Nirmala means pure, transparent and without any pollutant. The same idea describes the budget proposals of 2020. The writing on the wall is loud and clear. Modi 2.0 wants minimum government and maximum governance. Whichever tax proposal you pick up, simplification is the name of the game. Income tax has become 70% simpler. Corporate tax for existing companies is only 22%. India can now boast of being most-corporate-friendly destination in the entire world. The housing sector is expected to have a boom in selected areas. Interestingly, some demands that went viral on social media have also been paid attention to. These include dispute resolution mechanism and bank deposits insurance. The budget also has some specific provisions to promote the spirit of innovation and development.
Income tax has become 70% simpler
Yes, as against 70 complicated provisions that used to grant exemptions and deductions, only 30 stay. A direct tax relief has been optionally offered to all the direct tax payers; those who earn upto Rs 10 lakhs per annum stand to gain Rs. 37,500 per annum and this amount doubles for those who earn upto Rs 15 lakhs. I used the word optionally because those who want to continue under the existing complex structure can choose to do so. The intent of FM seems to ensure that no tax payer should suffer.
India can now boast of being the most-corporate-friendly destination in the entire world
India now is the only land with minimum corporate tax. Corporate tax for existing companies is only 22%. New power generating companies will pay a tax of 15% only. Dividend distribution tax has been abolished for corporate (It will be counted in the income of the households). If you have a small business with a turnover up to Rs 5 crore, there is no need of any statutory audit. Moreover, if you are an MSME having a turnover upto Rs 25 crores, you can choose any 3 consecutive years (out of first 7) to be zero-tax years. And of course, MSMEs have also been gifted with the fulfillment of long-pending demand of restructuring of loans; nearly 5 lakh of MSMEs stand to be benefitted from such a restructuring! Cooperative societies will be taxed now at 22% only against the 30% prevalent tax rates.
The housing sector is expected to have a boom in selected areas
The biggest benefit comes for affordable housing developers; they are offered a 100% tax holiday! This will definitely boost realty sector. To top this up, sovereign wealth funds will enjoy 100% tax exemption on investments in infra projects.
A look over some social media demands
Earlier bank deposits were insured upto Rs 1 lakh per account. This amount has now gone up 5 times. Similarly, direct tax dispute resolution mechanism has also been simplified. Vivad se Vishvas is expected to showcase the trust Modi 2.0 claims to have in the industry.
Thinking out of the box!
The FM has an eye at innovation and development too. The proposed Data Centre will definitely provide much needed boost to the IT companies of India. 100 more airports and the timely completion of the proposed Delhi-Mumbai Expressway will not only showcase India’s growing capacity but it will also help the infrastructure sector. The LIC IPO will enable the FM to have some extra funds at her disposal and also to galvanise the so called animal spirits of the insurance sector. An investment of 1.7 lakh crore in the transport infrastructure is also expected to create jobs and demand in the economy.
Changing face of Indian Railways
Railways have enjoyed special attention of our chaiwala PM. As many as 150 new trains will be operated under Public Private Partnership model. Success of these trains can speed up the process of reforms in the railways. The capability of the private sector in nation building will be tested through redevelopment of 4 stations. I view these four as a pilot project. If successful, this may be replicated at many other locations. Railways will invest in solar power capacity building; this also indicates at a synergy between public sector of India and our environmentalists.
A Brief introduction:
Varun Gupta is a Company Secretary currently engaged in training students for national tests such as CAT, CLAT, IPM and Banking etc. He has also written 23 books published by globally renowned publishers LexisNexis.
