What are the budgets 2020 explained in Layman’s term

The Indian Budget 2020-21 was delivered on 1st February 2020 by Nirmala Sitharaman, the Finance Minister of India. The budget had many new and modified tax provisions which came into effect from 1st April 2020. It’s essentially money management made simple. If done properly, managing your budget can help you reach your financial goals sooner than later. 

The growth in real GVA during 2019-20 has been lower than that of 2018-19 due to relative growth in mining and quarrying, manufacturing, production & supply of natural gas. Other utility services, including construction, trade, repair, hotel and restaurant services, were also used in balancing the expenditure.

What is a Budget?

A budget estimates your total revenue expected and expenses over some time, usually one year. A budget is a list of what you expect to earn and spend over that period. 

Despite all its pomp and ceremony, an annual budget is nothing more than a statement of how much money a country makes and spends. The total revenue expected could abruptly increase, but taxes will also be levied accordingly.

The government is much bigger than you thought, and it earns billions through taxes and spends billions on national priorities like defence and education. But just like your household budgeting spreadsheet, everything has to balance out at zero.

In other words: Expenditure has to be matched by total revenue expected from somewhere else, maybe from tax revenues collected or borrowing from private investors or central banks.

What Does it Mean for Businesses?

Make sure you understand what each of your taxes are, how they affect your business and how you can minimise them. Find out if any specialised tax deductions or credits are available to you as a new business owner. 

Remember that paying too much tax is worse than not paying enough. You might risk an audit from higher authorities, and an audit could cost you more time and money than saving by not paying enough.

For Startups

The most important takeaway from budget 2020-21 for startups is related to interest rates, which will affect how much money they can borrow and how many investors are willing to invest. 

For Real Estate and Home Buyers

The tax rates have been raised marginally for every bracket, but no increase in income limit. This means you will pay more tax if your annual income is ₹1 lakh to ₹2.5 lakh. The government is targeting houses worth 10 lakh per month from individual citizens by 2022. The target for the primary deficit is 3.1% of GDP.

What Does It Mean to Finance?

Our finances are always a bit of a mystery for many of us. We don’t spend much time investigating where our money goes and how it should be used. For most people, life happens, and we don’t make enough time to get informed about our finances. 

The Union Budget is a great push for people looking to gain more control over their finances. Whether they want to save more, invest better or create an emergency fund. 

What Does It Mean to Education and Healthcare?

India plans to spend 3.38% of its GDP on education and 2.3% on healthcare, which makes up a whopping 6.68% of India’s overall budget. In contrast, China spends less than 2% on education and around 1.2% on healthcare, which make up only about 4% of its overall budget. 

This means that India is spending more money on both sectors than China. This also means that while it may not be increasing spending by much as last year, it will still be able to invest more money into these two sectors.

What Does it Mean?

The Income Tax (Amendment) Bill proposes stricter income tax rates for non-resident Indians who stay outside India for more than 182 days. Additionally, Non-Resident Indians will not be allowed to carry forward losses from previous years. 

The Taxation Laws (Second Amendment) Bill proposes an additional 1% levy on foreign transactions, except if banks or financial institutions carry them out. You’ll have to pay a tax if you remit money abroad through your bank account. 

However, there are ways to avoid paying taxes while sending money abroad. For example, you can use peer-to-peer networks like TransferWise or PayPal to send and receive payments at competitive exchange rates and low fees.

Conclusion

The Union Budget was delivered on 1st February 2020 by the Finance Minister of India. The Indian government plans to spend Rs 30,42,230 crore in 2020-21, 12.7% higher than the revised estimate for 2019-20. The theme of the budget was to extend the goal of Atmanirbhar Bharat by increasing independence by turning the nation into a global manufacturing hub across different sectors. Some major benefits of budget 2021 are an extension of interest deduction on a home loan, relaxation in filing the income tax return, the exemption for the LTC cash scheme, and ease in advance tax instalment for dividend income.