The Budget 2020 brought the biggest stock market crash, which was not happened in the previous 11 years.What was in this Budget? Lets see the benefits and the disadvantages about the Budget from a common people perspective.
Income Tax:
If you notice the Govt. has reduced the Tax . Previously people are paying 20% income tax whose income was between Rs. 5 Lakh -Rs.10 Lakh , but now they will pay 10% and 15% tax whose income in between 5 Lakh-7.5 Lakh and 7.5 Lakh-10 Lakh respectively. Where as the rates are the same for the people earning above 10 Lakhs.
You'll thought there are low tax for the people whose income is between 5-10 Lakhs but this is not true. The Govt. has also announced that there will be no Exemptions, no Deductions. Because in previous Budgets you were getting Deductions on Income Taxes when you invests money in EPF and ELSS by which your overall you were paying less Tax.
Now the point is The Govt. has gave you an option choose which Tax system Do you want? You can either go with the OLD TAX system or with the NEW one. If you ask which one is better or on which system we save more Tax, then it will vary person to person depending upon which Deduction scheme you have taken or want to take and what is your income now ? You have to calculate individually which one is the best for you, the New one or the Old one. It makes all the TAX SYSTEM more complicate while Govt. claims they are simplifying it.
Conclusion is Budget 2020 has a NEGLIGIBLE effect on Income TAX rates but it complicated the whole system.
Deposit Insurance:
One good news is the Deposit Insurance has rose from 1 lakh to 5 Lakhs. After the Punjab National Bank fraud case the people demanded to save their money securely. So, you can deposit a money around 5 Lakhs in a bank. If some fraud happens the the Govt. will give you up to 5 Lakhs which is the Deposit insurance.
Education & Health:
In previous year budget Govt. spend 95,000 cr. for Education & Health, but this year it has been rise a little bit i.e 99,300 cr. and also said that they are going to spend 3000 cr. for skill development. The new thing in this Budget they are providing online degree courses to students from weaker sections. But this is very less for skill development.
Similarly for Health they are going to spend 69,000 Cr. which was 62,000 Cr. in 2019. These no.s are very less in my opinion because the economists are saying to spend much on Education and Health care. These prices are not enough to Education and Health, It should be increased.
Agriculture:
In Agriculture sector Govt. has allocated 2.83L CR. in 2020 and again promised to double the income of the farmers till 2022. The Govt. also announced a scheme called "KUSUM" by which they will provides funds to the farmers to build solar panels.
It is a great thing but we have to see the implementations , because they are promising we'll do this.. that for the farmers but there is no ground level implementations and no improvements.
Corporate Tax:
To promote the investment the Govt. has reduced the corporate Tax to 22%. Previously it was 25%.
In Asia this is the lowest Tax RATES for the companies and it is just 15% for the new manufacturing companies. To stop Tax harassment civil offences have Decriminalized.
Privatization:
In Budget 2020 the Govt. has decided to sell the IDBDI bank completely .
Also decided to give some amount of stakes of one of the most profitable Govt. company LIC(Life Insurance Corporation) to the public offering. It doesn't mean complete privatization exactly, but many people suggested this is the first step towards the privatization.
This decision made a lot of people unhappy for which all the staff members of LIC are going to strike on 4 Feb. Even a lot of Modi supporters are saying from this one decision the whole Insurance system of the Nation are destroyed. It is a very controversial decision because other economists are claiming in its favor.
NRI TAX :
This is a bad news for the Non Residential Indians . If you are sending money outside the country more than 7 Lakhs then a Tax of 5% will be introduced. It is a very bed news for the people whom children are studying outside India, because they will pay Tax on transferring money outside.
It is a type of double Tax for the peopel. For first, Tax on your income and again Tax on sending money outside the country. The definition of NRI has also changed. Previously the people who were staying out side India for 183 days are Tag as NRI but now it will take 246 days.
Also the people not paying Tax across any other country in the world they are assumed to be Indian citizen and will pay the TAX.
What got Costlier?
Many imported things are became costlier like 🔻Furniture,Glassware,AC,mobiles,Toys,headphones,stationary,coffee-machine,medical equipment, combs,cooler,fans and footwear.
🔺Newsprint,Raw sugar and skimmed milk are became cheaper.
Overall this Budget has benefits for the companies, but for a common citizen things are even more complicated and costlier. The economists suggested to pay attention to the Auto-sectors, to revive real-estate, spend more to the Education and Health and the consumption rates of the people to increase demand rates. But the Govt. didn't say anything about these topics.
To my opinion this Budget was a Fuss budget.
Income Tax:
If you notice the Govt. has reduced the Tax . Previously people are paying 20% income tax whose income was between Rs. 5 Lakh -Rs.10 Lakh , but now they will pay 10% and 15% tax whose income in between 5 Lakh-7.5 Lakh and 7.5 Lakh-10 Lakh respectively. Where as the rates are the same for the people earning above 10 Lakhs.
You'll thought there are low tax for the people whose income is between 5-10 Lakhs but this is not true. The Govt. has also announced that there will be no Exemptions, no Deductions. Because in previous Budgets you were getting Deductions on Income Taxes when you invests money in EPF and ELSS by which your overall you were paying less Tax.
Now the point is The Govt. has gave you an option choose which Tax system Do you want? You can either go with the OLD TAX system or with the NEW one. If you ask which one is better or on which system we save more Tax, then it will vary person to person depending upon which Deduction scheme you have taken or want to take and what is your income now ? You have to calculate individually which one is the best for you, the New one or the Old one. It makes all the TAX SYSTEM more complicate while Govt. claims they are simplifying it.
Conclusion is Budget 2020 has a NEGLIGIBLE effect on Income TAX rates but it complicated the whole system.
Deposit Insurance:
One good news is the Deposit Insurance has rose from 1 lakh to 5 Lakhs. After the Punjab National Bank fraud case the people demanded to save their money securely. So, you can deposit a money around 5 Lakhs in a bank. If some fraud happens the the Govt. will give you up to 5 Lakhs which is the Deposit insurance.
Education & Health:
In previous year budget Govt. spend 95,000 cr. for Education & Health, but this year it has been rise a little bit i.e 99,300 cr. and also said that they are going to spend 3000 cr. for skill development. The new thing in this Budget they are providing online degree courses to students from weaker sections. But this is very less for skill development.
Similarly for Health they are going to spend 69,000 Cr. which was 62,000 Cr. in 2019. These no.s are very less in my opinion because the economists are saying to spend much on Education and Health care. These prices are not enough to Education and Health, It should be increased.
Agriculture:
In Agriculture sector Govt. has allocated 2.83L CR. in 2020 and again promised to double the income of the farmers till 2022. The Govt. also announced a scheme called "KUSUM" by which they will provides funds to the farmers to build solar panels.
It is a great thing but we have to see the implementations , because they are promising we'll do this.. that for the farmers but there is no ground level implementations and no improvements.
Corporate Tax:
To promote the investment the Govt. has reduced the corporate Tax to 22%. Previously it was 25%.
In Asia this is the lowest Tax RATES for the companies and it is just 15% for the new manufacturing companies. To stop Tax harassment civil offences have Decriminalized.
Privatization:
In Budget 2020 the Govt. has decided to sell the IDBDI bank completely .
Also decided to give some amount of stakes of one of the most profitable Govt. company LIC(Life Insurance Corporation) to the public offering. It doesn't mean complete privatization exactly, but many people suggested this is the first step towards the privatization.
This decision made a lot of people unhappy for which all the staff members of LIC are going to strike on 4 Feb. Even a lot of Modi supporters are saying from this one decision the whole Insurance system of the Nation are destroyed. It is a very controversial decision because other economists are claiming in its favor.
NRI TAX :
This is a bad news for the Non Residential Indians . If you are sending money outside the country more than 7 Lakhs then a Tax of 5% will be introduced. It is a very bed news for the people whom children are studying outside India, because they will pay Tax on transferring money outside.
It is a type of double Tax for the peopel. For first, Tax on your income and again Tax on sending money outside the country. The definition of NRI has also changed. Previously the people who were staying out side India for 183 days are Tag as NRI but now it will take 246 days.
Also the people not paying Tax across any other country in the world they are assumed to be Indian citizen and will pay the TAX.
What got Costlier?
Many imported things are became costlier like 🔻Furniture,Glassware,AC,mobiles,Toys,headphones,stationary,coffee-machine,medical equipment, combs,cooler,fans and footwear.
🔺Newsprint,Raw sugar and skimmed milk are became cheaper.
Overall this Budget has benefits for the companies, but for a common citizen things are even more complicated and costlier. The economists suggested to pay attention to the Auto-sectors, to revive real-estate, spend more to the Education and Health and the consumption rates of the people to increase demand rates. But the Govt. didn't say anything about these topics.
To my opinion this Budget was a Fuss budget.
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