Budget 2020 - Sabka Saath, Sabka Vishwas, Sabka Vikas
This is an Epoch making budget
2020. Finance Minister Smt. Nirmala Sitharaman has kept in mind all the
segments of the economy. It enforces Prime Ministers Shri Narendra Modi’s
vision of achieving 5 trillion dollar economy by 2024, with Sab ka Saath Sab ka Vikas.
The Government has not bogged down by the resource
constraints and has continued with its push of spending on infrastructure and
asset creation. It has taken care that the social welfare schemes of the
government have sufficient funds allocation and can continue on its path of
benefit to the last person (Antyodaya). Though the fiscal deficit targets have
been relaxed but the government gives a fiscal consolidation path and has also,
for the first time, annexed a list of off budget borrowing in the budget
document and settled a very significant debate about transparency in government
borrowing.
All previous governments had been resorting to off budget
borrowing like oil bonds etc. but were not disclosing it. FM has estimated a
nominal GDP growth rate of 10 percent for the coming year, keeping inflation
below 4 percent our real GDP growth will be above 6 percent.
The budget focuses on wealth creation, pro business policy
and minimal government intervention under the Economic Development Theme of the
Budget. For resource generation it has desisted from increasing direct or
indirect taxes. The government has reiterated its commitment of recognizing and
honoring honest taxpayer and is taking care of unwarranted harassment by tax
authority by bringing accountability in the tax administration. Announcement of
Taxpayer’s Rights Charter within the statute is an important step in this
direction. Provision for statutory taxpayer’s right exists only in three other
countries worldwide.
Direct personal tax slabs have been changed to benefit
middle-income segment and taxpayers up to income level of Rs 15 lakh will be
benefited if they opt for new regime of personal tax. FM has also promised that
many tax concessions enjoyed currently by individual tax payers will be
incorporated in the new regime, depending upon the nature. The taxpayers, who
do not have business income, can revise the option on yearly basis. Income
accruing to NRI in zero tax countries like UAE will be taxed on income
generated in India only, a logical step to fill the gap in taxation.
Agriculture sector have been sufficiently provided for with
the 16 new initiatives announced under Aspirational India theme for rural and
agriculture sector. Budget also provides for gap funding for new hospitals in
the aspirational districts for servicing Ayushman health care scheme and
provision for drinking water. State government’s concerns about two months
pending transfer under GST has been duly met through the consolidated fund and
its commitment to compensate the states for increased 14 percent revenue every
year in future has been provided through compensation.
This settles one of the contentious issues under GST. For
devolution of funds to the States, the FM has accepted the interim report of
the 15th finance commission, which incorporates provisions of increased
efficiency in State Finances for revenue transfer from the Centre.
Stressed assets under MSME has been given an extended one
year time period for resolution and limit to go to resolution mechanism under
SARFASI Act has been reduced to 100 crore from earlier 500 crore. The
requirement for Tax Audit has been increased to a turnover of Rs 5 crore from
Rs 1 crore earlier. MSME also meets its demand for invoice financing under Trends.
Startup ecosystem gets several hand holding supports like payment of taxes for
ESOPs only at the point of sale. GIG economy, involving technological
development, gets a big push from the government. Education sector has several
reforms for connecting academics to industries, providing them with industrial
internship and skilling etc.
Setting of online educational facilities and new Police and
Cybercrime University are important development. Employment through National
Recruitment Agency for non-gazette posts will smoothen employment process and
make it completely transparent.
Under the theme of Economic Development, government provides
for all the important sectors like Technological Textile Centers, power,
renewable energy, connectivity like airports, seaports and railways. Finance
minister works out a mechanism for the ambitious plan of investment of Rs 103
lakh crore under National Infrastructure Pipeline (NIP) identifying 6500 projects
through Center, State and foreign direct investments (FDI). Budget has
announced 100% tax exemption to interest, dividend and capital gains income in
respect of investment made in infrastructure and other notified priority
sectors before 31st march 2024 with a lock in period of three years. Government
has also opened up its bond markets, in rupee denomination, for investment from
foreign sovereign debt funds, securing against exchange fluctuations, a concern
shown earlier for sovereign debt funds. Financial market’s long pending demand
for abolition of dividend distribution tax (DDT) has been accepted.
Government has also taken care of inverted duty structure
that has seeped in the domestic industry under Free Trade Agreement (FTA) from
ASEAN countries. It also protects domestic industries from dumping from
countries like China, securing domestic industries through clauses like country
of origin and safeguard duties.
Discrimination of civil acts under Company Law and removal
fear in the corporate sector has been hailed across every section. Faceless
appeal provision and Vivad se Vishwas scheme will help resolving long pending
tax disputes in tax administration and will also release funds for the
government. Disinvestment road map will help reduce government dependence of
tax revenue and improvement of primary and secondary bond market and increasing
foreign debt investment limit commercial papers from 9 to 15 percent will help
reduce dependence of corporate sector on bank finance alone.