India 2020 Budget
Yesterday Indian Government has released the budget for 2020 which will be used in all over the sectors like education, health, government, technology, agriculture etc… Come let us analyze budget 2020-
A budget, the release of which was followed by the worst stock market crash in 11 years What was this budget about (to lead to such a stock market crash)? What are the benefits and what are the losses that could be faced by you?
I’d like to explain you (that) from the perspective of a common man in this article Come, let us see Observing superficially, the government has reduced the income tax rates Whereas earlier you had to pay an income tax of 20% in the slab of 5 lakhs to 10 lakhs,
Now a tax of 10% needs to be paid in the slab of 5 lakhs to 7 lakhs and a tax of 15% needs to be paid for the 7.5 lakh to 10 lakh slab 30% tax needs to be paid for a slab of above 15 lakhs That remains like it was before So you would think that the income tax rates between 5 lakhs – 15 lakhs have been reduced,
But it is not so The reality is that this is a type of “Puzzle”(false promise/ hyperbole) because the government has said that there would be no exemptions in this new tax rate nor would there be any deductions whereas, there used to be deductions in the prior tax rates For example, if you invested money in EPF, PPF or ELSS, then there used to be deductions on the income tax due to which you paid less tax,
overall If you want to understand how the deductions under section 80C work, then I have explained about EPF, PPF in this Article.. The fact is that the government has you an option- you can either use the new tax rates or use the old tax rate system You would ask which one would save more money- the old one or the new one?
This depends on individual to individual as to what deductions you already make use of and which ones you want to use and how much your income is So you will have to individually calculate and see which system is better for you- the new one or the old one and this makes the entire tax system even more complicated although our government had said that they are simplifying the income tax system but this has become even more complicated due to it Furthermore
, an education cess of 4% is imposed on your income tax- which is still applicable like it was done before So all in all, the fact remains that there has been a mere negligible difference on the income tax rates but overall, the entire system has become more complicated
A good news is that deposit insurance has been raised from 1 lakh to 5 lakhs When the PMC bank scam happened, then the biggest demand of the people was to ensure that their money kept in banks was secure and the government has fulfilled that promise to an extent.
The government has paid heed to the people If you now deposit upto 5 lakhs in the banks, then it would remain saved up Although in my opinion, even 5 lakhs is less as a limit In my opinion, the limit should atleast be 10-20 lakhs so that atleast that amount would remain safe if deposited But the government atleast took a small step in he right direction In the budget of last year,
the government had earmarked approximately 95,000 crore Rs for education There is a slight increase this year The government has increased it slightly and has set it at 99,300 crore rupees Also, the government has said that it is assigning 3,000 crore rupees for skill development this year
A new unique thing that the government has brought in the filed of education is that now they are promoting online degree courses Until now, you could learn online Now, universities can award their complete degrees online.
This is a huge advantage for an underprivileged student the 3,000 crore rupees kept aside for skill development amount to a pittance Similarly, the government had allocated 62,000 crore rupees for healthcare in the budget of last year This year, this has been set at 69,000 crore rupees after a tiny increment.
these increases are inadequate Because time and again, the economists have been reiterating that we need to spend to spend a lot more on education and healthcare if we want to make our youngsters skilled and educated This minimal increase is going to make no difference.
A lot more money needs to be invested in the fields of education and healthcare In the field of agriculture, the government has allocated 2.83 lakh crores this time A 16 point action plan has been unveiled and promises have been made yet again of doubling the farmers’ income by 2020.
they have said that 20 lakh farmers will be provided with funds under the Kusum Yojana due to which the farmers will be enabled to install stand alone solar pumps in their fields It is a great step but how far it is implemented actually, is yet to be seen Because they have continued to say that they would do so much for the farmers since the past 5 years.
They says so in every budget But no implementation is perceptible on the ground level because there seems to be no visible improvement in the lives of farmers To promote FDI and investment, the government has further reduced the corporate income tax Earlier, it used to be 25%. Now it is a mere 22%.
This is one of the lowest tax rates for companies in Asia And this is only 15% for the new manufacturing companies DDT- Dividend Distribution Tax The money that the companies earn and then give it to their shareholders on the basis of per shareholding Earlier, it was taxed Now it has been abolished Also, in order to stop tax harassment, the government has decriminalized civil offences which will break through the pervasive fear in companies.
The government has also decided in the budget 2020 that IDBI bank will be sold completely It will be privatized completely Furthermore, one of the most profitable government companies, some percent of the stakes of LIC (Life Insurance Corporation of India) will be kept on public offering by the government
Although this does not amount to privatization, exactly, but a lot of people believe that this is the first step towards privatization of LIC And a lot of people are upset by this especially, the employees of LIC, who have declared that on the 4th of February, that is, tomorrow, they will hold a nationwide strike against this decision.
A lot of Modi supporters are also upset- the ones who had been saying last year that they would vote for Modi because they were very concerned for the suture of their children Now the same people are saying that due to this one decision, the entire insurance sector of the country has fallen to ruins
So this is a very controversial decision but you would also encounter economists who would be in favor of this because privatizing and making public offers of government companies are decisions that find economist both in favor and against There is a bad news for NRIs , that is, Non Residential Indians If you want to send more than 7 lakhs outside the country, Then the government has introduced a new tax of 5% on it.
This is a huge disadvantage for the students that are studying abroad because their parents send them money to study abroad so even that money would now be taxed And this is double taxation, in a way First you are already paying an income tax on the money you earn Now if you want to send the same money abroad to your family members, then that would be subject to another tax.
The definition of NRI has also been changed Earlier, you would be an NRI if you are staying outside India for 183 days Now this definition is – if you stay outside India for 246 days Furthermore, the government has put forward another proposal to tax the NRIs that those Indian citizens that do not pay taxes in any other country of the world.
they will be deemed as Indian residents and they will have to pay taxes in India Earlier, the people had misunderstood it that the people living in Dubai or Saudi Arabia No taxes need to be paid there So, will they too, be deemed as Indian residents and will they too, have to pay taxes in India?
Later, the government issued a clarification regarding this and said that this is not for those people This is only for those who keep changing their country of residence in order to avoid paying taxes in all the countries The people living in Dubai and Saudi Arabia are residents there So this category does not fit them.
A lot of imported things have become costlier due to the increase in custom duties this time For example, the furniture in your house, your shoes, the glassware in your kitchen, coffee machine, tea maker Your fans, AC, water cooler, mobile phones the toys for your children, your combs, refrigerator, headphones, medical equipment, kitchen items and even stationery items- all of these have become costlier What has become cheaper?
News print, raw sugar and skimmed milk Analyzing this budget overall, there have been some benefits for the companies But for the common man and common taxpayer, things have become more difficult and have become costlier In this article, I had had told you what the opinions of the different economists and experts of the country are and what suggestions they have for the government to revive the economy
After looking at the budget, the government has ignored most of these suggestions and they have not been implemented These experts had said that the auto sector needs to be revived But the government did not even talk about the auto sector in this budget These experts had said that the real estate sector needs to be revived .
That too, was not talked about The experts had said that demand is a huge problem More money needs to be given in the hands of the common man to boost demand and consumption But nothing of that sort was done, either Things have been made costlier for the common man by the government The demand is not going to increase this way The experts had said that there needs to be a large scale spending on the education sector There needs to be a large scale spending on skill development as well But a negligible increase has been seen in these things on the part of the government The entire budget,in my opinion, was futile.