Union Budget 2020-21: Highlights

Finance minister Nirmala Sitharaman presented the Union Budget of the third decade of the 21st century. Nirmala Sitharaman, today unveiled a series of far-reaching reforms, aimed at energizing the Indian economy through a combination of short-term, medium-term, and long term measures.

The budget is woven around three prominent themes :

1. Aspirational India in which all sections of the society seek better standards of living, with access to health, education and better jobs.
2. Economic development for all, indicated in the Prime Minister exhortation of “Sabka Saath, Sabka Vikas, Sabka Vishwas”.
3. Caring Society that is both humane and compassionate, where Antyodaya is an article of faith.

The three broad themes are held together by ethos of:

• Corruption free – policy-driven good governance
• Clean and sound financial sector.

Here are the sectoral highlights of Budget 2020-21

Key Budget takeaways:-

• Govt to raise funds via listing of LIC
• Deposit insurance raised to Rs 5 lakh
• FY21 fiscal deficit target pegged at 3.5% of GDP
• FY20 fiscal deficit at 3.8% of GDP vs earlier target of 3.3%
• Companies Act to be amended to decriminalise civil offences
• FY21 nominal GDP growth pegged at 10%
• To bring new education policy; allocates Rs 99,300 crore for sector in FY21
• 100 more airports to be developed by 2025 to support UDAN scheme
• To introduce a new simplified personal tax regime
• No income tax for income up to Rs 5 lakh
• 10% income tax for those earning between Rs 5 lakh to Rs 7.5 lakh versus 20% earlier
• 15% income tax for those earning between Rs 7.5-10 lakh versus 20% earlier
• 20% income tax for those earning between Rs 101-2.5 lakh versus 30% earlier
• 25% income tax for those earning between Rs 12.5-15 lakh versus 30% earlier
• Income above Rs 15 lakh to continue to pay tax at 30%
• New income tax scheme is optional, without exemptions
• Dividend Distribution Tax (DDT) abolished, shifted to individuals instead of companies 100% tax exemption on Sovereign Wealth Funds’ India investments
• Tax holiday for affordable housing extended by one-year
• To amend I-T Act to allow faceless appeals
• FY21 divestment target: Rs 2.1 lakh crore versus FY20 target of Rs 1.05 lakh crore
• To launch new direct tax dispute settlement scheme; interest, penalty waived till March 31, 2020
• Budget 2020 removed 70 exemption from personal income tax
• Audit threshold for MSMEs raised to ₹5 crore from ₹1 crore
• Excise duty hiked on tobacco, cigarettes raised

Here’s a list of key budgetary allocations:

• FY21 agriculture allocation ₹1.38 lakh crore
• FY21 rural development allocation ₹1.23 lakh crore
• FY21 agriculture and rural allocation ₹2.83 lakh crore
• FY21 agriculture credit target ₹15 lakh crore
• FY21 education allocation at ₹99,300 crore
• FY21 healthcare allocation at ₹69,000 crore
• FY21 transport infra allocation at ₹1.7 lakh crore
• FY21 renewable energy sector allocation at ₹20,000 crore
• FY21 defence sector budget allocation Rs 3.37 lakh crore