Union Budget 2020: Finance minister Nirmala Sitharaman will present Union Budget 2020 on Saturday at 11 AM in Parliament. This will be her second and the Modi 2.0 government’s first budget. Expectations are high as economic growth is the lowest in the last 11 years. The Economic Survey has projected the GDP growth rate for the coming financial year at 6 to 6.1 per cent. Bold economic reforms are expected from the ministry. (Union Budget 2020 Full Coverage)Also Read - Nirmala Sitharaman to Present Union Budget 2020 in Lok Sabha Today; Major Announcements on Tax Exemption Expected
Spending may go Up Also Read - Markets Recoil as Economic Survey Stokes Fiscal Slippage Fears; All Eyes on Union Budget 2020
As the fiscal situation is experiencing a slowdown, the government may increase spending to revive economic growth. Also Read - Union Budget 2020: Government Tables Economic Survey, Pegs Growth Rate at 6-6.5% For FY 2020-21
Income Tax Benefit
Income Tax slabs may be revamped in Budget 2020. Speculations are rife that those having annual income between Rs 6-7 lakh may be taxed at the rate of 5 per cent. At present, while individual income up to Rs 2.5 lakh per annum is exempt from tax, a 5 per cent tax is levied for income between Rs 2.5 lakh and Rs 5 lakh. A higher 20 per cent slab is for income between Rs 5 lakh and 10 lakh while a 30 per tax rate is applicable for income above Rs 10 lakh. In addition, the government also levies a surcharge in slabs on super-rich for income above Rs 50 lakh.
The government is likely to provide some impetus to its Housing for All scheme. If reports are to be believed, tax deduction can be raised to Rs 4 lakh on interest paid on housing loan. Union minister of state for housing and urban affairs Hardeep Sing Puri had earlier said that PM Modi’s Housing for all will achieve its target in 2020 itself.
Tax-free Dividend Benefit
The government may propose that instead of the company, shareholders will pay tax on dividend income. Dividend os a return given by a company to its shareholders out of profits. Dividend Distribution Tax is a tax on this which is now paid by the companies.
In Budget 2018, tax exemption on medical reimbursement amounting to Rs 15,000 and transport allowance amounting to Rs 19,200 in a financial year have been replaced with a standard deduction of Rs 40,000. The limit may rise.