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Indian Union Budget 2020 Analysis

Indian Union Budget 2020 Presentation, Analysis, Calculators

Hon'ble Finance Minister Smt. Nirmala Sitharaman presented the Union Budget on Feb 01st 2020 in the house of parliament. Team had recommended various measures to be considered for the betterment of the economy before 17th of Jan 2020. In addition, below are the highlights of the Budget.Last Updated: Feb 02nd 2020

  For Latest year visit Indian Budget 2021 > Presentation
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What is Budget?

A budget is a financial plan for a specified period say Year in general. The Government of India i.e., Ministry of Finance after consultation with all the other ministries prepares the annual budget. The budget will be generally presented by the Finance Minister on the first day of February in Parliament. The proposed budget will come into effect from April 1st of the respective year.

Expectations before Budget

A relief was expected mainly to the working class (typical taxpayers of India), and the farmers of the country. Further expected to give priority to the simplification of income tax act, women empowerment, workers in unorganized sector, Ease in SME Loans, Ease in Company Registrations & Compliance, Zero MDR to promote Digital Currency, and further focused agriculture focus.

List of expectations / recommendations for the Indian union budget of FY 2020-21 were  originally published on Jan 19th 2020 @

Indian Budget 2020 a Straight talk on Expectations

Post-budget Highlights

A great relief to working class (taxpayers of India) through simplification of Taxes

  As expected by Team .. A great relief given to working class (taxpayers of India) by bringing new income tax regime that not only simply taxes but also reduce the tax rates. Many other changes are primarily focused to put the money in the hands of the people.

  In addition, kick started the reforms in Insurance sector, measures taken to control fake business models, unaccounted foreign income, strengthened for debit market with ETFs, gave relief to SMEs by not going through the Tax Audit, if the revenue is less than 5 Crs.

  What are we missing ? Lot of expectations on further promotion of Digital Currency, Removal of third-party signatures for starting a business, which is only unique to India (comparing equal size economies), removal of DSCs, announcements on reducing cost of Money, cost of Credit etc.

India Budget 2020 | Top 10 Questions

New budget 2020 brought many changes like new personal income tax regime, lowered corporate and business taxes, along with removal of certain legacy rules. While it is difficult for a common taxpayer to understand all the rules, Team put together top 10 frequent questions to get to know and follow

Direct Taxation (Income Tax + )

  • IT is expected to be simplified for the ease of following and filing.
  • New Personal IT Regime reduced tax rates who forego reliefs, exemptions.
  • 70 out of 100+ exemptions were removed from the old it regime.
  • Retained exemption benefits like .. Employer contribution to PF, Gratuity withdrawal, amount received from retrenchment compensation, Amount received voluntary retirement, early withdrawal of NPS on closure of the account, Leave encashment, Commutation of Pension, Scholarships granted to meet Education etc.

  • Old Personal Tax regime to continue for those who wish to have reliefs and exemptions.
  • In the new tax regime, Individual taxpayers with annual taxable income of Rs 5 lakhs will get full tax rebate
  • In the new tax regime, Individuals with income between 5, 7.5L gross income is required to pay 10% instead of current 20%

  • Many employees who may not able to produce receipts for HRA (and other such) are now can relax, and use, benefit from the new income tax regime.

  • Now Taxpayers need to chose the best modal (old or new) based on the refund before they file. is expected to release new SmartFile feature in its ITR filing software before 15th of this Feb.

  • Comparison of Old Personal Income Tax Regime with New one from budget session

  • No major changes to the exemptions and reliefs announced earlier.
  • New Corporate Tax Rate in manufacturing to 15%
  • Corporate tax for existing companies slashed to 22%
  • Tax on Co-Op societies to be reduced to 22% + surcharge
  • Direct Tax Reforms leads to a loss of Rs. 40K Crores
  • IT Act to be amended to allow nameless, faceless appeals. Now it applies to even IT disputes, except where it is a must
  • Good news. DDT (Dividend Distribution Tax) is completely removed
  • For Real Estate, Income Tax relief on Notional rent from unsold houses extended further to 2 years.
  • Tax Payment on ESOPs (as perquisite) is deferred to the time of exit from Company or sale of ESOPs or 5 years whichever is earlier. Earlier it was taxed at the time of allotment
  • Companies are exempted from Minimum Alternate Tax (MAT) and Cooperative societies are exempted from Alternate Minimum Tax (AMT)
  • Additional deduction up to Rs. 1.5 lakhs for interest paid on loans taken for an affordable house (for upto 45 Lakhs) extended till 31st March, 2021. Earlier it was upto 31st March 2020 u/s 80EEA
  • Instant PAN to be allotted through Aadhaar

  • Changes to Tax Residency Status
  • Tax residency provisions were tightened to control tax revenue leakages from people who are high networth individuals (HNIs) not to be a resident of India to avoid taxes on global income.
  • A non-resident is defined as a person who stays outside of India for 240 days, earlier it was 182 days.
  • Also, if an Indian citizen who is not a resident of any country, such as sea farers in certain cases, or corner cases there was a question of 182nd day being at an internal airport etc. now the act is changed to become a Resident of India.
  • These changes make more taxpayers to be residents, and a considerable tax revenue is expected as the residents pay on global income.

New Vs Old Personal Income Tax Regime

Top three observations from the analysis were

  1. New Tax Regime is Good if you want higher take home salary
  2. Higher Deductions Higher Tax Savings with Old Tax Regime
  3. To switch to New Tax Regime, you need to work with your employer

Pictorial analysis on New Vs Old Personal Income Tax Regime

Comparison of Old Personal Income Tax Regime with New one from budget 2020
Top three observtions on Old vs New Tax Regime presented in Budget 2020
Get to know your Tax Exposure using
NEW FY 2020-21 IT Calculator
For additional Tax Calculators, visit IT Help Center

Other Budget Highlights

  • Simplified return with features like SMS based filing for NIL return and improved input tax credit flow to be implemented from 1st April, 2020 as a pilot run
  • GST refund Process to be 100% electronic
  • Deposit insurance increased to Rs 5 Lakh per depositor. Still to understand whether the change is "per depositor per bank" or just "per depositor" ?
  • Measures taken to eliminate tax harassment, protecting the taxpayer rights by enshrine in the statutes
  • Government to sell part of LIC stake through an IPO to raise funds. Also made a decision to invite private equity into IDBI. There seems to be more such moves expected during the financial year to support budget announcements and reduce the deficit.
  • New education policy announced to promote early innovation and bridging the gap between institution and industry. Budgeted around Rs.99K Crores, highest allocation of such funds over the years.
  • Planned to complete 100 new airports before 2025.
  • Agriculture Credit targeted to Rs. 15 Lakh Crores (not as big as it was anticipated)
  • New direct tax dispute settlement scheme to clear the cases in a transparent manner.
  • Small Medium Businesses Tax Audit threshold limit increased 5 times to Rs. 5 Cr. This will remove third-party signatures and putting less control on those who want to start a business in India. Though the announcement is for those businesses whose cash revenue is lessthan 5%, it indirectly applies to most of the SME businesses.
  • Nameless, faceless eAssessment for IT Disputes (to become an act later)

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Disclaimer: This article provides an overview and general guidance, not exhaustive for brevity. Please refer Income Tax Act, GST Act, Companies Act and other tax compliance acts, Rules, and Notifications for details.