Latest Union Budget Highlights 2020 Last Updated : 14 Jul 2020

The Union Budget 2020 was presented on 1 Feb 2020 by the Modi government with the purpose of boosting investments. Finance Minister, Nirmala Sitharaman announced that there is a proposal to raise the surcharge for incomes above Rs.2 crore. This is clearly an indication of the government’s effort on levying more tax on the super-rich.

The government is also looking to reduce corporate tax and sops to startups, electric vehicles, and the housing industry. Digital payments are likely to get cheaper and affordable housing will be encouraged through new rental laws.

The key highlights of the Union Budget 2020 are mentioned in the table below:

Category Highlights
Taxes
  • New set of income tax rates announced for individuals earning more as much as Rs.15 lakh per annum.
  • Income tax of 10% proposed for the income bracket of Rs.5 lakh to Rs.7.5 lakh instead of the existing 20%.
  • Income tax rates for income bracket of Rs.7.5 lakh to Rs.10 lakh and Rs.10 lakh to Rs.12.5 lakh have also been lowered to 15% and 20% respectively.
  • Income tax of 25% to be charged on the income range of Rs.12.5 lakh to Rs.15 lakh.
  • The new tax regime is optional, and individuals can choose from either the new system or the old one.
  • All the deductions will not be available under the new tax regime.
  • Dividend tax has been abolished for companies.
Manufacturing
  • New scheme to be focussing on the manufacturing of electronic equipment, mobile phones, and semiconductor packaging in India.
  • Private sectors to be encouraged to build Data Centre Parks across the country.
  • By 2025, the milk processing capacity will be doubled.
  • Rs.80 million to be spent for quantum technologies and applications over a span of 5 years.
Subsidy
  • Subsidy for fertiliser for the year 2020-21 is Rs.713.09 billion.
  • Subsidy for food for the year 2020-21 is Rs.1.15 trillion.
  • Subsidy for petroleum for the year 2020-21 is Rs.409.15 billion
Power sector
  • Rs.44 billion will be allocated for clean air incentives for the cities with a population of more than 1 million.
  • Rs.273 billion to be used for the promotion of industry and commerce.
  • Old thermal plants which do not meet the emission norms will be advised to shut down the units.
Highways and airports
  • By 2024, India will be working on the development of 100 more airports across the country.
  • By 2024, the country will monetise in 12 lots for more than 6,000 kms of highways.
  • At least one major port will be privatised.
Custom duty
  • The custom duty on walnuts raised from 30% to 100%.
  • The custom duty on auto parts and autos hiked by as much as 10%.
  • The custom duty on palladium and platinum reduced from 12.5% to 7.5% for specific use.
  • Health cess of 5% added on import of medical devices.
  • The custom duty on fans increased from 10% to 20%.
  • The custom duty on specific goods used in air conditioners and refrigerators increased from 10% to 12.5%.
Infra sector
  • Rs.100 lakh crore is streamlined to be invested on infrastructure over the next 5 years.
  • Across different sectors, more than 6,500 projects will be undertaken.
  • Projects worth Rs.103 lakh crore has been launched on 31 December 2019.
  • For the development of transport infrastructure in 2020-21, a budget of Rs.1.7 lakh crore has been proposed.
Excise Duty
  • Tax to be increased on cigarettes and tobacco products.
For senior citizens
  • Rs.9,000 crore allocated for the welfare of senior citizens.
For SC, ST, and other backward classes
  • Rs.53,700 crore allocated for the upliftment of Scheduled Tribes (STs).
  • Rs.85,000 crore allocated for the upliftment of Scheduled Castes (SCs) and other backward classes.
Healthcare
  • Rs.69,000 crore allocated for healthcare out of which Rs.6,400 crore will be sanctioned for Ayushman Bharat Yojana.
MSME Sector
  • Audit threshold increased to Rs.5 crore from Rs.1 crore for MSMEs.
Connection
  • Rs.6,000 crore allocated for BharatNet programme in India.
  • As many as 1 lakh gram panchayats are to be linked with the BharatNet programme.
Swachh Bharat Mission
  • A total of Rs.12,300 crore allocation has been proposed for Swachh Bharat Mission.
Railways
  • Re-development project to be undertaken for the betterment of 4 stations through the PPP models.
  • Development of solar capacity in Indian Railways.
  • Plans to be executed for the development of more projects like Tejas for connecting various tourist locations across the country.
  • Bengaluru Suburban Transportation project to be launched wherein the Government will be spending Rs.18,600 crore.
Agriculture
  • The credit target for fiscal year 2020-21 has been set at Rs.15 lakh crore for agriculture sector.
  • The expansion of the Nabard refinance scheme has been expanded.
  • Beneficiaries of PM KISAN programme will be covered under KCC if they are eligible for the same.
Education
  • ‘Study in India’ initiative will be promoted by the Government.
  • Apprenticeship diplomas will be offered by 150 higher education institutions by March 2021.
  • Rs.99,300 crore is to be allocated for the education sector in financial year 2021.

The key highlights of the Union Budget 2019 are mentioned in the table below:

Category Highlights
Taxes
  • Rates for personal income tax remains the same.
  • In case the income is Rs.2 crore, there is a surcharge hike of 3%.
  • In case the income is Rs.5 crore and above, there is a surcharge hike of 7%.
  • In case individuals do not have a PAN card, the Aadhaar card can be submitted for ITR.
  • An increase in Duty on CCTV cameras, digital and video recorders, certain kinds of synthetic rubber, auto parts, vinyl flooring, cashew kernels, and tiles.
  • Re.1 increase in fuel cess has been proposed. There will also be an increase in petrol and diesel price. In case of precious items or gold, there is an increase in Customs duty.
  • Corporate tax has been reduced from 30% to 25% for a turnover of up to Rs.400 crore.
  • The GST Council has been advised on the reduction of tax rates for EVs to 5% from 12%.
Promotion of Digital Payments
  • No additional charges on digital payments. In case of cashless payments, MDR charges are to be waived.
  • There will be 2% TDS when the amount withdrawn from your bank account for business payments is Rs.1 crore in a year.
Transportation
  • A Transport Card similar to an ATM card that can be used for travel via railways, roads, metros, etc. will be introduced.
  • The government is looking to create a Manufacturing, Repair, and Operate (MRO) industry.
  • PPP will be utilised for improving the efficiency of passenger freight services.
  • There will be a complete restructuring of the National Highways Programme to create the National Highways Grid.
  • The government will focus on using rivers for the transport of cargo, as opposed to roads and railways. This is expected to reduce traffic congestions.
Women Empowerment
  • Women SHG Interest Subvention Programme named ‘Nari Tu Narayani’ will be mobilised in all Indian districts.
  • Under the Mudra Scheme, SGH women members can avail a loan of up to Rs.1 lakh.
  • An overdraft facility of Rs.5,000 will be allowed for SGH women who have a Jan Dhan Account.
Pension A pension benefit of Rs.3 crore has been proposed for shopkeepers and retail traders who have an annual turnover less than Rs.1.5 crore.
MSME
  • ‘The Start Up India’ scheme will continue till 2025.
  • There will be a new television channel for start-ups.
  • There are proposals to ease angel tax for startups. Angel tax will not require scrutiny from the IT Department as well.
  • There will be a mechanism of e-verification that establishes the identity of investors and source of funds for all startups.
  • A 2% interest subvention is proposed for GST-registered MSMEs for loans.
  • A new payment platform will be created for MSMEs.
  • Pension benefits will be provided to retail traders who have annual turnover below Rs.1.5 crore.
Tourism Development of 17 world-class tourist sites is planned.
Investment
  • The NRI portfolio routes will be merged with FPI.
  • The statutory limit will increase in case of foreign investment for certain companies.
  • A credit guarantee enhancement corporation will be set up.
  • The current KYC norms for FPIs will be simplified so that these are more attractive to investors.
  • FPIs and FIIs will be able to invest in debt securities that are issued by NBFCs.
  • There is a proposal for a Social Stock Exchange under SEBI that will list voluntary organisations and social enterprises.
  • RBI and SEBI depositories will become inter-operable.
  • SEBI will consider increasing the minimum public shareholding from 25% to 35%.
  • There will be a review of the user-friendliness of trading platforms that deal with corporate debt securities. Stock exchanges may take AA rated bonds as collateral in the future.
  • There will be an Annual Global Investors’ Meet that is bound to attract global companies so that investments are made in India.
  • FPIs may be allowed to subscribe to listed debt papers of REITs.
Rural India
  • In FY 20, 100 new clusters will be set up for 50,000 artisans by the government.
  • The government will focus on Kisan, Garib, and Gaon.
  • By 2022, all single rural families will have electricity (except those who are unwilling).
  • The Jal Shakti ministry will liaise with the states so that all households will have water supply by 2024.
  • The third phase of Pradhan Mantri Gram Sadak Yojana will help in the improvement of 1,25,000 km of road length in the upcoming 5 years.
State of Economy
  • A 10-point vision will be laid out by the government for a New India.
  • The economy’s lifeline will be connectivity.
  • On 2 October, the inauguration of the Rashtriya Swachhta Kendra will take place at Rajghat.
  • Railways will need investments in the range of Rs.50 lakh crore between 2018 and 2030.
  • Infrastructure reforms such as Sagarmala, BharatMala, and UDAN are alleviating the urban-rural divide by bringing about an improvement in transport infrastructure.
  • The government will look to develop “Gandhipedia” to educate the youngsters on positive Gandhian values.
  • India is set to become a $3 trillion economy in 2019. The government will ensure that all structural reforms are taken to reach the $5 trillion goal.
Housing
  • There will be a reformation in rental laws. In order to promote house renting, states will be given modern tenancy laws.
  • In case a house is purchased for up to Rs.45 lakh, an additional tax relief of Rs.1.5 lakh will be provided on the home loan.
Living
  • NRIs can get an Aadhaar card once they arrive in India.
  • Informal sector workers will receive a pension payment of Rs.3,000 per month.
Technology
  • In 35AD deduction, chargers and solar storage batteries will be included.
  • For the purpose of scavenging, robots and machines will be deployed.
  • There will be a program for the mass scaling of LED bulbs.
Reforms in banking
  • There will be reforms to improve the governance of public sector banks.
  • A proposal has been put forward to change the regulatory authority to RBI from NHB.
  • A proposal has been made to provide a capital of Rs.70,000 crore for PSU Banks.
  • If there is a purchase of high-rate pooled assets of NBFC that goes up to Rs.1 lakh crore in this financial year, the government is ready to offer a 6-month credit guarantee.
Railways
  • An investment of Rs.50 lakh crore will be needed between 2018 and 2030 for railway infrastructure.
  • A huge programme for the modernization of railways will be launched in 2019.
  • The dedicated freight corridor project will be completed by 2022.
  • There will be a budgetary allocation of Rs.65,837 crore and an outlay for capital expenditure up to Rs.1.60 lakh crore for the railways.
  • A new PPP model will be introduced.
  • Railways will be investing more funds in suburban rail network through SPVs.
Education
  • The government will initiate a “Study in India” programme that will be aimed at attracting foreign students to India for higher education opportunities.
  • Rs.400 crore will be set aside for higher education institutions in FY20. These will be on par with the top universities abroad.
  • A new education policy will be unveiled.
  • Research will be promoted by a national research foundation.
  • A Higher Education Commission will lay special focus on higher autonomy.
  • A new policy will be introduced on national education; this may lead to changes in the school and higher education system in the country.
  • There will be more emphasis on new-age skills such as Internet of Things, Artificial Intelligence, Big Data, etc. so that the youth can get jobs outside the country.
FDI
  • There will be relaxation in local sourcing guidelines for the single-brand retail sector.
  • The government will set up FDI in the insurance, aviation, and animation sectors.
Auto Sector The government will support the FAME II scheme that will ensure quicker adoption of electric vehicles and associated charging infrastructure in the country.
Agriculture
  • The government will focus on zero budget farming.
  • There will be 10,000 new farm produce organisations in the country.
  • The government will look to set up 20 technology business incubators and 80 livelihood business incubators under the ASPIRE programme. This will help in the development of 75,000 skilled entrepreneurs in the agro-rural industries segment.
Sports The government aims to popularise sports in the country at multiple levels. National Sports Education Board will be set up for encouraging sports persons under the Khelo India scheme.
Divestment
  • The government will alter the current policy of retaining its stakes in PSUs at 51%.
  • The strategic divestment of some CPSEs will continue.
  • The divestment target for FY20 is Rs.1.05 lakh crore.
  • The strategic divestment of Air India will be initiated again.
Space
  • Since India is now a major space power, it should harness this on a commercial scale.
  • New Space India Limited (NSIL), a public sector enterprise, has been set up to take advantage of the benefits offered by ISRO.

FAQ's On Union Budget

  1. What is the total budget of India for 2020?
  2. The total budget which has been proposed by the government for financial year 2020-21 is Rs.30.42 lakh crore.

  3. What amount has been allocated for Jal Jeevan Mission in Budget 2020?
  4. A total amount of Rs.11,500 crore has been allocated for Jal Jeevan Mission in the Budget for FY 2020-21.

  5. What amount has been allocated for textile industry in Budget 2020?
  6. A total amount of Rs.1,400 crore has been allocated for textile industry in the Budget for FY 2020-21.

  7. What is the budget which has been allocated for all plans related to nutrition?
  8. A total amount of Rs.35,600 crore has been allocated for all the plans related to nutrition in the Budget for FY 2020-21.

  9. What is the budget which has been allocated for culture and tourism sector?
  10. A total amount of Rs.2,500 crore has been allocated for the culture and tourism sector in the Budget for FY 2020-21.

News About Union Budget 2020

  • Rs.46,038.70 crore sanctioned as states' share in central taxes and duties for May

    On 18 May, the Finance Ministry stated that Rs.46,038.70 crore has been sanctioned as the instalment of the devolution of the state’s share in central duties and taxes for May.

    According to the tweet, this release in funds is similar to the releases in April and has been calculated based on the tax receipts projected on the Budget 2020-2021 and not as per the actuals. The primary objective of the government of India has been to protect the revenues of the state and help them meet their liquidity requirements during the crisis of the COVID-19 pandemic.

    According to the budget, the projected share of the states in taxes was at Rs.7.84 lakh crore for the year 2020-2021 and the 15th Finance Commission had suggested the share of states at 41% of the divisible pool and 1% to the new Union Territories of Jammu and Kashmir, and Ladakh, with a total of 42%.

    The state-wise breakup of the funds are the highest to the state of Uttar Pradesh at Rs.8,255.19 crore, Rs.4,631.96 crore to Bihar, Rs.3,461.65 crore to West Bengal, Rs.1,892.64 crore to Andhra Pradesh, Rs.1,564.4 to the state of Gujarat, Rs.1,441.48 crore to Assam, and Rs.894.53 crore to Kerala.

    22 May 2020

  • Tax regimes can be switched every year

    The Union Budget 2020 unveiled two tax regimes: The old one offering higher interest rates while availing the existing deductions and exemptions and a new one offering lower interest rates but without the income tax deductions and exemptions. The government has now announced that these regimes can be switched every year. The exception for this would be for individuals who have a business of their own. In order to simplify the taxation process, the government is also considering income tax return forms that are prefilled. The Central Board of Direct Taxes is also considering the adoption of a taxpayer charter that will ensure that taxpayers are not harassed. In order to further simplify the tax structure, the government is planning to gradually phase out exemptions and deductions.

    12 Feb 2020

  • Budget 2020: Taxpayers’ charter to be institutionalised says Finance Minister

    Finance Minister Nirmala Sitharaman reassured taxpayers that several steps are being put into action in order to eliminate tax harassment during her Budget 2020 speech. She also said that taxpayers’ charter will be institutionalised.

    Taxpayers are expecting exemptions on various allowances amidst speculations that the finance minister might not propose any substantial cuts in the personal income tax rates.

    01 Feb 2020

  • 5 speculative changes to income tax in the Union Budget

    There are a number of speculations regarding income tax in the upcoming Union Budget. Some of these are: There might be some rationalisation in the income tax slabs in order to moderate it; withdrawal of dividend distribution tax and taxing it for shareholders at concessional rates; abolishment of Securities Transaction Tax (STT) on listed securities or exemption of Long Term Capital Gains Tax on the sale of listed securities; tax sops for home loans in order to boost the flailing real estate sector such as an annual Rs.1.5 lakh deduction on the principal repayment amount; increasing the income tax benefit for the National Pension Scheme (NPS) to Rs.1 lakh, and extending the 14% tax-free contribution to all subscribers of NPS categories.

    29 Jan 2020

  • Major highlights of Budget 2019-20

    The interim Budget for the financial year 2019-20 was announced on the 1 February 2019 by the interim Finance Minister Piyush Goyal. This budget has been driven by a populist push and the main purpose of it is to offer benefits to the middle class, salaried individuals, farmers, and so on. Some of the important highlights for the 2019-20 interim budget can be summed up as follows:

    • Individuals drawing an income of up to Rs.5 lakh will be eligible for a full tax rebate.
    • Individuals drawing an income of more than Rs.5 lakh will be falling under the prevalent tax slabs.
    • The individuals who draw a gross income of Rs.6.5 lakh will be able to receive full tax exemption if they make investments in provident funds, insurance, or other specified savings schemes.
    • The standard deductions for salaried individuals has been increased to Rs.50,000 from Rs.40,000.
    • The TDS threshold has been increased to Rs.2.4 lakh from Rs.1.8 lakh for rental incomes.
    • The upper limit for gratuity has been increased from Rs.10 lakh to Rs.30 lakh.
    • The defence budget has been announced and it has hit an all-time high of Rs.3 lakh crore.
    • Farmers with a holding of less than 2 hectares of land will be eligible to receive Rs.6,000 per annum in 3 instalments under the Pradhan Mantri Kisan Samman Nidhi scheme.

    15 February 2019

  • Cess on Income Tax Increased to 4% from 3% by Budget 2018

    A proposal to increase the cess on income tax has been made by Arun Jaitley, the Finance Minister of India, in Budget 2018. The cess is expected to increase by 1% to 4%. Owing to such a change, individuals who fall in the top-most tax bracket increases. For instance, an individual earns Rs.15 lakh per annum, his tax liability through the cess shall increase by Rs.2,625. Individuals who fall in the middle-income group, i.e. those who earn Rs.5 lakh to Rs.10 lakh per annum, will see the liability rise by Rs.1,125, and those who fall in the lowest bracket, i.e. those who earn Rs.2.5 lakh to Rs.5 lakh will see their liability rise by Rs.125. At the moment, 3% is charges as cess on income tax, and out of this, 2% is education cess while 1% is senior secondary education cess.

    6 February 2018

  • Custom Duty Increased to 25%, Luxury Cars to Cost More

    Arun Jaitley, the Finance Minister of India, proposed increasing the custom duty applicable to luxury cars manufactured abroad. All motorcycles and cars that are imported for assembly shall be more expensive as custom duty has risen from 10% to 15%. Custom duty on motor vehicles that are imported as fully constructed units shall also be more expensive owing to a rise in custom duty from 20% to 25%.

    2 February 2018

  • Women to Benefit From Budget 2018

    Arun Jaitley, the Finance Minister of India, announced beneficial measures for the female populace of the country. In addition to social protection benefits like construction of an extra 2 crore toilets across the country as well as electricity for all, the aim of the government is to make rural women more self-reliant. Female self-help groups will see the loans increase to Rs.75,000 crore from Rs.42,000 crore this financial year. In the first three years, women's contribution to EPF will be lowered to 8%. Over 8 lakh women across rural areas shall receive free LPG supply too.

    2 February 2018

  • Custom Duty Increased to 25%, Luxury Cars to Cost More

    Arun Jaitley, the Finance Minister of India, proposed increasing the custom duty applicable to luxury cars manufactured abroad. All motorcycles and cars that are imported for assembly shall be more expensive as custom duty has risen from 10% to 15%. Custom duty on motor vehicles that are imported as fully constructed units shall also be more expensive owing to a rise in custom duty from 20% to 25%.

    2 February 2018

  • Women to Benefit From Budget 2018

    Arun Jaitley, the Finance Minister of India, announced beneficial measures for the female populace of the country. In addition to social protection benefits like construction of an extra 2 crore toilets across the country as well as electricity for all, the aim of the government is to make rural women more self-reliant. Female self-help groups will see the loans increase to Rs.75,000 crore from Rs.42,000 crore this financial year. In the first three years, women's contribution to EPF will be lowered to 8%. Over 8 lakh women across rural areas shall receive free LPG supply too.

    2 February 2018

  • Upcoming Budget Could Offer Tax Benefits For Electric Vehicles

    Incentives may be offered by the Central Government in an effort to encourage people in the country to purchase electric vehicles. The Goods and Services Tax applicable to electric vehicles could be lowered, while tax benefits could also be extended in the 2018-19 Budget. The Government of India has plans to have only electric vehicles for public transport, while 40% of all personal vehicles are expected to be electric come the year 2030.

    Sources in the industry have revealed that Arun Jaitley, the Finance Minister of India, may announce the tax benefits applicable to electric vehicles in the upcoming Budget on February 1, adding that plenty of brainstorming has been taking place thus far. The GST applicable to electric vehicles may come down from the current 12% to just 5%, and the income tax benefits that may be offered in addition to a lower GST is expected to make these vehicles more alluring to individuals across the country. RK Singh, the Power and New and Renewable Energy Minister, said recently that incentives must be given to electric vehicles.

    31 January 2018

  • GST madeeasy Comes as a Boon to the New Tax Regime

    In order to render GST tasks comparatively facile and effortless, a revolutionary digital solution called GSTmadeeasy was launched recently. With the goal of making every Indian SME and MSME thoroughly GST complaint, this comprehensive digitization is being viewed as the “game changer" for the new tax reform of the country.

    Offering thoroughgoing business solutions, GSTmadeeasy takes care of a multitude of tasks efficiently. From the purchase of invoices (including unlimited invoices), digitization of sales, resolution of disputes, reconciliation of tax ledgers to filing returns and online taxation, GSTmadeeasy is your go-to digital solution to all GST-related issues.

    Where the technological aspects are concerned, GSTmadeeasy offers a user-friendly POS solution which is utterly different from the earlier versions of software. Along with providing useful data, you will henceforth be able to operate GSTmadeeasy offline as well.

    Along with all the aforementioned features, GSTmadeeasy also provides a Help Desk number which is toll-free to address and solve all your problems on a real-time basis.

    31 January 2018

  • National Health Policy cleared by Cabinet

    The Union Cabinet approved the National Health Policy after it was deferred twice previously. A suo motu statement will be made in the Parliament by Health Minister J P Nadda in order to make the details of the new policy public as there cannot be a policy announcement outside the House while Parliament is in session. This policy ensures that health is an entitlement but is not a fundamental right as envisioned by the draft policy. It does not provide a legislative backing for right to health. A constitutional amendment would be needed to bring health in the concurrent list from where it is presently on the state list.

    In the present policy, health services are only ‘assured’. However, discussions of imposing a health cess similar to the education cess that was put forth after RTE was legislated. It also talks of increasing public expenditure on health to 2.5% of the GDP.

    16 March 2017

  • Budget 2017: There won't be any service tax on health care services

    Regarding the Budget 2017, the government noticed speculation on social media pertaining to the proposal of service tax on healthcare service. The government has clarified that there won't a service tax on health care services. Some of the media channels had mentioned a proposal of 5% service tax on health care services. The government confirmed that the Union Budget 2017 doesn't have any proposal of service tax for the health care services. The proposal of service tax was dropped in the Budget of 2011-2012 itself due to strong opposition.

    15 February 2017

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