Budget Analysis 2020
Come let us analyze budget 2020-
Hello friends
A budget, the release of which was followed by the worst stock market crash in 11 years
What was this budget about (to lead to such a stock market crash)?
What are the benefits and what are the losses that could be faced by you?
I'd like to show you (that) from the perspective of a common man in this article
Come, let us see. Observing superficially, the government has reduced the income tax rates
Whereas earlier you had to pay an income tax of 20% in the slab of 5 lakhs to 10 lakhs,
Now a tax of 10% needs to be paid in the slab of 5 lakhs to 7 lakhs and a tax of 15% needs to be paid for the 7.5 lakh to 10 lakh slab 30% tax needs to be paid for a slab of above 15 lakhs
That remains like it was before
So you would think that the income tax rates between 5 lakhs - 15 lakhs have been reduced But it is not so the reality is that this is a type of "jumla"(false promise/ hyperbole)
because the government has said that there would be no exemptions in this new tax rate nor would there be any deductions whereas, there used to be deductions in the prior tax rates
For example, if you invested money in EPF, PPF or ELSS, then there used to be deductions on the income tax due to which you paid less tax, overall .If you want to understand how the deductions under section 80C work, then I have explained about EPF, PPF in this video. You can click on the "i" button to watch it
Now the fact is that the government has you an option- you can either use the new tax rates or use the old tax rate system
You would ask which one would save more money- the old one or the new one?
This depends on individual to individual as to what deductions you already make use of
and which ones you want to use and how much your income is..
So you will have to individually calculate and see which system is better for you- the new one or the old one and this makes the entire tax system even more complicated although our government had said that they are simplifying the income tax system but this has become even more complicated due to it furthermore, an education cess of 4% is imposed on your income tax- which is still applicable like it was done before
So all in all, the fact remains that there has been a mere negligible difference on the income tax rates but overall, the entire system has become more complicated
A piece of good news is that deposit insurance has been raised from 1 lakh to 5 lakhs
When the PMC bank scam happened, then the biggest demand of the people
was to ensure that their money kept in banks was secure and the government has fulfilled that promise to an extent. The government has paid heed to the people
If you now deposit up to 5 lakhs in the banks, then it would remain saved up
Although in my opinion, even 5 lakhs is less as a limit
In my opinion, the limit should at least be 10-20 lakhs so that at least that amount would remain safe if deposited
But the government at least took a small step in the right direction
In the budget of last year, the government had earmarked approximately 95,000 crore Rs for education
There is a slight increase this year
The government has increased it slightly and has set it at 99,300 crore rupees
Also, the government has said that it is assigning 3,000 crore rupees for skill development this year
A new, unique thing that the government has brought in the field of education is that now they are promoting online degree courses. Until now, you could learn online
Now, universities can award their complete degrees online
This is a huge advantage for an underprivileged student
In my opinion, the 3,000 crore rupees kept aside for skill development amount to a pittance .Similarly, the government had allocated 62,000 crore rupees for healthcare in the budget of last year
This year, this has been set at 69,000 crore rupees after a tiny increment
In my opinion, these increases are inadequate.Because time and again, the economists have been reiterating
that we need to spend a lot more on education and healthcare if we
want to make our youngsters skilled and educated
This minimal increase is going to make no difference
A lot more money needs to be invested in the fields of education and healthcare
In the field of agriculture, the government has allocated 2.83 lakh crores this time
A 16 point action plan has been unveiled and promises have been made yet again
of doubling the farmers' income by 2022
Furthermore, they have said that 20 lakh farmers will be provided with funds under the Kusum Yojana due to which the farmers will be enabled to install stand-alone solar pumps in their fields. It is a great step but how far it is implemented actually, is yet to be seen because they have continued to say that they would do so much for the farmers since the past 5 years
They say so in every budget
But no implementation is perceptible on the ground level because there seems to be no visible improvement in the lives of farmers
To promote FDI and investment, the government has further reduced the corporate income tax earlier, it used to be 25%. Now it is a mere 22% this is one of the lowest tax rates for companies in Asia and this is only 15% for the new manufacturing companies
DDT- Dividend Distribution Tax
The money that the companies earn and then give it to their shareholders on the bases of per shareholding Earlier, it was taxed
Now it has been abolished
Also, to stop tax harassment, the government has decriminalized civil offenses which will break through the pervasive fear in companies
The government has also decided in the budget 2020 that IDBI bank will be sold completely It will be privatized completely
Furthermore, one of the most profitable government companies,
See this video to better understanding
some percent of the stakes of LIC (Life Insurance Corporation of India)
will be kept on the public offering by the government although this does not amount to privatization, exactly, but a lot of people believe that this is the first step towards privatization of LIC and a lot of people are upset by this especially, the employees of LIC, who have declared that on the 4th of February, that is, tomorrow, they will hold a nationwide strike against this decision
A lot of Modi supporters are also upset- the ones who had been saying last year that they would vote for Modi
because they were very concerned about the future of their children
Now the same people are saying that due to this one decision, the entire insurance sector of the country has fallen to ruins
So this is a very controversial decision
but you would also encounter economists who would be in favor of this
because privatizing and making public offers of government companies are decisions that find economist both in favor and against
There is bad news for NRIs, that is, Non-Residential Indians
If you want to send more than 7 lakhs outside the country,
Then the government has introduced a new tax of 5% on it.
This is a huge disadvantage for the students that are studying abroad because their parents send them money to study abroad so even that money would now be taxed and this is double taxation, in a way
First, you are already paying an income tax on the money you earn
Now if you want to send the same money abroad to your family members, then that would be subject to another tax
The definition of NRI has also been changed
Earlier, you would be an NRI if you are staying outside India for 183 days
Now this definition is - if you stay outside India for 246 days
Furthermore, the government has put forward another proposal to tax the NRIs
that those Indian citizens that do not pay taxes in any other country of the world, they will be deemed as Indian residents and they will have to pay taxes in India
Earlier, the people had misunderstood it that the people living in Dubai or Saudi Arabia
No taxes need to be paid there
So, will they too, be deemed as Indian residents, and will they too, have to pay taxes in India? Later, the government issued a clarification regarding this and
said that this is not for those people This is only for those who keep changing their country of residence to avoid paying taxes in all the countries
The people living in Dubai and Saudi Arabia are residents there
So this category does not fit them .A lot of imported things have become costlier due to the increase in customs duties this time. For example, the furniture in your house, your shoes, the glassware in your kitchen, coffee machine, tea maker
Your fans, AC, water cooler, mobile phones the toys for your children, your combs, refrigerator, headphones, medical equipment, kitchen items and even stationery items- all of these have become costlier
What has become cheaper?
Newsprint, raw sugar, and skimmed milk
Analyzing this budget overall, there have been some benefits for the companies but for the common man and common taxpayer, things have become more difficult and have become costlier
In this article, I had told you what the opinions of the different economists and experts of the country are and what suggestions they have for the government to revive the economy .After looking at the budget, in my opinion,the government has ignored most of these suggestions and they have not been implemented
These experts had said that the auto sector needs to be revived
But the government did not even talk about the auto sector in this budget
These experts had said that the real estate sector needs to be revived. That too was not talked about
The experts had said that demand is a huge problem
More money needs to be given in the hands of the common man to boost demand and consumption
But nothing of that sort was done, either
Things have been made costlier for the common man by the government
The demand is not going to increase this way the experts had said that there needs to be a large scale spending on the education sector
There needs to be a large scale spending on skill development as well
But a negligible increase has been seen in these things on the part of the government
The entire budget, in my opinion, was futile
You tell me what it was in your opinion. You can write down in the comments below
And if you still want to make use of the deductions in the old tax rates to save your taxes,
Thank you
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