Highlights of Union Budget for 2020-21

FY21 ESTIMATES
* Fiscal deficit seen at 3.5% of GDP
* Net market borrowing pegged at 5.36 trln rupees
* Gross market borrowing at 7.8 trln rupees
* Pegs nominal GDP growth at 10%
* Receipts seen at 22.46 trln rupees
* Total spending seen at 30.42 trln rupees
* ETNow: Pegs divestment target at 2.1 trln rupees

FY20 REVISED
* Net market borrowing pegged at 4.99 trln rupees
* Fiscal deficit seen at 3.8% of GDP
* Receipts 19.32 trln rupees
* Spending revised to 26.99 trln rupees

FISC HEALTH
* Expected tax buoyancy will take time
* Good part of govt borrowing to be used for capex
* Fully provided for all flagship schemes of govt
* To activate FRBM Act escape clause on structural reforms
* Fundamentals of economy strong
* Centre’s debt down to 48.7% of GDP Mar 2019 vs 52.2% Mar 2014

GROWTH, INFLATION
* India now 5th largest economy in the world
* FY14-19 average GDP growth 7.4%
* Financial structure must keep evolving to become $5-trln economy
* Stable, predictable business environment a key objective
* Reliable, robust, clean financial sector critical for economy

DIRECT TAX
* Looking at inverted duty structure under GST
* Introducing Aadhaar-based verification for indirect taxes
* Instant allotment of PAN on basis of Aadhaar
* To amend Income Tax Act to help merged PSU banks to absorb losses
* To waive interest on tax disputes if amount paid by Mar 31
* Propose scheme to settle old direct tax cases
* To amend laws to allow faceless tax appeals
* Propose to abolish dividend distribution tax
* Dividend to be taxed only in hands of recipient
* Revenue forgone on dividend distribution tax 250 bln rupees
* To review, rationalise tax exemptions over next few years
* New power cos to attract 15% corporate tax
* Cooperatives can be taxed at 22% without exemptions
* Concessional 4% withholding tax on bonds listed in GIFT City
* Proposes some tax sops on ESOPs of staff at startups
* Deferring tax payment on sale of ESOP for 5 yrs in start-ups
* Concessional 5% withholding tax extended to municipal bonds
* Can avail new tax rates if not availing some exemptions
* Tax holiday for affordable housing extended by 1 year
* Turnover threshold for audit of MSMEs hiked to 50 mln rupees
* Tax on income above 1.5 mln rupees at 30%
* Person with income of 1.5 mln rupees to get 78,000-rupee relief
* No tax on income below 500,000 rupees
* Cut tax on income of 1.25-1.50 mln rupees to 25%
* Cut tax on income of 1.00-1.25 mln rupees to 20%
* Cut tax on income of 750,000-1 mln rupees to 15%
* Cut tax on income of 500,000-750,000 rupees to 10%
* New direct tax scheme optional for taxpayers
* Large benefits for taxpayers under new direct tax regime
* Propose to significantly reduce income tax in new regime
* To bring simplified personal income tax regime
* Tax proposals to bring ease of compliance, reduce litigation
* Tax proposals focused on simulating growth
* Want to enshrine taxpayers’ charter into statute
* Tax harassment can’t be tolerated
* 100% tax exemption on sovereign wealth funds’ infra investment
* Removed 70 of 100 income tax exemptions in new regime
* Revenue foregone on income tax cut at 400 bln rupees/year

INDIRECT TAX
* Propose nominal health cess on import of medical devices
* Customs duty on footwear, furniture raised
* To review remaining customs duty exemptions
* Some customs duty exemptions being withdrawn
* To review rules of origin for imports under free trade deal
* Amending laws to ensure no undue gains for imports under FTA
* To transfer FY17, FY18 cess balance to GST compensation fund
* GST compensation to states to be limited to cess collection
* GST helped add 6 mln tax payers in 4 years
* Average household saves 4% of monthly spend due to GST
* Effective tax for all commodities came down due to GST
* GST did face certain challenges
* Turnaround time for trucks cut by 20% due to GST
* Inspector Raj has vanished due to GST
* GST has resulted in efficiency gains
* GST has been gradually maturing
* GST has facilitated formalisation of economy
* GST extended 1-trln-rupee benefit annually to consumers

REFORMS
* Accepted substantial recommendations of 15th finance panel
* To improve quality of life through national infra pipeline
* Already provided 220 bln rupees for national infrastructure pipeline
* To encourage states to follow model laws made by Centre

FINANCIAL SECTOR, MARKETS
* Propose to divest LIC via IPO
* GIFT City to set up international bullion exchange
* To enhance credit guarantee scheme for NBFCs
* To allow NRIs to buy certain govt securities
* To float new debt ETF comprising primarily of gilts
* Some gilts to be completely available to overseas investors
* FPI limit in corporate bonds to be raised to 15% from 9%
* To amend Factoring Regulation Act to cover NBFCs
* Asked RBI to mull extending MSME recast window by 1 more year
* Encourage PSU banks to approach capital mkt for fund raising
* Have robust system to check health of scheduled

About Renuka Jain:

She is a Chartered Accountant (All India 17th rank in CA) and Company Secretary by qualification Financial Consultant by profession.

She is a Top-Notch Financial Consultant – All India 1st rank for the year ended June 30 ’08 for HDFC Standard Life. Member of prestigious centurion club and Top of the Tops Insurance professionals consecutively for all last six years. Platinum partner with Reliance Mutual fund. Registered Platinum master for Prestigious HSBC Masters with HSBC Mutual fund. Platinum partner with DWS Mutual fund. Acclaimed Portfolio Manager-Deals with blue-chip corporate houses and HNIs

Recognitions: Special Felicitation in Zurich, Switzerland for attaining Number one rank in September 2008. Special Felicitation in Macau, China for retaining the position in top three ranks in January 2010.

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