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Union Budget: Income Tax rates reduced & other big highlights

Saturday, February 1, 2020 • Telugu Comments
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Union Budget: Income Tax rates reduced & other big highlights

Union Finance Minister Nirmala Sitharaman today tabled the Budget for 2020-21 in the Parliament.  Aspirational India to boost the standard of living, economic development for all, and building a humane and compassionate society are the three themes of the Budget.

Income Tax-related changes:

The government has announced some tax breaks for lower/middle-income categories.  The system of optional personal Income Tax Regime with no exemptions has been introduced.  This means that the new rates will be applicable only if you five up certain deductions/exemptions.  Here are the new rates as per journalist Meenakshi Doshi.

10%: Rs 5 – 7.5 lakh (Versus 20%) 15%: Rs 7.5 – 10 lakh (Versus 20%) 20%: Rs 10 – 12.5 lakh (Versus 30%) 25%: Rs 12.5 – 15 lakh (Versus 30%) 30%: Above Rs 15 lakh (Versus 30%)

Sitharaman elaborates:

"We propose to bring a personal income tax regime, where income tax rates will be reduced.  Now, a person earning between Rs 5-7.5 lakhs will be required to pay tax at 10% against the current 20%. In this new personal income tax regime, income tax rates will be significantly reduced for the individuals who forgo certain exemptions and deductions."

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

A highlight is that about 70 of more than 100 income tax deductions and exemptions have been removed.

Big allocations/announcements:

In a big move, the government has allocated Rs 3.6 lakh crore for the ambitious Jal Jeevan Mission.

The FM said that Healthcare will be allocated Rs 69,000 Cr, while the Education sector will get Rs 99,300 Cr.  Rs 27,300 Cr has been allocated for the development of industry and commerce.

Skill Development, which has been an important focus area since 2014, will get Rs 3,000 Cr.  On the other hand, Swachh Bharat Mission, will get Rs 12,300 Cr.

In a big way, Transport infrastructure has been allocated Rs 1.7 lakh crore, whereas Power and renewable energy will get Rs 22,000 Cr.

Nutrition-related programs have been allocated Rs 35,600 Cr.  Schemes meant for women get Rs 28,600 Cr.  Schemes focussing on the welfare of SCs and OBCs get Rs Rs 85,000 Cr.

Sitharaman urged all States and Union Territories to replace conventional energy meters with pre-paid smart meters by 2023.

One hundred more airports will be developed by 2024 under the Udaan scheme.

States will get Rs 4,400 Cr towards adopting clean air technologies and steps that ensure clean air.  The FM has enhanced the allocation of Rs 9500 Cr for senior citizens and differently-abled citizens.  "I propose to provide Rs 2500 crores for promotion of tourism in the year 2020-21," Sitharaman further said.

Describing GST as a great reform, the FM said that consumers have benefitted to the tune of Rs 1 lakh crore per annum because of the tax reform.

"Deposit Insurance and Credit Guarantee Corporation has been permitted to increase deposit insurance coverage to Rs 5 lakh per depositor from Rs 1 lakh," she added.

To support Jammu & Kashmir and Ladakh, Rs 30,757 Cr for 2020-21 for the former and Rs 5,958 Cr for the latter has been allocated.

Regarding the financial sector, the Government has proposed to sell a part of its holding in the Life Insurance Corporation through IPO. Besides, a mechanism will be made to address the liquidity constraints of Non-Banking Financial Corporations and housing finance corporations. "We will offer support by guaranteeing securities floated to provide liquidity for NBFCs," she said.

Dividend Distribution Tax will be removed.  Companies will not be required to pay DDT.  Dividend will be taxed only at the hands of recipients at applicable rates.

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