Budget 2020: IT rates cut, more expenditure on Agri
Delhi, Feb 1: Announcing the Union Budget for 2020-21, Finance Minister Nirmala
Sitharaman on Saturday slashed income tax for individuals, abolished dividend
tax for companies and announced record spending in agriculture and
infrastructure sectors to pull out the economy from its worst slowdown in more
than a decade.
cut in income tax rates, which would help save about Rs 31,000 a year in tax
for persons with annual income of up to Rs 17 lakh, was, however, conditioned
on current exemptions and deductions including standard deduction for Rs 50,000
as well as the waiver earned on payment of up to Rs 1.5 lakh in tuition fee of
children, and contribution towards insurance premium and provident fund, being
raised import duty on a variety of products ranging from tableware and
kitchenware to electrical appliances to footwear, furniture, stationery and
toys to boost domestic manufacturing while at the same time provided funds to
help farmers set up solar power generation units and set up coal storages to
the limit of insurance cover in case of bank failure on deposits was increased
to Rs 5 lakh from Rs 1 lakh and a sale of government stake in the country’s
largest insurer Life Insurance Corporation (LIC) announced.
her second budget in Parliament, Sitharaman said the 2020-21 Budget was aimed
at boosting incomes and enhancing purchasing power, stressing that the
economy’s fundamentals were strong and inflation was well contained.
farm and rural sectors, she allocated Rs 2.83 lakh crore and fixed Rs 15 lakh
crore target for giving agriculture credit. Another Rs 1.7 lakh crore spending
was planned for transport infrastructure and Rs 40,740 crore allocation was
made for the energy sector.
doing so, the government will miss its deficit target for the third year in a
row, pushing shortfall to 3.8 per cent of GDP in the current fiscal as compared
to 3.3 per cent previously planned. The fiscal deficit target for the coming
fiscal year starting April 1 has been fixed at 3.5 per cent.
who cut tax paid by companies to its lowest in September last year, proposed
new tax slabs of 15 per cent and 25 per cent in addition to the existing 10 per
cent, 20 per cent and 30 per cent. The new slabs would be for individuals not
availing certain specified deductions or exemptions.
the proposed I-T slab, annual income up to Rs 2.5 lakh is exempt from tax.
Those individuals earning between Rs 2.5 lakh and Rs 5 lakh will pay 5 per cent
tax. A 10 per cent tax will be charged on income between Rs 5 and 7.5 lakh, 15
per cent, 20 per cent and 25 per cent on next Rs 2.5 lakh each and 30 per cent
on income above Rs 15 lakh.
annual income up to Rs 2.5 lakh is exempt from income tax. While a 5 per cent
tax is charged for income between Rs 2.5 and 5 lakh. 20 per cent for income
between Rs 5 lakh and Rs 10 lakh and 30 per cent for those earning above Rs 10
new tax regime shall be optional for taxpayers,” she said.
accepted the demand of the industry to reverse the taxability of dividends back
to the recipients, making equity investment more attractive. Now, dividends
will be taxed in the hands of recipients, a move that will cause Rs 25,000
crore dent to her coffers.
she deferred taxes for ESOPs in the hands of employees which will be an
important decision for the employees to own shares in the employer without
getting worried about organising cash to pay taxes. This will also provide
greater flexibility to the employers and employees in the structuring of their
proposal that could be become contentious was tax being imposed on Indian
citizens abroad if they are not taxable in their home country.
the next fiscal, she pegged net borrowings of Rs 5.45 lakh crore and doubled
target of raising revenue from the sale of government stake in PSUs to Rs 2.1