Govt introduces five tax slabs with lower rates for those foregoing exemptions; raises customs duty

New Delhi, February 1

Finance Minister Nirmala Sitharaman on Saturday announced cuts in personal income tax, extended tax benefits for affordable housing and gave relief to companies on payment of dividend in the Union Budget for 2020-21 as the government looked to boost consumption to bring the economy out of the worst slowdown in 11 years.

The minister proposed raising customs duty on a variety of products ranging from tableware and kitchenware, electrical appliances to footwear, furniture, stationery and toys to give a level-playing field to domestic companies and boost ‘Make in India’.

Offering an optional lower rate of income tax to individuals, Sitharaman in her Budget for 2020-21 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 I-T slabs would be for individuals not availing certain specified deductions or exemptions.

Under the proposed I-T slab, annual income upto 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. Income between Rs 5 lakh and Rs 7.5 lakh will be taxed at 10 per cent, while those between Rs 7.5 and Rs 10 lakh at 15 per cent.

Those earning between Rs 10 lakh and Rs 12.5 lakh will pay tax at the rate of 20 per cent, while those between Rs 12.5 lakh and Rs 15 lakh will pay at the rate of 25 per cent. Income above Rs 15 lakh will be taxed at 30 per cent.

Individuals opting for taxation under new rates will not be entitled to exemption/deductions, including under Section 80C and 80D, LTC, housing rent allowance, deduction for entertainment allowance, professional tax, and interest on self-occupied/vacant property.

Also read: Manmohan Singh calls Nirmala Sitharaman’s Budget speech ‘too long to absorb’ 

Currently, annual income upto Rs 2.5 lakh is exempt from I-T. While a 5 per cent tax is charged for income between Rs 2.5 lakh and Rs 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 lakh.

“The new tax regime shall be optional for taxpayers,” she said.

Also read: FM Nirmala Sitharaman cuts short Budget speech after feeling unwell

“The proposed tax structure will provide significant relief to taxpayers and more so to those in the middle class,” Sitharaman added.

To boost growth, Sitharaman announced higher spendings on infrastructure, rural development and agri sector.

The Finance Minister said the government is proposing a 16-point action plan to boost agriculture and farmers’ welfare.

Also read: Moving toward lower tax rates with no exemptions: FM

Agricultural services needed copious investments, she said, adding that the government had insured 6.11 crore farmers under the Pradhan Mantri Fasal Bima Yojana.

With her post 2019-20 Budget corporate tax cut drilling a Rs 1.45 lakh crore hole in government revenues, the minister hiked the fiscal deficit target for current fiscal to 3.8 per cent of GDP, from 3.3 per cent.

For 2020-21, she pegged the fiscal deficit at 3.5 per cent. PTI

BUDGET HIGHLIGHTS

*FM Sitharaman cuts short her Budget speech after feeling unwell towards fag-end

*Lower Income Tax rates for individuals only on foregoing exemptions under Section 80C, 80D, LTC, HRA, among others

*Customs duty on catalytic converters, parts of commercial vehicles, other than EVs, hiked 

*Customs duty on tableware/kitchenware made of porcelain or china ceramic, clay iron, steel, copper doubled to 20%

*Customs duty exemption on raw sugar, agro-animal-based products, tuna bait, skimmed milk, certain alcoholic beverages, soya fibre, soya protein withdrawn

*Anti-dumpting duty on purified terephthalic acid (PTA) abolished

*Customs duty on wall fans increased from 7.5 pc to 20 pc

*Budget provides e-commerce operators to deduct TDS on all payments to e-commerce participants at 1 per cent with PAN/Aadhaar, 5 per cent in non-PAN/Aadhaar 

*FM halves customs duty on import of newsprint, lightweight coated paper to 5 per cent 

*FM raises excise duty by way of national calamity contingent duty on cigarettes, tobacco products 

*Health cess on import of medical equipment imposed in Budget

*Customs duty raised on footwear and furniture

*Direct taxes are lowest, simplest and smoothest

*To ease allotment of PAN, new process of instantly allotting PAN through Aadhaar will be brought

*'Vivad se Vishwas’ scheme for direct taxpayers whose appeals are pending at various fora

*FM proposes scheme to bring down litigation in direct taxation scheme; 4.83 lakh direct cases pending in various appellate forums

*Income Tax Act to be amended to allow faceless appeals against tax orders on lines of faceless assessment

*Govt extends additional Rs 1.5 lakh tax benefit on interest paid on affordable housing loans to March 2021

*Date of approval of affordable housing projects for availing tax holiday on profit earned by developers extended by 1 yr

*Tax on cooperative societies proposed to be reduced to 22  per cent plus surcharge and cess, as against 30 per cent at present

*Budget proposes deferment of tax payment by employees on ESOPs from startups by five years

*Concessional withholding rate of 5 pc on interest payment to non-residents extended up to June 30, 2022 

*20% tax for individuals annually earning between Rs 10 lakh and Rs 12.5 lakh; 25% for income between Rs 12.5 lakh and Rs 15 lakh; 30% for above Rs 15 lakh income under new slab

*Govt proposes 100 pc tax concession to sovereign wealth funds on investment in infra projects 

*Concessional tax rate of 15 pc extended to power-generation companies

*Dividend Distribution Tax shifted to individuals instead of companies

*FM says have removed 70 exemptions, deductions with a view to further simplify tax regime

*Rs 40,000 cr per annum will be revenue foregone from new income tax rates for individuals 

*A person earning Rs 15 lakh per annum and not availing any deductions will pay Rs 1.95 lakh tax in place of Rs 2.73 lakh now

*New income tax rates will be optional 

*Those earning upto Rs 5 lakh a year will pay no tax

*Govt proposes 10% tax for income between Rs 5 lakh and Rs 7.5 lakh per annum for those who forego deductions and exemptions

*For income between Rs 7.5 lakh and Rs 10 lakh per annum, tax rate reduced from 20 pc to 15 pc

*Income tax rates will be significantly reduced for those who forego reliefs, exemptions

*Recent cut in corporate tax to cause loss of substantial revenue in short run, economy to reap huge returns in due course

*Net market borrowings would be Rs 4.99 lakh cr in FY 20; Rs 5.36 lakh cr in next fiscal

*Expected tax buoyancy will take time 

*Fiscal deficit pegged at 3.8 pc in current fiscal and 3.5 pc in next

*All flagship schemes of govt are provided for in Budget

*Receipts for 2020-21 pegged at Rs 22.46 lakh cr, expenditure Rs 30.42 lakh cr

*Nominal GDP growth for 2020-21 estimated at 10 per cent

*RE expenditure for FY20 at Rs 26.99 lakh cr, receipts at Rs 19.32 lakh cr

*Govt accepts recommendations of interim report of 15th Finance Commission, final report to be submitted later

*Amendments to be made to enable NBFCs to extend invoice financing to MSMEs 

*International bullion exchange to be set up in IF SC GIFT City

*Govt to sell part of its holding in LIC

*To address liquidity constraints of NBFCs and housing finance corporations, partial credit guarantee scheme to be launched by govt

*Budget proposes debt-exchange traded funds comprising mainly government securities 

*Rs 22,000 cr already provided as support to infrastructure project pipeline 

*Certain govt securities will be open for foreign investors

*Govt proposes to increase investment limit of FPIs in corporate bonds from 9 pc to 15pc 

*National Recruitment Agency to be set up for conducting common online eligibility tests for recruitment to non-gazetted posts

*Govt has asked RBI to extend debt restructuring window for MSME by a year to March 31, 2021 

*Scheme to provide subordinate debt for entrepreneurs of MSMEs to be introduced 

*Need for greater private capital in banks

*Govt proposes amendments to facilitate separation of govt pension trust from PFRDA 

*Balance govt holding in IDBI banks to be sold to pvt retail investors

*Robust mechanism in place to monitor health of banks, depositors’ money is absolutely safe

*Deposit insurance for depositors increased to Rs 5 lakh from Rs 1 lakh

*Rs 3.5 lakh cr infused as capital in public sector banks in past years

*Robust mechanism in place to monitor health of all commercial banks

*Clean, reliable, robust financial sector required to achieve USD 5 trillion economy 

*Govt proposes Rs 30,757 cr for Jammu and Kashmir, and Rs 5,958 cr for Ladakh for fiscal 2020-21 

*Rs 100 crore allocated for hosting G-20 Summit

*Data must have credibility; National Policy on statistics to be brought in

*Govt proposes major reform in recruitment of non-gazetted staff

*Govt proposes amendments in Companies Act to decriminalise civil offences 

*Tax harassment cannot be tolerated 

*Taxpayer charter will be part of statute

*National Security is top priority for this govt

*Wealth creators will be respected in the country

*PM KUSUM to be expanded to provide 2 million farmers in setting up standalone solar pumps 

*Rs 4,400 crore allocated for states that work towards clean air

*India’s commitment towards tackling climate change made in Paris conference kickstarts from January 1, 2021

*Power plants with emissions above prescribed limits will be asked to close down

*Govt allocates Rs 3,150 cr for ministry of culture, Rs 2,500 cr for ministry of tourism 

*5 archaeological sites in Haryana, UP, Assam, Gujarat and Tamil Nadu, to be developed with on-site museums

*Govt proposes tribal museum in Ranchi, Jharkhand

*Govt proposes Rs 53,700 cr for welfare of schedule tribes and Rs 9,500 cr for senior citizens and divyangs for 2021-22

*Rs 9,500 crore provided for senior citizens and Divyangs

*Rs 85,000 crore allocated for SCs and OBCs in Budget for FY 2020-21

*Task force to be set up to recommend marriageable age for women

*Rs 35,600 cr allocated for nutritional-related programme in FY21

*FM says 150 higher institutes to start apprentice training for general category students 

*Govt allocates Rs 28,600 crore for programmes specifically for women

*To achieve higher export credit, new scheme being launched which provides higher insurance cover and reduced premium

*Gross enrolment ratio for girls across all levels of education is higher than boys 

*Rs 8,000 cr outlay provided for National Mission on Quantum Technology and Application over 5 yrs 

*All public institutions at gram panchayat levels such as police stations and post offices to be connected digitally

*Fiber to home through BharatNet to link 1 lakh gram panchayats this year; Rs 6,000 cr provided for BharatNet in FY21

*Govt proposes discoms replace conventional meters with smart pre-paid meters, option to consumers to choose electricity suppliers

*Govt to bring out policy for data centre parks throughout country

*Govt allocated Rs 1.23 lakh for rural development and panchayati raj, and Rs 1.6 lakh crore for agriculture and allied activities

*FM allocates Rs 2.83 lakh crore for agri and allied activities

*Further reforms for transparent price discovery for natural gas will be undertaken 

*Natural gas pipeline grid to be expanded to 27,000 km from over 16,000 km now

*Rs 22,000 crore to Power and Renewable Energy sector in 2020-21

*State govts need to replace conventional electricity meters with prepaid smart meters in 3 yrs 

*Rs 1.7 lakh cr provided for transport infrastructure in 2020-21

*Govt to consider corporatisation of at least one major port and listing it on stock exchanges 

*100 more airports to be developed by 2025 to support Udaan scheme

*150 trains to be run in PPP mode; also 4 stations to be redeveloped with help of private sector

*Proposal for setting up large solar power capacity alongside rail track is under consideration 

*More Tejas type trains will connect tourist destinations

*550 Wi-fi facilities have been commissioned at railway stations

*Delhi-Mumbai Expressway to be completed by 2023, Chennai-Bengaluru Expressway to be launched 

*Govt to set up project preparation facilities for infrastructure sector, national logistic policy soon

*Digital refund of duties and taxes of Centre, states and local bodies to exporters from this year 

*Rs 103 lakh crore infra project pipeline launched in December-end

*Rs 27,300 crore provided for development and promotion of industry and commerce

*FM proposes National Technical Textile mission with an outlay of Rs 1,480 crore over 4 years to cut down imports

*Govt vision is to make each district an export hub

*Govt proposes scheme for manufacturing of cell phones, semiconductors and other electronic devices 

*Milk processing capacity to be doubled by 2025 

*India needs to boost domestic manufacturing and attract investment in electronic manufacturing

*Youth and fishery extension work to be enabled by rural youth as Sagar Mitras, 500 fish farmer producing organisations to be set up

*Propose to set up Investment Clearance Cell to give investors free investment advisory, land banks and facilitate clearances even at state level 

*Rs 99,300 crore allocated for education sector, Rs 3,000 crore for skill development in FY21 

*Special bridge courses to be designed for teachers, nurses, paramedical staff, caregivers 

*Govt proposes to attach medical colleges with district hospitals on PPP model to deal with shortage of doctors

*Degree-level full-fledged online education programme by institutions ranked in top 100 

*National Police University and National Forensic University are being proposed 

*Govt proposes to start programme for urban local bodies to provide opportunities for internship to young engineers

*Steps to be taken to attract external commercial borrowing, FDI in education sector 

*Centre to announce new education policy soon; govt received over 2 lakh suggestions on it

*Govt proposes Rs 3.6 lakh crore towards piped water supply to households

*Allocation for Swachh Bharat for 2020-21 stands at Rs 12,300 crore

*FM proposes to expand Jan Aushadhi Kendras in all districts of country to provide medicines at affordable rates

*Anti-TB campaign to be launched to eliminate TB by 2025

*Viability gap funding will be provided to set up warehouses for agri products

*Viability gap funding for setting up hospitals in those districts with no empanelled hospitals under Ayushman Bharat

*Proceeds from taxes on medical devices would be used to support setting up of hospitals

*Govt proposes to expand coverage of artificial  insemination to 70 pc from 30 pc to increase livestock productivity

*Fish production to be raised to 200 lakh tonnes by 2022

*Govt proposes conservation of marine fishery

*One horticulture crop in one district on cluster basis will be promoted 

*NABARD refinance scheme will be expanded

*Agri credit target set up at Rs 15 lakh cr for FY21

*Horticulture with 311 MT exceeds production of food grains

*Indian Railways to set up Kisan Rail in PPP mode for cold supply chain to transport perishable goods 

*Krishi Udaan to be launched by Civil Aviation Ministry to transport agri-products to national as well international destinations

*Self Help Groups will be allowed to set up village agri storage facilities 

*NABARD will map and geo-tab 162 mn tonne capacity agri warehouses across country 

*FCI and Warehousing Corporation of India to build warehousing facility on their land 

*Govt proposes plans to help farmers use proper manure and little water, encourage balanced use of fertilisers

*Balanced use of fertiliser will bring about change in prevailing regime of providing incentive for use of chemical fertiliser

*States asked to adopt 3 central model laws on agri land leasing, marketing and contract farming 

*Farmers to be allowed to set up solar units on barren/fallow lands; supply power to grids

*20 lakh farmers to be provided funds for setting up standalone solar pumps 

*Govt proposing comprehensive measures for 100 water-stressed districts

*Govt proposes 16-point action plan to boost agriculture and farmers welfare 

*Agri market needs to be liberalised; govt proposes to handhold farmers 

*Agri services need copious investments

*We have insured 6.11 crore farmers under Pradhan Mantri Fasal Bima Yojana

*Everything that we do, speaks through budget, everything that govt does is for country

*FM says Budget woven around aspirational India, economic development and caring society

*Govt says aim is to achieve seamless delivery of services through digital governance 

*India uplifted 271 million people out of poverty

*India is now 5th largest economy in world. Central Govt debt reduced to 48.7% of GDP from 52.2 per cent in March 2014

*We shall strive to bring ease of living for every citizen

*7.4 pc growth surpassed in 2014-19 with average inflation of 4.5 pc

*Finance Minister lists out welfare schemes like affordable housing scheme, DBT and Ayushman Bharat

*Simplified return for GST is being introduced from April 2020

*GST resulted in Rs 1 lakh crore gains to consumers, removed inspector raj and helped transport sector

*Average household now saves 4 pc in monthly expense after rollout of GST

*This Budget aims to fulfil aspirations of people

*FM terms GST as historic structural reform; says it integrated country economically

*During 2014-19, govt brought paradigm shift in governance 

*Fundamentals of economy strong, inflation well contained, banks cleaned up accumulated loans

*FM says Budget is for boosting income, purchasing power of people

*Finance Minister Nirmala Sitharaman begins presenting Budget for 2020-21 in Lok Sabha