New Delhi: All eyes are set on Finance Minister Nirmala Sitharaman as she will present the Union Budget 2020 at 11 AM for the upcoming finacial year on Saturday. This will be second Budget of both the Modi 2.0 government and Sitharaman. Also Read - Union Budget 2020: Confused Between Tax Exemption, Deduction And Rebate? Here's What to Know
As per the norms, the Union Budget 2020 is preceded by the presentation of Economic Survey of India, which was presented on Friday by Chief Economic Advisor Krishnamurthy Subramanian. Also Read - Union Budget 2020: Increase Import Duty on Medical Devices in Graded Manner, Says Engineering Export Promotion Council
Notably, the Union Budget 2020 comes at a challenging time when the country is battling a six-year low economic growth and a 45-year high unemployment rate. These two factors make the Budget presentation a unique affair, as economy observer and investors eye the financial document for a stimulus package and further reforms to arrest the slowdown cycle.
Meanwhile, the expectation of common man from the Union Budget 2020 has increased, after Sitharaman slashed the corporate tax rate to 22 per cent from 30 per cent. Besides, various sectors such as e-commerce, health, agriculture, education, Information Technology (IT), and manufacturing among others expect major policy initiatives which will drive growth and support development and expansion.
Expectations from Budget 2020
Reports have also claimed that the Narendra Modi-led government may revamp income tax slabs in the 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 upto 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.
In the interim Budget in February 2019, there was some relief given to taxpayers but it primarily benefited only those whose income was below Rs 5 lakh. It was announced that there will be no tax liability if the net taxable income does not exceed Rs 5 lakh.
The Union Budget is also expected to bring about a new policy to reduce the losses of power distribution company and revive them. RK Singh, Union Power Minister had said that the Power Ministry discussed and proposed the new scheme with the Finance Ministry and was hopeful that it would find place in the Budget 2020-21. The new scheme would include elements of the current UDAY scheme and would provide assistance for reduction of discoms’ losses, he told reporters on the sidelines of an event here.
The government is likely to provide some impetus to its Housing for All scheme. If reports are to be belived, 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.
To meet Prime Minister Modi’s commitment of ‘Housing For All by 2022’, the Finance Ministry may income tax incentives for rental housing. In its pre-Budget 2020 memorandum ASSOCHAM had suggested that ‘Rental Housing’ needs a boost as various people in India cannot afford ownership housing. The apex trade associations of India has reportedly said that a flat 10 per cent should be levied on rental income of house properties in the upcoming Budget.
Briefcase or Traditional Bahi-Khata
It also remains to be seen if the FM would carry documents in a briefcase or a traditional bahi-khata (ledger) which she used for her maiden budget presentation. Notably, on the day of the Union Budget presentation in 2019, Sitharaman ditched the briefcase and opted for traditional bahi khata, which is a kind of a ledger wrapped in a red coloured cloth.
Commenting on the shift from a briefcase to bahi-khata during the 89th Union Budget, Chief Economic Advisor, Krishnamurthy Subramanian had said, “The government is following Indian tradition and bahi khata symbolises our departure from the slavery of Western thought.”
Before Sitharaman, a long-standing tradition in connection with the budget presentation was broken during the Atal Bihari Vajpayee government with the then Finance Minister Yashwant Sinha presenting the budget at 11 AM rather than at the traditional time of 5 PM. Since then all governments have been presenting the budget at 11 am.
The Budget is likely to draw the broad contours for Prime Minister’s vision of making India a 5 trillion dollar economy. The budget is awaited with great eager by both the business and salaried class.
What is Balanced, Surplus and Deficit Budget?
If the government’s expenditure is equal to or less than government’s receipt or revenue that is known as a balanced Budget.
When the government’s revenues exceed its expenditures, that is called Surplus Budget. It helps in curbing inflation.
While the Deficit Budget is useful at the time of recession. When the government’s expenses exceed the income received through operations that is called Deficit budget.