which will make all the difference. Of course, the monsoon Gods and Geo-

political winds will also continue to also impact India’s economic growth. Are the

Gods listening?

FOREWORD

FOREWORD

UNION BUDGET 2020

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Tourism

• Government has allocated Rs 3,150 crore for the ministry of culture, Rs

2,500 crore for the ministry of tourism.

• Five archaeological sites in Haryana, UP, Assam, Gujarat and Tamil Nadu, to

be developed with on-site museums.

• Rs 85,000 crore allocated for SCs and OBCs in Budget for FY 2020-21.

• Tribal Museum: Sitharaman said a tribal museum would be set up in Ranchi,

Jharkhand.

• Government has proposed Rs 53,700 crores for welfare of schedule tribes

and Rs 9,500 crores for senior citizens and Divyangs for 2021-22.

• Rs 9,500 crore provided for senior citizens and Divyangs.

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MAJOR ANNOUNCEMENTS

FOREWORD

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Women Empowerment

• Govt allocates Rs 28,600 crore for programmes specifically for women.

• Government will set up a task force to recommend the marriageable age for

women

• Rs 35,600 cr allocated for nutritional related programmes in FY21

• FM says 150 higher institutes to start apprentice training for general category

students.

MAJOR ANNOUNCEMENTS

FOREWORD

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Rail and Infrastructure

• 1,150 trains will be run in PPP mode, also 4 stations to be redeveloped with

help of private sector. More Tejas type trains will connect tourist destinations,

• Proposal for setting up large solar power capacity alongside rail track is under

consideration. The FM said that 550 wi-fi facilities have been commissioned at

railway stations.

• Delhi-Mumbai Expressway will be completed by 2023;Chennai-Bengaluru

Expressway to be launched soon.

• Government to set up project preparation facilities for infrastructure sector,

national logistic policy soon

• Rs 27,300 crore provided for development and promotion of industry and

commerce.

• Aviation sector gets a boost with 100 more airports and doubling of aircraft

fleet.

MAJOR ANNOUNCEMENTS

FOREWORD

UNION BUDGET 2020

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Education

New Education Policy

• Government will soon announce a new education policy.

• Rs 99,300 crore have allocated for education sector, Rs 3,000 crore for skill

development in FY21.

• New special bridge courses to be designed for teachers, nurses, paramedical

staff.

• A programme for urban local bodies to provide opportunities for internship to

young engineers to be started.

MAJOR ANNOUNCEMENTS

FOREWORD

UNION BUDGET 2020

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AgricultureKrishi Udaan For Farmers

• Krishi Udaan will be launched by Civil Aviation Ministry to transport agri-

products to national as well as international destinations.

• Self Help Groups will be allowed to set up village agri storage facilities.

• NABARD will map and geo-tab 162 mn tonne capacity agri warehouses across

country. FCI and Warehousing Corporation of India to build warehousing facility

on their land.

• One horticulture crop in one district on cluster basis will be promoted.

Kisan Rail in PPP mode for farmers

• Indian Railway to set up Kisan Rail in PPP mode for cold supply chain to

transport perishable good. Horticulture with 311 MT exceeds production of food

grains. Agri credit target set up at Rs 15 lakh cr for FY2020-21.

• NABARD refinance scheme will be expanded.

• States to adopt three central model laws on agricultural land leasing, marketing

and contract farming

MAJOR ANNOUNCEMENTS

FOREWORD

UNION BUDGET 2020

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MAJOR ANNOUNCEMENTS

OthersPiped Water

• Government has proposed Rs 3.6 lakh crore towards piped water supply to

households. Allocation for Swachh Bharat for 2020-21 stands at Rs 12,300

crore

Stake in LIC

• Government announces partial stake sale in LIC through LIC.

• Robust mechanism in place to monitor the health of all commercial banks.

• Clean, reliable, robust financial sector required to achieve USD 5 trillion

economy.

• Modi government has proposed Rs 30,757 cr for Jammu and Kashmir, and

Rs 5,958 for Ladakh for fiscal 2020-21.

• Rs 100 crore allocated for hosting G-20 Summit.

• Govt proposes major reform in recruitment of non-gazetted staff

• Bank Deposit guarantee raised to Rs 5 lakh from the current Rs 1 lakh!

• Government debt reduced to 48.7% of GDP from 52.2 per cent in March

2014

• 6.11 crore farmers under insured Pradhan Mantri Fasal Bima Yojna

FOREWORD

UNION BUDGET 2020

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MAJOR ANNOUNCEMENTSIndian Economy in 2020-21

• The Indian economy has been struggling with a prolonged slowdown and GDP

growth in the September quarter dipped to 4.5 percent, lowest in over six years.

• Foreign direct investment continued to rise in the last five years. India received

$34.9 billion in FDI as of September 2019 in FY20.

• Foreign institutional investors invested Rs 79,642 crore in the fiscal year 2020.

• As of December 2019, auto sales stood at 2,07,36,410 units in the current

fiscal. Retail auto sales dropped by nearly 15 percent to 1,606,002 units in

December 2019, the highest decline in the current financial year.

• Direct and indirect tax collections for FY20 is expected to about Rs 21 lakh

crore, lower than the Budget estimate of around Rs 25 lakh crore.

• In terms of disinvestment, the government could achieve only Rs 18,095 crore,

compared to the target of Rs 1.05 lakh crore

FOREWORD

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CAPITAL MARKET

Indian stocks are set to rise further over the coming year, according to a Reuters

poll of equity strategists, but those gains will be limited as fiscal stimulus and easy

monetary policy fail to reverse an economic slowdown.

The slew of measures announced by the government in recent months and the

Reserve Bank of India reducing rates should result in only a very gradual recovery

in demand over the next 12 months. As a result, the pace of economic recovery and

earnings growth is likely to be subdued over the next two years. This in turn should

cap stock market gains over the next 12-month period and beyond

Foreign portfolio investors (FPIs) have turned net buyers of Indian equities after

being net sellers in July and August. Capital inflows in domestic equities touched a

seven-month high in November, according to data from National Securities

Depository Ltd (NSDL).

"Buying opportunity enthused FPIs (are set) to look into the Indian market. FPIs are

expecting stable governance, and we are at the bottom of everything - whether it is

GDP, unemployment or consumption. From here, improvements are expected”.

MAJOR ANNOUNCEMENTS

FOREWORD

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DIRECT TAXESNEW TAXATION SCHEME FOR INDIVIDUALS :

• Optional taxation scheme proposed for Individual & HUF taxpayers

Resident Individual / HUF

Net Income Range Income-tax Rate

New Regime Old Regime

Upto Rs. 2,50,000 Nil Nil

Rs. 2,50,001 to Rs. 5,00,000 5% 5%

Rs. 5,00,001 to Rs. 7,50,000 10% 20%

Rs. 7,50,001 to Rs. 10,00,000 15% 20%

Rs. 10,00,001 to Rs. 12,50,000 20% 30%

Rs. 12,50,001 to Rs. 15,00,000 25% 30%

Above Rs. 15,00,000 30% 30%

FOREWORD

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DIRECT TAXES • Under new regime almost no separate deductions / exemptions are allowed.

• New regime will come into effect from F.Y.2020-21.

• The above rates are subject to Surcharge and Cess.

PROPOSED CHANGE IN RATE OF TAX FOR RESIDENT CO-OPERATIVE SOCIETIES

Tax is reduced from 30% to 22%, however no deductions or exemptions are

available as well as AMT is not applicable if opted for lower rate of tax.

TAX CONCESSION FOR ELECTRICITY GENERATION COMPANIES

Concessional Corporate Tax rate of 15% is extended to new companies engaged

in generation of electricity.

FOREWORD

UNION BUDGET 2020

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DIRECT TAXESTAX CONCESSION FOR FOREIGN INVESTMENTS

• 100% tax exemption for interest, dividend and long term capital gains income

earned by Sovereign Wealth Fund of Foreign Governments from investment made in

Infrastructure and other notified sectors before 31st 2024, with a minimum

blockage period of 3 years.

DIVIDEND DISTRIBUTION TAX

• Dividend Distribution Tax (DDT) removed but dividend will be taxed in the hands

of recipients at applicable rates Dividend received by Holding company shall be

eligible for deduction to the extent of dividend distributed by such holding company.

STARTUPs

• ESOPs taxability had been deferred for five years or till employee leave company

or employee sell their shares whichever is earlier as against present taxability as

perquisite which is at time of exercise of ESOP option. For claiming 100% deduction

by STARTUPs, the eligible turnover limit has increased from Rs.25 crores to Rs. 100

Crores.

FOREWORD

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DIRECT TAXES

MEDIUM, SMALL AND MICRO ENTERPRISES

• Turnover threshold for Tax audit, proposed to be raised upto 5 crores as against

existing limit of 1 crore, however such entity should have cash transactions less than

5%.

AFFORDABLE HOUSING

• One year extension given for availing loan for additional deduction of

Rs.1,50,000/- for interest paid on loans taken for purchase of an affordable house.

Now loan can be taken before 31st March, 2021.

REAL ESTATE SECTOR

• Safe harbour margin has been increased from 5% to 10% for immovable

properties sold below stamp valuation rate (circle rate).

TAX DEDUCTION AT SOURCE

• Interest on monies borrowed in form of Bonds listed on any recognised stock

exchange located outside India or any municipal debt securities to a foreign entity

will be subject to TDS at 5%. TDS on e-commerce payments to e-commerce

participants @ 1% u/s 194O.

FOREWORD

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DIRECT TAXES

CHARITY INSTITUTIONS

• Donation to Charity Institution (donee) is allowed as deduction in computing the

taxable income of the donor. However, now, donee’s information will be available

pre-filled based on Donor’s compliance.

• Fresh online registration process for all charitable institute is introduced.

NEW PROVISIONS OF PENALTY

• Penalty for false entry of invoice or omitted invoice @ 100% of such transaction

u/s 271AAD proposed.

• For 80G exemption, Donor to file annual statement of donation received, failure

will attract penalty of Rs. 200 per day or penalty of Rs. 10,000 to Rs. 100,000.

VIVAD SE VISHWAS SCHEME

• Under this scheme, tax payer can get rid of its litigations by paying only the

disputed tax amount whereas interest as well as penalty will be waived. This

needs to be done by 31st March, 2020. Additional payment will be required if the

tax payer wants to make payment up to 30th June, 2020.

FOREWORD

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DIRECT TAXES

FACELESS APPEALS

• Faceless appeal on the lines of Faceless assessment to be introduced.

STAY OF DEMAND

• Under the powers of ITAT, stay of demand can be granted if assesse provides

security of equivalent value of 20% of demand.

INSTANT PAN THROUGH AADHAAR

• A system will be launched under which PAN shall be instantly allotted online on

the basis of Aadhaar, without any requirement for filling up of detailed

application form.

RESIDENTIAL STATUS

• A person being citizen of India residing outside India comes to India and stays for

more than 120 days, will become resident in India.

• For resident but not ordinary resident, now test will be of non resident in seven

out of ten preceding years as against present condition of 9 out of 10 preceding

years.

FOREWORD

UNION BUDGET 2020

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INDIRECT TAXES GOODS AND SERICE TAX

• Simplified GST return shall be implemented from the 1st April, 2020. It will

make return filing simple with features like SMS based filing for nil return,

return pre-filling, improved input tax credit flow and overall simplification.

• Dynamic QR-code is proposed for consumer invoices. GST parameters will be

captured when payment for purchases is made through the QR-code.

• E-Invoice will be implemented in Phased Manner.

CUSTOMS

• Customs Duty on Footwear and Like Industries to be raised.

• National Calamity Contingent Duty (NCCD) on Cigarettes and Tabacoo products

proposed to be increased. NCCD remains unchanged on Bidis.

• Health Cess of 5% on imports of specified medical equipment proposed.

• Basic Customs Duty on imports of news prints and light-weight coated paper is

proposed to be reduced from 10% to 5%.

• Rate of duty for specified furniture goods is proposed to be raised from 20% to

25%.

DISCLAIMER

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