- FM nirmala sitharaman introduced union budget on 1 Feb, 2020
- Income tax slab rates has been changed
- Corporate and NRI taxation has been changed
On 1st February 2020, our Honorable Finance minister Mrs. Nirmala Sitharaman presented her first Finance Budget for the Assessment Year 2021-22. The reaction of the public was clearly seen in the day’s closing market conditions, which saw a great fall after 11 years i.e. it was the biggest share market crash in the last 11 years.
Let’s discuss and analyze the reasons behind such a great fall:-
- If we see the slab rates, we will think that rates of income tax have been reduced, but if we go into the depth we will get to know that 70 exemptions and deductions such as Section 80C will not be available to the person adopting such lower tax rates. On introducing the new rates, our FM said that it will make the taxation system simple, but in actual it is made more complicated as every person will have two options i.e. the new rates without exemption and old rates with exemptions. Tax outflow in both the options will change from individual to individual based on the deductions the person wants to claim.
- Deposit insurance has been increased from 1 lakh to 5 lakh rupees, which is a very positive step after the PMC bank crisis.
- The education sector got 99,300 crores, skill development got 300 crores and the Health sector got 69,000 crores for their dev elopement, but if we compare these with the previous year’s budget there is a very minimum increment in the current year’s budget. The agriculture sector has been given 2.83 lakh crores and a new scheme ‘Kusum Yojna’ has been introduced, which will help farmers set up solar panels in their farms.
- Corporate tax has been reduced from 25% to 22%, which has made India Asia’s lowest corporate tax rate country. Tax on Dividend Distribution i.e. DDT has been dissolved.
- Another biggest announcement is that IDBI has been fully privatized and soon they will also offer a few percentage of LIC’s stake to the public.
- In NRI taxation, a new tax has been introduced. If you send money abroad, a tax of 5% will be charged. A person staying in India for more than 246 days will now be considered as Resident as compared to 180 days. Those Indian citizens who travel to different countries just to save tax and did not pay tax in any country will be considered as Indian residents and have to pay tax in India.
So this was the summary of the biggest announcements made by our finance minister in the current budget. In my opinion, some important areas are left out from budgets such as Auto sector and Real estate sector. Also Education and healthcare sector got a negligible increase.
What are your views on the current Union Budget? Share them in the comment section below.