1 Welcome to the 15th Budget Presentation Union Budget 2020 21 - PowerPoint PPT Presentation

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Welcome to the 15th Budget Presentation Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 2

State of the Economy Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 3

State of the Economy GDP growth of India has come under stress in the recent times. Year 2014 – 15 2015 – 16 2016 – 17 2017 – 18 2018 – 19 2019 – 20 (Adv. Est.) Change 7.4 % 8.0 % 8.3 % 7.0 % 6.1 % 5.0 % Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 4

State of the Economy Growth of the top 20 economies of the world. Rank Country GDP Growth Rank Country GDP Growth 1 China 5.8 11 Canada 1.8 2 Indonesia 5.1 12 Spain 1.8 3 India 5.0 13 Netherlands 1.6 4 Turkey 3.0 14 United Kingdom 1.4 5 Australia 2.3 15 France 1.3 6 Korea 2.2 16 Mexico 1.3 7 Saudi Arabia 2.2 17 Swizerland 1.3 8 USA 2.1 Germany 1.2 18 9 19 Italy 0.5 Brazil 2.0 20 Japan 0.5 10 Russia 1.9 Still India continues to be one of the fastest growing economy in the world. GDP for the year 2019. Source : www.imf.org & Economic Survey Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 5

State of the Economy India is 5 th largest economy in the world in terms of GDP. All figures in US $ Trillion Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 6

State of the Economy Consumer Price Index ( CPI ) Inflation. Year 2014 – 15 2015 – 16 2016 – 17 2017 – 18 2018 – 19 2019 – 20 (Apr. – Dec.) Change 5.9 % 4.9 % 4.5 % 3.6 % 3.4 % 4.1 % Inflation on a rise. Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 7

State of the Economy Interest rates on a decline. Will the interest rate decline continue ? Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 8

State of the Economy Interest rates in the top 20 economies of the world. Rank Country Interest % Rank Country Interest % 1 Turkey 11.25 11 South Korea 1.75 2 Mexico 7.25 12 Australia 0.75 Russia United Kingdom 3 6.25 13 0.75 India France 4 5.15 14 0.00 5 Indonesia 5.00 15 Germany 0.00 6 Brazil 4.50 16 Italy 0.00 7 China 4.15 17 Netherlands 0.00 8 United States 2.50 18 Spain 0.00 9 Saudi Arabia 2.25 19 Japan -0.01 Canada Switzerland 10 1.75 20 -0.75 Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 9

State of the Economy Crude oil prices on a decline. Price of Brent crude in US $ 2015 2016 2017 2018 2019 04 – 02 – 2020 49.49 40.76 52.51 69.78 64.05 55.27 India’s annual crude bill (2018 – 19) : 111.9 $ bn. India is 83.8 % dependent on crude import. Source : www.ppac.gov.in Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 10

State of the Economy Stock Market Performance in last 1 year. 01 Feb. 2019 to 31 Jan. 2020 Source : Business India, www.investing.com Rank Country Change in % Rank Country Change in % 1 USA Nasdaq 25.67 12 India - Sensex 12.32 2 Russia - MCEX 22.04 13 Japan - NIKKEI 225 11.71 Canada - S&P/TSX 3 Australia - S&P/ASX 200 19.65 14 11.44 Composite 4 Switzerland - SMI 18.49 15 Indonesia - IDX 9.08 5 Italy - FTSE MIB 17.77 16 U K - FTSE 100 4.55 6 Brazil – Bovespa 17.00 Saudi Arabia - 7 France - CAC 40 16.30 17 3.66 Tadawul All Share 8 Germany - DAX 16.19 18 Spain - IBEX 3.44 9 China - Shanghai Composite 15.17 10 Turkey - BIST 100 14.48 19 Mexico -IPC 0.27 11 Netherlands – AEX 13.23 20 Korea - KOSPI -3.89 Stock market benchmark rallying on account of a few stocks. Broad based rally still illusive. Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 11

State of the Economy Forex Reserves ( $ bn ). 2014 – 15 2015 – 16 2016 – 17 2017 – 18 2018 – 19 2019 – 20 * 341.6 360.2 369.9 424.5 412.9 462.16 * Till 17 Jan. 2020 Healthy Forex Reserves. Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 12

State of the Economy Exchange Ratio – Stable. 2014 – 15 2015 – 16 2016 – 17 2017 – 18 2018 – 19 2019 – 20* 61.14 65.50 67.10 64.50 69.90 70.49 Rs. 9.35 depreciation. Just 15.29 % depreciation in 6 years. * Ave till 30 Jan. 2020 Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 13

State of the Economy Foreign Institutional Investment ( FII ) V/s. Domestic Institutional Investments ( DII ). Amount in Cr. Year 2014 2015 2016 2017 2018 2019 FII 67423 - 20373 - 10582 - 44108 - 73212 44151 DII - 28557 67586 35362 90738 109661 42257 Source : www.moneycontrol.com Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 14

State of the Economy Assured flows from Domestic Investors. Month Mutual Funds SIP flows / Month (Rs. Cr.) March 2016 2,719 March 2017 4,335 March 2018 7,119 March 2019 8,055 8,518 December 2019 That is Rs. 1,02,216/- ( 8,518 X 12 ) Crores annually. Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 15

State of the Economy Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 16

State of the Economy Government finances are under pressure. ✓ GST collection below expectation. ✓ Disinvestment target falling short by 38%. ▪ Target : Rs. 1.05 Lakh Crore. ▪ Actual : Rs. 0.85 Lakh Crore. ✓ Reduction in the rate of Corporate Tax to revive the economy. From 34.9% to 25.2% and for manufacturing companies setup after 1/10/19 - 17% (all rates with surcharge and cess). This would cost the government Rs. 1.45 lakh cr. Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 17

State of the Economy Indian Corporate Tax Rate now comparable to Global Peers. Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 18

Expectations ✓ Putting the economy back, fast, on the growth trajectory. ✓ Reviving investments in the economy. ✓ Reviving demand in the economy. ✓ Fiscal discipline. Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 19

Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 20

Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 21

Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 22

Some Important Announcements ✓ Disinvestment target set at higher level of Rs. 2.1 lakh Crores. ✓ Strategic disinvestments of BPCL, CONCOR, Air India. ✓ Public issue of LIC (Life Insurance Corporation).Sovereign guarantee to continue. ✓ Government stake in IDBI Bank to be sold off. Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 23

Some Important Announcements ✓ Insurance on Bank Deposits to increase from Rs. 1 lakh to Rs. 5 lakhs. Simplified GST return from ✓ 1 st April. Refund process to be fully automated. ✓ ETF of Government Securities (G – Secs) to be launched. Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 24

Changes in Income Tax Act Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 25

Changes in Income Tax Act Personal Taxation (Individual & HUF) ✓ There is no change in the following rates of Income Tax. Income Tax Rate 0 to 2,50,000 Nil 2,50,000 to 5,00,000 5% 5,00,000 to 10,00,000 20% 10,00,000 and above 30% Relief U/s. 87A of Rs. 12,500/- available. Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 26

Changes in Income Tax Act Personal Taxation (Individual & HUF) ✓ Concessional Rate of tax offered U/s. 115BAC. Income Tax Rate 0 to 2,50,000 Nil 2,50,000 to 5,00,000 5% 5,00,000 to 7,50,000 10% 7,50,000 to 10,00,000 15% 10,00,000 to 12,50,000 20% 12,50,000 to 15,00,000 25% 15,00,00 and above 30% Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 27

Changes in Income Tax Act ✓ Concessional rates of tax offered U/s. 115BAC. CONDITIONS Deductions not available in order to arrive at taxable income. ▪ Leave Travel Concession ▪ House Rent Allowance ▪ Related to Some allowance of Sec. 10(14) ▪ I income from Allowance to MPs / MLAs ▪ salaries Standard deductions ▪ Professional Tax ▪ Entertainment Allowance Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 28

Changes in Income Tax Act ✓ Concessional rates of tax offered U/s. 115BAC. CONDITIONS Deductions not available in order to arrive at taxable income. ▪ Related to Interest on housing loan – Self II income from occupied U/s. 24 or vacant House Property U/s. 23(2). Related to ▪ Deduction from family pension III income from U/s. 57 (iia) other sources Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 29

Changes in Income Tax Act ✓ Concessional rates of tax offered U/s. 115BAC. CONDITIONS Deductions not available in order to arrive at taxable income. ▪ Additional depreciation U/s. 32 ▪ Deduction U/s. 32AD, 33AB, 33ABA Related to ▪ Deduction on Scientific Research IV business 35(2AA)(ii)(iia)(iii) income ▪ Deduction U/s. 35AD, 35CCC ▪ Deduction U/s. 10AA Union Budget – 2020 – 21 Income Tax & Investment Viewpoint 30