Union Budget 2020-21: Highlights & Analysis
On 1st February, Finance Minister Nirmala Sitharaman presented the Union Budget 2020-21 in the Parliament. The size of the Union Budget 2020-21, which is equal to expenditure or receipts of Government of India, is INR 30.42 Lac Crore.
The Finance Minister said that the Union Budget 2020-21 aims:
- To achieve seamless delivery of services through Digital governance.
- To improve physical quality of life through National Infrastructure Pipeline
- Risk mitigation through Disaster Resilience
- Social security through Pension and Insurance penetration.
The Union budget 2020-21 is woven around three prominent themes:
- Aspirational India in which all sections of the society seek better standards of living, with access to health, education and better jobs.
- Economic development for all, indicated in the Prime Minister‟s exhortation of “SabkaSaath, SabkaVikas, SabkaVishwas”.
- Caring Society that is both humane and compassionate, where Antyodaya is an article of faith.
The three components of Aspirational India are-
- a) Agriculture, Irrigation and Rural Development ,
- b) Wellness, Water and Sanitation and
- c) Education and Skills
Analysis of Union Budget 2020-21
- The government is estimated to spend Rs 30,42,230 crore during 2020-21.
- This is 12.7% more the revised estimate of 2019-20.
- Out of the total expenditure, revenue expenditure is estimated to be Rs 26,30,145 crore (11.9% growth) and capital expenditure is estimated to be Rs 4,12,085 crore (18.1% growth).
- The total receipts (including borrowings) in 2020-21 are estimated to be Rs 30,42,230 crore.
- This is 16.3% over the revised estimates of FY 2019-20.
- Out of the total receipts, revenue receipts are estimated to be Rs 20,20,926 crore and capital receipts are estimated to be Rs 2,24,967 crore. Thus net receipts (excluding borrowings) of GOI are estimated to be Rs 22,45,893 crore.
Budget & Deficit:
- Budgetary Deficit
- = Revenue A/c Deficit + Capital A/C Deficit
- = (Revenue Receipt- Revenue Expenditure) + (Capital Receipt – Capital Expenditure)
- (20.2-26.3)+(2.25-4.12) = 7.96 Lac Crore.
- Revenue Deficit
- = Revenue Receipt – Revenue Expenditure
- (20.2 – 26.1) = 6.09 Lac Crore = 2.7% of GDP
- Fiscal Deficit
- = Non Debt Receipt – Total expenditure
- = Revenue Receipt+Recovery of loans+Other receipts-Total Exp.
- = 7.96 Lac Crore = 3.5%of GDP
- Primary Deficit
- Fiscal Deficit – Interest Payment
- 0.88 Lac Crore = 0.4% of GDP
- Total = 22,45,893 crore
- Includes Revenue Receipts (Rs 20,20,926 crore) and Capital Receipts (Rs 2,24,967 crore).
- Revenue Receipts includes two components: Tax Revenue (Center’s Share Rs 16,35,909 Crore) and Non-Tax Revenue(Rs 3,85,017 Crore).
- Tax Revenue: GST > Corporate Tax > Income Tax > Union Excise Tax > Customs.
- Non-Tax Revenue: Dividend & Profits > Other Non-tax rev > Interest.
- Capital Receipts include major component of proceeds from disinvestment.
- Total = Rs 30,42,230 crore during 2020-21.
- Includes two components Revenue expenditure (Rs 26,30,145 crore) and Capital expenditure (Rs 4,12,085 crore).
Composition of Expenditure:
Other Major Changes Proposed:
Changes in Personal Income Tax:
|Total income (Rs)||Current Tax Rate||New Regime|
|Up to Rs 2.5 lakh||Nil||Nil|
|From 2,50,001 to 5,00,000||5%||5%|
|Rs 5,00,001 to 7,50,001||20%||10%|
|Rs 7,50,0001 to 10,00,000||20%||15%|
|Rs 10,00,001 to 12,50,000||30%||20%|
|Rs 12, 50,001 to 15,00,000||30%||25%|
|Above Rs 15,00,000||30%||30%|
Surcharge and cess shall be continued to be levied at the existing rates.
Other Tax related Announcements
- Aadhaar-based quick issuance of PAN announced.
- Aadhaar-based verification for GST compliance to be introduced.
- Over 70 deductions have been removed.
- Companies will no longer be required to pay Dividend Distribution Tax (DDT).
- TDS of 1% will be levied on e-commerce transactions.
- The Income Tax Act, 1961 specifies various conditions for determining the resident status of an Indian citizen or a person of Indian origin. A person will be considered a resident, i.e. their global income is taxable in India, if they are in India for more than 182 days. This has been reduced to 120 days.
- Union Budget 2020 Summary Analysis by PRS – Download PDF
- Union Budget 2020 PIB Release Combined – Download PDF
- Union Budget 2020-21 at a Glance – Download PDF
- Key features of Budget 2020-21 – Download PDF
Caution: This is a personal point of view of author, having no Professional qualification or authority to present the numbers. The article is intended to provide some information/knowledge w.r.t process of budget and its different aspect. Please donot reproduce any figure without confirmation from appropriate source/authority.