By Vikrant Rana and Rupin Chopra
The Hon’ble Finance Minister Smt. Nirmala Sitharaman presented the Union budget for financial year 2020-21 in Lok Sabha on February 1, 2020. The Finance Minister disclosed in her speech that the Economic Survey has projected economic growth at 6%-6.5% during the next financial year commencing April 1. Apart from the introducing new tax slabs and unraveling the outcomes of the Economy Survey, the government has also revealed major plans for other sectors as well.
Major highlights of the Union Budget
- Three Prominent themes of the Budget[1]
- Aspirational India– better standards of living with access to health, education and better jobs for all sections of the society.
- Economic Development – “Sabka Saath, Sabka Vikas, Sabka Vishwas”.
- Caring Society– both humane and compassionate; Antyodaya (helping the under privileged and oppressed) as an article of faith.
- Key Budgetary Allocations[2]:
Agriculture | INR 1.38 lakh crore | USD 19,714.29 Million (Approx.)[3] |
Rural development | INR 1.23 lakh crore
|
USD 17,571.43 Million (Approx.) |
Agriculture and rural | INR 2.83 lakh crore | USD 40,428.57 Million (Approx.) |
Agriculture credit target | INR 15 lakh crore | USD 214,285.71 Million (Approx.) |
Education | INR 99,300 crore | USD 14,185.71 Million (Approx.) |
Healthcare | INR 69,000 crore | USD 9,857.14 Million (Approx.) |
Transportation infrastructure allocation | INR 1.7 lakh crore | USD 24,285.71 Million (Approx.) |
- Promoting Innovation
- Apart from the allocation of INR 99,300 crore (USD 14,185.71 Million Approx.) to the education sector, the Government proposed INR 3,000 crore (USD 428.57 Million Approx.) for ‘Skill India’ to provide relevant skill training to the youth in India.[4]
- New education policy to be announced soon.
- Enabling external Commercial Borrowings and FDI for education sector.
- In an attempt to boost the start-up ecosystem, Finance Minister proposed to ease the burden of taxation on the employees by deferring tax payment on Employee Stock Option Plans (hereinafter referred to as ESOPs) by five years or till they leave the company or when they sell their shares, whichever is earliest.[5]
- National Police Universityand National Forensic Science University is proposed to be set up for policing science, forensic science, and cyber-forensics.
- Top-100 institutions in the National Institutional Ranking Framework to provide Degree level full-fledged online education program.
- Urban Local Bodies to provide up to 1-year internship to fresh engineers.
- The Ministries of Health, and Skill Development to design Special bridge courses.[6]
- Apprenticeship embedded degree/diploma courses to be started by 150 higher educational institutions before March 2021.
- Ind-SAT (Scholarship Aptitude Test) proposed for Asian and African countries as a part of Study in India[7]
- The government has announced a National Mission on Quantum Technologies & Applications (NM-QTA) with a total budget outlay of INR 8000 Crore (USD 1,142.86 Million Approx.) for a period of five years to be implemented by the Department of Science & Technology (DST).[8]
- IPR[9]
- The Union Budget seeks to expand the base for knowledge-driven enterprises
- A digital platform would be promoted that would facilitate seamless application and grant of Intellectual Property Rights.
- In an Institute of Excellence, a Centre would be established that would work on the complexity and innovation in the field of Intellectual Property.
- The government will setup Knowledge Translation Clustersacross different technology sectors including new and emerging areas.
- For designing, fabrication and validation of proof of concept, and further scaling up Technology Clusters, harboring such as test beds and small scale manufacturing facilities would be established.
- To support Mapping of India’s genetic landscape which is critical for next generation medicine, agriculture and for bio-diversity management, two new national level Science Schemes shall be initiated.
- The government has proposed to provide early life funding, including a seed fund to support ideation and development of early stage Start-ups.
- Business[10]
- New Income tax slabs and lower rates have been introduced in the budget. For such persons who are not availing any tax exemptions, the following tax slabs will be applicable as per their annual income:
- 100% tax exemption on Sovereign Wealth Fund’s Indra Investment.
- 5% concessional withholding tax extended to municipal bonds.
- Companies will not be required to pay Dividend Distribution Tax and dividend to be taxed only at the hands of the recipients at applicable rates.
- Scheme to encourage manufacturing of mobile phones, electronic equipment and semi-conductor packaging.
- National Technical Textile Mission to be introduced for a period of 4 years.
- Extension of invoice financing for micro, small, medium enterprises (MSMEs) through Trade Receivables Discounting System (TReDs).
- Simplified GST return shall be implemented by April 1, 2020. The process for return shall be fully automated.
- A proposal to introduce Dynamic QR-code consumer invoices. GST parameters to be captured when payment for purchases is made through the QR-code.
- Corporate Law[11]
- To ensure effective enforcement of contracts, the Contracts Act will be strengthened.
- The budget proposed to review laws, including the Companies Act, to remove criminal liability for acts that are civil in nature.
- Judiciary
- The Union Budget for 2020-21 made a cut in the allocation for creating infrastructure facilities for the judiciary, and in the funding earmarked for justice delivery and legal reforms.
- There is a cut in the allocation for creating infrastructure facilities for the judiciary which include Gram Nyayalayas and other court infrastructure from INR 990 crore (USD 141.43 Million Approx.) in 2019-20 to INR762 crore (USD 108.86 Million Approx.) in the coming financial year.
- The allocation for National Mission for Justice Delivery and Legal Reforms has gone up from INR 210 crore (USD 30 Million Approx.) in 2019-20 to INR 285.73 crore (USD 40.82 Million Approx.) in 2020-21.[12]
- E- Commerce Platforms[13]
- INR 1700 Billion (USD 24.29 Billion Approx.) has been allocated for transport infrastructure and setting up of a governance framework for ports.
- A National logistics policy has been proposed to create a single-window e-logistics market.
- Reduction of withholding tax on technical services to 2% from 10%, and introduction of 1% withholding tax on payments by e-Commerce marketplace to seller for sale of good or services on its platform has been proposed.
- Health Sector:[14]
- Union Budget 2020 allocated INR 69,000 crore (USD 9,857.14 Million Approx.) for the health sector
- Finance Minister has proposed to attach a medical college to a district hospital in Public Private Partnership model.
- Clean Air and Pollution Free Cities[15]
- Closing down of Power Plants having emissions above the prescribed.
- Finance Minister has allocated INR 4,400 Crore (USD 628.57 Million Approx.) for states that work towards cleaner air.
- India is stating its campaign towards climate change on January 1, 2021 as per the commitment made at Paris conference for Climate Change.
Related Posts
Union Budget 2019-20: A 10-year road map to strengthen Indian Economy
India: Union Budget 2016-17 Proposes Steps to Encourage Domestic Patent Regime
[1] https://www.indiabudget.gov.in/doc/bh1.pdf
[2] Key Highlights of Union Budget 2020-21, Press Information Bureau, February 1, 2020 (https://pib.gov.in/newsite/PrintRelease.aspx?relid=197836)
[3] USD value is calculated at INR 70/ USD
[4] Key Highlights of Union Budget 2020-21, Press Information Bureau, February 1, 2020 (https://pib.gov.in/newsite/PrintRelease.aspx?relid=197836)
[5] Summary of Union Budget 2020-21, Press Information Bureau, February 1, 2020
(https://pib.gov.in/newsite/erelevent.aspx?mincode=15&eventt=8)
[6] Summary of Union Budget 2020-21, Press Information Bureau, February 1, 2020
(https://pib.gov.in/newsite/erelevent.aspx?mincode=15&eventt=8)
[7]https://www.indiabudget.gov.in/doc/frbm1.pdf
[8] Summary of Union Budget 2020-21, Press Information Bureau, February 1, 2020
(https://pib.gov.in/newsite/erelevent.aspx?mincode=15&eventt=8)
[9] Summary of Union Budget 2020-21, Press Information Bureau, February 1, 2020
(https://pib.gov.in/newsite/erelevent.aspx?mincode=15&eventt=8)
[10] https://www.indiabudget.gov.in/doc/frbm1.pdf
[11] Key Highlights of Union Budget 2020-21, Press Information Bureau, February 1, 2020 (https://pib.gov.in/newsite/PrintRelease.aspx?relid=197836)
[12] https://www.theweek.in/news/biz-tech/2020/02/01/budget2020-allocation-for-judiciary-expenditure-has-been-reduced.html
[13] https://www.indiabudget.gov.in/doc/frbm1.pdf
[14] https://www.indiabudget.gov.in/doc/bh1.pdf
[15] Key Highlights of Union Budget 2020-21, Press Information Bureau, February 1, 2020 (https://pib.gov.in/newsite/PrintRelease.aspx?relid=197836)