Finance Minister Nirmala Sitharaman presented the Union Budget 2020 on February 1st 2020. The FM said that the underlying idea is to enhance the income which would therefore reflect in the purchasing power of the citizens. 

 

Who benefits

Transport infrastructure is one of the biggest beneficiaries of the Union Budget with Finance Minister proposing $23.7 billion for the development. 

Rural India and Electronic manufacturing sector also come close second with the former getting the allocation of INR 2.83 trillion and agriculture credit target for the next year set at INR 15 trillion. Other avenues that cheered the budget were Telecom companies, Online Education, Pipeline Gas Suppliers, Water and IT firms.

On the other hand, sectors like Insurance, State run banks, Logistic companies and Real estate sector remain deprived of any targeted announcement by the Finance Minister. 

 

Income Tax

Government decided to bring in the new income tax slab. However, in a unique approach the old regime will also exist. This has created some sort of confusion in the minds of income tax payers. 

 

A comparative view of the existing and the new tax slabs would give more clarity to our readers.

 

Slabs

Existing

New

Up to 2.5 lacsNilNil
2.5 lacs to 5 lacs5%Nil
5 lacs – 10 lacs20%Slab NA
5 lacs-7.5 lacsSlab NA10%
Above 10 lacs30%Slab NA
7.5 lacs-10 lacsSlab NA15%
10 lacs – 12.5 lacsSlab NA20%
12.5 lacs -15 lacsSlab NA25%
15 lacs and aboveSlab NA30%

 

Finance Minister made clear that new tax regime will be optional and would not include any rebates and exemptions that can be availed to reduce the overall tax paid. Currently, there are 70 such exemptions that taxpayers can claim. 

However, if the taxpayer opts for the newer tax regime, then he would not be able to avail the above mentioned exemptions.

 

Tax Sops for Start-ups

Growing start-ups in the country cheered the budget with FM announcing expansion for tax incentives for them. The government has made the move towards making the employee stock options tax friendly. The budget proposes deferring the tax on ESOPS by five years or until the employee leaves the company, or when they decide to sell their shares or whichever is the earliest.

 

Retail Participation

In order to encourage the retail participation in the Government Securities market, FM Nirmala Sitharaman has also proposed Debt ETF. A new debt ETF would be floated taking a cue from the recent success of the previous one.

 

Items such as imported fans, refrigerators and Air Conditioners will become expensive with the new budget rolling. Among other things that will become expensive are footwear, furniture, Auto & Auto parts, Importing Medical Equipment, Paper trays, blinders and so on.

 

Items that are set to get cheaper include Newsprint, skimmed milk, tuna bait, Sports goods, electric vehicles and microphones.

Overall, economists have expressed mixed views on the budget with some claiming that the budget has been disappointing while others stating it to be in line with the expectations. 

 
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An MBA in finance, I like to cover the wide range of topics related to Taxation, SEBI, Finance and anything that is Public Helpful. The motive is always to make it simpler for the taxpayers understand the system better and take informed decisions.

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