Budget 2020 Highlights. Winners and Losers.

01.02.2020

The following are the highlights of Budget 2020 announced by Finance Minister today

Personal income tax

New slab rate (without exemption)
10% income 5 7.5 lakhs
15% 7.5 10 lakhs
20% 10 12.5 lakhs
25% 12.5 15 lakhs
30% Above 15 lakhs

Income upto 5 lakhs no tax

if individual earns income of 15 lakhs then tax would be 1.95 lakh visavis 2.73 lakhs as earlier

New scheme of individual tax rates is optional
FM said reviewed all existing income tax exemptions and removed 70 of them in new regime and will review remaining and rationalize

Propose to remove DDT and dividend would be taxable in the hands of shareholders; removal of cascading effect of dividend distributed by holding to subsidiary (25k Crore revenues forgone on account of DDT abolition)

Concessional tax rate for electricity/power generation companies
100% tax exemption on new investment by foreign funds in infrastructure sector by 2024 with a minimum lock in period of 3 years

ESOPs given by startups to employees currently taxed as perquisites; differing of tax payment by employees to 5 years

Increase in turnover limit from 25 Crore to 100 Crore for startups

Deduction can be claimed by startups upto 10 years

Tax audit turnover threshold limit increased from 1 Crore to 5 Crore

Concessional 5% withholding tax has been extended to municipal bonds.

Cooperatives are taxed at 30 percent now

Cooperatives can choose a 22 percent tax with 10 percent surcharge and 4 percent cess with no exemptions.

Complete online registration of charitable institutions

Faceless appeals on the line of faceless assessment

Vivad se Vishwas Scheme introduced New direct tax dispute settlement scheme

More than 4.83 lakhs cases pending at various forums

Taxpayer's need to pay only disputed amount of tax (no penalty be charged) by March 2020; scheme will be available till June 2020 but some additional payment to made in addition to tax

CBDT to adopt Taxpayer's charter
PAN shall be instantly allotted on the basis of Aadhar without any filling up of form

Personal interface with tax administrators will be at minimum level

GST reforms will continue including a simplified return filling form. FM says, refund has been simplified and has been fully automated.

GST bring synergy in logistics sector (20% time reduction)

60 lakhs new taxpayers added via GST introduction

New simplified GST returns from April 2020

Other Budget Proposals

FDI elevated during period 20142019 to $284bn

Central government debt reduced to 48.7% of GDP in 2019

16 points action plan for agricultural & irrigation sector under aspirational India

New Education Policy will be announced soon

ECB and FDI will open in education sector

Degree level full fledged online programs to be started

National Police University & Forensic university is proposed to be set up

INR 99,300 Crore proposed for education sector

Investment clearance cell to be set up to facilitate investments and to provide advisory at State as well as Centre level

5 new smart cities to be developed

Move to develop each district an export hub

INR 27,300 Crore for promotion of industry & commerce

National logistics policy to be released soon

Digital refund of duties to exporter

Setting up of solar panels on barren lands

More Tejas types train to be introduced to connect iconic cities

100 more Airports to be developed by 2024

Proposed to states to replace old electric meters to the smart prepaid electric meters.

This will give flexibility to consumer to choose service provider.

INR 22,000 Crore proposed for power & renewal energy sector

Private sectors to built data centre parks throughout the country, policy may come soon

INR 6,000 Crore proposed for 'Bharat Net'

Funding for ideation and start up

INR 28,600 Crore proposed in this budget specific to women

Proposed to set up Indian Institute of Heritage & culture as a deemed university

5 Archeological sites would be developed as iconic sites with onsite museums

Setting up of Tribal Museum in Ranchi, Jharkhand

INR 2,500 Crore proposed for development of Tourism sector

Taxpayer's charter to be a part of statute to build confidence/trust

Government will ensure that citizens need not worry about tax harassment. There is a debate on building criminal liabilities for civil acts. Companies Act will be amended to correct this

India to host G20 presidency in 2022; INR 100 Crore allocated for preparation

Robust mechanism is in place to monitor health of all scheduled banks

Insurance cover for deposits increased from INR 1 lakh to 5 lakh

Universal pension coverage with auto enrollment to be introduced (through PFRDI) to every person

Invoice financing by NBFCs to MSME sector Amendments to be made in Factoring Act

Certain amendments to be made in SARFESI Act

Non residents can invest in certain Government securities

Liquidity constraints of NBFCs & HFCs will be addressed Government has taken steps from last year

International Bullion exchange to be setup in GIFT IFSC

LIC initial public offer will come to list on stock exchange; Government will sell part of its holding

Winners of Budget 2020

Transport Infrastructure
Sitharaman unveiled plans for India's highways and railways, proposing Rs 1.7 trillion ($23.7 billion) for transport infrastructure that includes the accelerated development of highways and plans to monetize 12 lots of highway bundles.

Key infrastructure players like Larson & Toubro and KNR Constructions and IRB Infra look set to benefit.

Electronics Manufacturing
The government's plan to encourage the manufacture of mobile phones, electronic equipment, and semiconductor manufacturing as well as medical devices will be positive for companies such as Dixon Technologies, Amber Enterprises, Subros, said Vinay Pandit, Head of Institutional Equities at IndiaNivesh.

Rural India
The farm and rural sectors were allocated 2.83 trillion rupees, while the agriculture credit target for next year is set at 15 trillion rupees.

News of the government's proposal to expand fisheries and create 500 fish farmer producer organizations saw gains in Avanti Feeds, Apex Frozen Foods and Waterbase.

The minister announced that the rail service will be equipped with air conditioned freight cars and the government will provide viability gap funding for warehousing. Container Corporation of India Ltd is set to be the biggest winner off the move.

Water
Sitharaman announced measures to help farm sector growth in water-stressed districts, helping to boost the shares of VA Tech Wabag Ltd., which designs and builds water and sewage treatment plants.

Shakti Pumps India Ltd. jumped the most in three-weeks on proposals to help farmers set-up standalone solar pumps to allow them to make a living out of their barren land.

The plan to provide piped water across Indian households by 2024 - with 3.6 trillion rupees in funding - means Jain Irrigation Systems Ltd., KSB Ltd., Kirloskar Brothers Ltd., JK Agri Genetics Ltd., PI Industries Ltd. could benefit.

The minister also announced 123 billion rupees for the Clean India mission.

Telcos
The government is also further developing Bharat Net - or Bharat Broadband Network Ltd. - a program to bring broadband to villages. The government plans to provide 60 billion rupees for the project in the next fiscal year.

Online Educators
Education received significant attention in Finance Minister's budget speech, with the sector receiving 993 billion rupees in 2020-21.

The establishment of degree-level, fully-fledged online education programs to be offered by institutions who are ranked within the nation's top 100 will see online educators like National Institute of Information Technology and MT Educare benefit.

IT Firms
The announcement of a policy to allow the private sector to build data center parks has the potential to benefit all IT firms.

Pipeline & City Gas Suppliers
India plans to expands its national gas grid to 27,000 kilometers from 16,200 kilometers.

Losers of Budget 2020

Insurance
The government's plan to sell a part stake in Life Insurance Corp. triggered declines in shares of private insurers, which were star performers in 2019.

State-Run Banks
The finance minister stayed silent on infusing new capital into state-run banks for 2020-21. If the government doesn't inject fresh capital, it would be the first under Modi's five years in power.

Real Estate & Construction
Finance minister did not announce any specific measure for the sector, which had demanded measures to enhance credit availability for developers, an industry status and other measures that could propel sales.

The proposed cut in personal tax rates that will likely enhance purchasing power of middle class and continuation of tax sops for affordable housing announced in the budget failed to enthuse real estate stocks.

Fertilizer Companies
Finance Minister proposed balancing the use of chemical fertilizers with a change in incentives. She also announced a renewed focus on zero-budget farming which significantly cuts down on fertilizer consumption.

Logistics Players
The delay in the country's long-awaited National Logistics Policy will be a disappointment for Key players