Hon’ble Finance Minister Nirmala Sitharaman presented Union Budget for the Financial Year 2020-21 on February 1, 2020 by dedicating it to ‘Ease of Living’ woven around 3 prominent themes, i.e., Aspirational India, Economic Development for All & Developing a Caring Society. These themes being held together by corruption free – policy driven good Governance, clean & sound Financial sector.
The Government announced a series of reforms aiming to foster the overall growth of the economy. From outlining a 16 point action plan for boosting agricultural sector, driving digital revolution, major infrastructure investments, encouraging foreign investment, to protecting the domestic manufacturing industry by introducing safeguards from customs perspective, the budget aims to achieve prosperity & well being of all.
On Direct Taxes front, although the Government has not been keen on giving much on-the-ground relief after substantial cut in tax rates for manufacturing companies towards end of 2019, it is interesting to see the new trend started by Government of offering alternative schemes of taxation for various categories of taxpayers – one with higher rate of tax but allows incentives / deductions, other with lower rate of tax but without incentives / deductions. Abolition of Dividend Distribution Tax, impetus to affordable housing sector & start-ups are welcome steps. Government’s efforts to make assessment (audit), appellate & penalty proceedings online to minimize human interface between taxpayer & authorities is also well-founded, however much depends on the extent of its implementation.
From an indirect taxes perspective, ‘Make in India’ has been the primary focus. Some significant amendments have been proposed to the Customs Act including stringent checks on rising imports under Free Trade Agreements & increase of Customs Duty in certain sectors like healthcare, electronic goods, etc. Changes in customs front aims to align Indian policies with global norms. On the GST front, push towards simplification & technology-led administration is expected to continue with new return forms & e-invoicing.
In a nutshell, Government has smartly balanced expectations from the industry while maintaining public confidence viz-a-viz. its socio-economic-political responsibility.
Pease click Union-Budget-2020 to read the analysis of KrayMan Consultants LLP on the Union Budget 2020.