A boost from Tax to Infrastructure: Union Budget 2020
A new Income tax regime proposed by the Government in Budget 2020 that comprises significant changes in tax slabs. This optional tax regime will give options to the taxpayers to either choose the new tax slab or continue with the old one.
On February 1, 2020, the 1st Union Budget of the 3rd decade in the 21st century was out. Presented by the Finance Minister of India Smt. Nirmala Sitharaman, the speech that lasted for two and a half hours aimed at energizing the Indian economy through a combination of short, mid and long-term measures.
The budget has been structured keeping 3 aspects in mind – Economic development, aspirational India and caring society.
Here are some key highlights from budget 2020
Tax simplified on Individual’s Income: The tax amount is reduced by 5 to 10 percent on individuals’ income. This new scheme is also optional, and one can choose to remain under the old income tax scheme.
Rs 1.5 lakh of additional deductions on home loan interest extends till March 2021: With an aim to boost the real estate sector for the housing demand finance minister Nirmala Sitharaman proposed an extension for 1 year for availing additional Rs. 1.5 lakh tax deduction on home loan interest till March 2021. This scheme was introduced in last year’s budget for first time buyers up to 45 lakhs.
1.7 trillion allocated for transport: The transport sector gets 1,70,000 crore which includes investments in railways, roads, shipping, ports and civil aviation. The finance minister in her speech stated that the government encourages NHAI, get good commercialization of highways to raise finance. Under the Bharatmala economic corridor, 9,000 km is being built, 6,000 km of inter-feeder corridors, 2,000 km of coastal connectivity, 2,000 km of border and international connectivity roads, 5,000 km of national corridors , 800 km of expressways and 2,500 new access-controlled highways…Our budget allocation has increased by nearly three times since financial year 2014-15,” union road transport and highways minister Nitin Gadkari said.
5 new Smart Cities: Under smart cities mission launched by prime minister Narendra Modi, the finance minister announced that the government will develop new smart cities in collaboration with states under PPP (public private partnership) model. This gives an opportunity to maximise the benefits of three economic activities: the revitalisation of manufacturing activities, the economic corridors and technological demands.
Dividend income becomes taxable in recipients hands: Budget 2020 has made dividend income from mutual funds share taxable in the hands of recipients. the applicable income tax rates to the individual and abolish the DD hitherto levied on dividend income before distribution by the company or mutual fund house.
Budget 2020 unveils flagship NIP (National Infrastructure Pipeline) scheme: To create job opportunities and to boost India’s infrastructure government has launched 103 lakh crore for this scheme. Sitharaman stated that their focus is on infrastructure for economic development and 6,500 projects across sectors under NIP.
The union budget is a road map for fiscal consolidation. The measures announced are primarily focused at instilling a financial discipline into the system along with recognition and rewards for wealth creation. The road map of the journey towards a USD 5.0 trillion economy has carefully created an enabling environment for ease of doing business, attracting investments and creating employment through skill development and technical education.
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