This year, the Narendra Modi government has chosen to present a budget that simplifies taxation, nurtures aspirations and assures and environment for honest business. But for a common person, the economic and financial jargon can certainly send them into a tizzy. We demystify the budget for our readers, pulling out takeaways that are relevant to you.
As an Entrepreneur, How Does the Budget Ease the Business Environment?
Budget 2020 highlights the continued commitment of the Narendra Modi government to create a business-friendly environment in India. Having recognized the contribution of this stakeholder group in India’s growth story, several key announcements have come up that help change the operating paradigm for the better:
- An Investment Clearance Cell will help to provide end to end clearances, give access to land banks and other facilities via a portal.
- For the Startup India registered firms, announcements on easing taxation on ESOPs and profits have been made.
- Audits for small traders, shopkeepers and small businesses with a revenue turnover of upto ₹5 crores will not be needed anymore.
- Private sector will be encouraged through incentives to build data centre parks across the country.
- Concessional corporate tax has been extended to companies entering power generation sector to give it a fillip.
- Import cess on imported healthcare products has been introduced. This shall help support the manufacturing industry within India, given how it has emerged as a success story.
- National Textile Mission to be set up to help the textile industry.
- Cooperatives now have a level playing field vis-à-vis corporates. They now have 22% tax rate plus cess/surcharge with no exemptions and deductions, as well as MAT exemption.
- Vivaad Se Vishwaas Scheme has been introduced to settle direct tax litigation on the lines of Sabka Vishwaas scheme. This is significant as nearly 5 lakh direct tax cases pending at various levels, settlement to be at fixed rate done before 31 March 2020.
- Support fund for pharma and automotive sector MSMEs via a fund to be housed in SIDBI and EXIM Bank for technical support and productivity improvement.
- Window for MSME’s debt restructuring by RBI has been extended by one year till March 31, 2021.
- NIRVIK Scheme has been introduced to provide higher insurance cover and reduced premium for small exporters.
- Project Preparation Facility to boost activity and reduce delays in infrastructure projects has been announced.
Narendra Modi government has reiterated its commitment for doubling incomes of the farmers by 2025. Continuation and expansion of several existing programmes alongside introduction of new schemes has been done for this purpose:
- ₹2.83 lakh crore have been allocated for agriculture and allied sectors, irrigation and rural development
- One Product One District has been announced for high focus to give momentum to horticulture to promote specialization and value maximization.
- Kisan Rail scheme has been announced, whereby cold storage rakes shall be increased to prevent loss of perishable agricultural products.
- Krishi Udaan scheme has been announced for improving value realization in North East and Tribal districts.
- Government shall increase the coverage of PM-KUSUM Solar farmer scheme significantly to augment farmer incomes, increase savings from reduced dependence on diesel and petrol. It is also introducing the solar farmer scheme to boost farmer schemes from fallow lands.
- A major boost to fisheries and fish processing via Sagar Mitra has been announced for coastal states like Bengal and Tamil Nadu; benefits coastal youth via jobs and entrepreneurship in these areas
- Viability Gap Funding for setting up such efficient warehouses at the block/taluk level by Food Corporation of India (FCI) and Central Warehousing Corporation (CWC) has been announced.
- The government will ensure that financing on Negotiable Warehousing Receipts (e-NWR) shall be integrated with e-NAM.
- Artificial insemination for livestock to be increased to 70% from the present 30%. This is part of a series of measures for boosting milk production in India, including the dovetailing of MNREGS to develop fodder farms and increasing the milk processing capacity to 108 million MT by 2025.
As A Wealth Creator, Has The Government Addressed My Concerns?
The government has celebrated the wealth creators of this country, thanking them for their multidimensional role in propelling the Indian economy. To sustain their positive outlook for the Indian economy as an ongoing credible story, the government has made several announcements that boost overall investor sentiment:
- Government abolishes Dividend Distribution Tax for companies. This ensure that dividends are now taxed at the hands of recipients henceforth, avoiding double taxation.
- A tax payer charter shall be institutionalized as law and embedded into the tax codes, which will help prevent tax harassment.
- The government shall now remove criminal liability for acts that are civil in nature. Further such provisions in other laws will also be corrected.
- Sovereign wealth funds will get tax exemption on their interest, dividend and capital gains in infrastructure and notified sectors before March 2024
- Bond market incentives have been announced – lower rate of 5% withholding.
- Appeal system shall also be automated like the assessment system to prevent harassment at the hands of the tax inspectorate officials.
What Is In It For Me, The Middle Class?
The government has acknowledged the contributions of the middle class in the form of honest taxpayers. It has committed itself to ensuring that the lives of the middle classes become easier, as part of its objective of ensuring ‘Ease of Living’ in India:
- Insurance cover shall be raised to ₹5 lakh per depositor for banks, bringing much relief to several depositors.
- Income tax rates have been effectively reduced for incomes of up to ₹15 lakh based on an optional scheme that payers can avail.
- The date for loan sanction to avail Interest deduction for tax calculation on interest on housing loan has been extended by one more year.
- Aadhar and PAN interchangeability has been pushed further to ease all paperwork. PAN will now be instantly allotted on basis on AADHAR card.
- Auto-enrolment in Universal Pension coverage shall now be ensured.
- Jan Aushadhi Kendra Scheme to offer 2,000 medicines and 300 surgicals in all districts by 2024 shall be set up.
- 100 more airports will be developed by 2024 to support Udaan scheme.
- Four station re-development projects and operation of 150 passenger trains through PPP have been announced. Also, more trains like Tejas Express to connect iconic tourist destinations have been promised.
- 148 km long Bengaluru Suburban transport project at a cost of Rs 18,600 crore, to have fares on metro model has been announced.
As The Youth, What Do We Get?
Youth of India has often been seen by the Modi government as the hope of this country. Keeping their dynamism and aspirations in mind, several important initiatives have been announced:
- Apprenticeship embedded degree programs shall be launched.
- Urban local bodies shall be encouraged to give one-year paid internships to engineering students and graduates.
- Full-fledged degree level online programs to deprived students to be launched by 100 top universities.
- National Police University and National Forensic Science University to be launched keeping in mind the modern, specialized skill requirements.
- New medical college with each district hospital in PPP Mode on Gap funding model to provide both jobs and education shall be set up.
- Skill-gap bridging courses for paramedical and nursing aspirants wishing to work abroad shall be launched by the government.
- Study in India – an InSAT program for foreign students to study in India
- Project Preparation Facility proposed to be set up involving young professionals has been announced.
- 150 higher educational institutions will start apprenticeship embedded degree/diploma courses by March 2021.
How Do Women And Children Benefit From The Budget?
The government’s Beti Bachao Beti Padhao Yojana has seen great benefits. Girl enrollment has surpassed that of boys at all levels – at elementary level it stands at 93.2% vs 89.2%; at secondary level it is 81% vs 78%; and at higher levels it 59% vs 57%.
Further committing to its development, several steps have been announced:
- Women SHG led Dhaanya Lakshmi Scheme has been announced to help farmers reduce their logistics cost.
- Allocation of ₹35,600 crore for nutrition-related programmes proposed for the FY2020-21 has been mandated.
- ₹28,600 crores have been proposed for women specific programs
- Viability Gap Funding window proposed for setting up hospitals in the PPP mode has been announced.
- Mission Indradhanush has been expanded to cover 12 more diseases.