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INDIAN BUDGET 2020- 21 AN ANALYSIS

INDIAN BUDGET 2020- 21 AN ANALYSIS
February 21
15:34 2020

Nita Dhruva

One more budget of the Modi Government can be viewed as a bold and pragmatic budget of US$ 5 trillion economies taking the country on the right path

The budget has kept the basic macro strategy intact. On the one hand, it provides thrust to the rural economy; on the other, it focuses on simultaneously enabling measures to transform India. It seeks to remove structural bottlenecks that were hampering investments and takes steps to boost investments.

Main Highlights of the budget:

  1. Total estimated budget expenditure at Rs. 30.42 lakh cr.
  2. Defense spending Rs. 3.37 lakh cr.
  3. Agricultural and rural development expenditure at Rs. 2.83 lakh cr.
  4. Tax revenue estimated at Rs. 22.46 lakh cr.
  5. Expenditure for Jal Jeevan Mission at Rs. 3.60 Lakh cr.
  6. Education sector allocation Rs. 99,300 cr.
  7. Launch of national infrastructure pipeline with Rs. 103 lakh cr.
  8. Electrification of 27,000 km of tracks.
  9. Insurance on deposit with the bank increased from Rs. 1 Lakh to Rs. 5 Lakh.
  10. Disinvestment target of Rs. 2.10 lakh cr.
  11. Tax on individual and HUF has been reduced under the new tax regime.

 The biggest announcement was the removal of the Dividend Distribution Tax (DDT), which was an additional tax paid at the company’s level. Instead, shareholders will now have to discharge taxes on dividends received. This is a win-win situation because, for a significant part of the recipient, it is taxed at a lower rate, and now foreign investors can also take credit for the same in their country of residence.

Another good thing that has happened in this budget is a proposal to incorporate the Charter of Tax Payers Rights in the Income Tax Act itself. The government has given the mandate to CBDT to adopt a tax charter. This will create trust between taxpayer and administration and efficiency of the delivery system of the Income Tax Department.

Non- Resident Indians (NRIs)

  1. Now, Under Income Tax Act, NRIs will be treated as Resident of India if he stays in India for more than 120 days in any financial year. Earlier it was 182 days.
    And he will be treated as R & OR if he has been resident of India in three years out of ten previous years. Then global income will be liable to tax in India.

    WE ARE EXPECTING THAT THIS CHANGE WILL  BE WITHDRAWN.

  2. Individual being citizen of India will be liable to tax in India on income earned outside India provided it is derived from Indian Business or Profession, and he is not liable to be taxed in any country or jurisdiction NRI’s can invest in specified Government securities -An attractive Investment Opportunity.
  3. FPI can invest up to 15% of the outstanding stock of Corporate Bonds.- Earlier it was 9%.
  4. In case of income from Royalty and  Fee for Technical Services, if TDS has been deducted, NRI’s are not required to file Income Tax Return.

In a nutshell, the budget is a good start as it tries to put forth a series of far-reaching reforms aimed at energizing the Indian economy-through a combination of short term, medium-term and long term measures. And it is a welcome move to make sure investors feel safe while putting their savings and resources in India. 

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