Presenting the maiden Union Budget of the third decade of 21st century, Finance Minister Nirmala Sitharaman, today proposed a series of what she described as a “far-reaching” reforms, aimed at energising the Indian economy through a combination of short-term, medium-term, and long-term measures. Here are the key steps announced in Union Budget 2020-21 that may impact the Building Products & Home Improvement Industry:
By Mrinmoy Bhattacharjee
Infrastructure
- Rs 100 lakh crore to be invested on infrastructure over the next 5 years
- A National Logistics Policy to be released soon: to clarify roles of the union government, state governments and key regulators; a single-window e-logistics market to be created
- Project preparation facility for infrastructure projects proposed
- Rs 1.7 lakh crore proposed for transport infrastructure in 2020-21
Affordable Housing
- Additional deduction up to Rs 1.5 lakhs for interest paid on loans taken for an affordable house extended till March 31, 2021
- Date of approval of affordable housing projects for availing tax holiday on profits earned by developers extended till March 31, 2021
Smart Cities
Five new smart cities proposed to be developed
Industry & Commerce
- Rs 27,300 crore allocated for 2020-21 for development and promotion of industry and commerce
- Investment Clearance Cell proposed to be set up to provide ‘end-to-end facilitation and support; to work through a portal
MSME
- The window for MSME’s debt restructuring by RBI to be extended by one year till March 31, 2021
- An app-based invoice financing loans product for MSMEs to be launched to prevent the problem of delayed payments and consequential cash flows mismatches
- MSMEs to boost less-cash economy: Turnover threshold for audit increased to Rs 5 crore from Rs 1 crore for businesses carrying out less than 5% business transactions in cash
- Factor Regulation Act 2011 to be amended to enable NBFCs to extend invoice financing to the MSMEs through TReDS
- NBFCs eligibility limit for debt recovery reduced from: Rs 500 crore to Rs 100 crore asset size; and Rs 1 crore to Rs 50 lakh loan size
Startups
- A digital platform to be promoted to facilitate seamless application and capture of IPRs
- Knowledge Translation Clusters to be set up across different technology sectors including new and emerging areas
- For designing, fabrication and validation of proof of concept, and further scaling up Technology Clusters, harbouring testbeds and small scale manufacturing facilities to be established
- Early life funding proposed, including a seed fund to support ideation and development of early-stage startups
Skill Development & Education
- Rs 3000 crore for skill development; and a new Education Policy to be announced soon
- National Skill Development Agency to give special thrust to infrastructure-focused skill development opportunities
Environment & Climate Change
- Purposed allocation of Rs 4400 crore for 2020-21
- Proposed to advise the utilities to close the running old thermal power plants with carbon emission above the pre-set norms
- States that are formulating and implementing plans for ensuring cleaner air in cities above one million to be encouraged
GST
- Cash reward system envisaged incentivising customers to seek invoice
- Simplified return with features like SMS-based filing for nil return and improved input tax credit flow to be implemented from April 1, 2020, as a pilot run
- Dynamic QR-code capturing GST parameters proposed for consumer invoices
- Electronic invoice to capture critical information in a centralized system to be implemented in a phased manner
- Aadhaar-based verification of taxpayers being introduced to weed out a dummy or non-existent units
- GST rate structure being deliberated to address inverted duty structure
Export
- Scheme for Revision of duties and taxes on exported products to be launched
- Exporters to be digitally refunded duties and taxes levied at the Central, State and local levels, which are otherwise not exempted or refunded
- All Ministries to issue quality standard orders as per PM’s vision of ‘Zero Defect-Zero Effect’ manufacturing
Governance
- Companies Act to be amended to build into statues, criminal liability for certain acts that are civil in nature. Other laws with such provisions are to be corrected after examination
Direct Tax Proposals
New and simplified personal income tax regime proposed:
| Taxable Income Slab (Rs.) New | Existing Tax Rates | New Tax rates |
| 0-2.5 Lakh | Exempt | Exempt |
| 2.5-5 Lakh | 5% | 5% |
| 5-7.5 Lakh | 20% | 10% |
| 7.5-10 Lakh | 20% | 15% |
| 10-12.5 Lakh | 30% | 20% |
| 12.5-15 Lakh | 30% | 25% |
| Above 15 Lakh | 30% | 30% |
