Union Budget for 2020-21

Circular No.ES/228/2019- 20                                                                                 4th February, 2020

To:  Members of the Council                                                                                     

Sub: Union Budget for 2020-21

Dear Member,

The Council is pleased to inform you that the Government has announced the Union Budget for 2020-21 on 1st February, 2020.

The Union Budget has made the following announcements:

(A)       Amended Technology Upgradation Fund Scheme (ATUFS)

  • ATUFS allocation is Rs.761.90 crores against Rs. 700 crores allocated in 2019 –20.

(B)       Economic Development

  • Allocation of Rs.27,300 crore for 2020-21 for development & promotion of Industry & Commerce.

  • Investment Clearance Cell proposed to be set up to provide “end to end” facilitation and support and also, to work through a portal.

  • Five new smart cities proposed to be developed.

  • Set up of National Technical Textiles Mission :

  • With four-year implementation period from 2020-21 to 2023-24.

  • At an estimated outlay of Rs 1480 crore.

  • To position India as a global leader in Technical Textiles.

  • Launch of a New scheme NIRVIK to achieve higher export credit disbursement.

(It will provide for higher insurance coverage, reduction in premium for small exporters and simplified procedure for claim settlements

  • Turnover of Government e-Marketplace (GeM) proposed to be taken to Rs 3 lakh crore.

  • Launch of Scheme for Revision of duties and taxes on exported products (RoDTEP)-

(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.

(C)       Infrastructure

  • 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

  • Focus to be on generation of employment, skills and making MSMEs competitive.

(D). Ports & Water-ways

Governance framework keeping with global benchmarks needed for more efficient sea-ports.

(E)       Airports

  • 100 more airports to be developed by 2024 to support Udaan scheme.

(F)       Electricity

  • More measures to reform DISCOMs to be taken.

(G)       Power

  • Further reforms to facilitate transparent price discovery and ease of transactions.

(H)       New Economy

  • Measures proposed to benefit Start-ups:

  • 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 test beds and small scale manufacturing facilities to be established.

  • Rs.8000 crore proposed over five years for National Mission on Quantum Technologies and Applications.

(I) Financial Sector

  • New scheme to provide subordinate debt for entrepreneurs of MSMEs by the banks.

  • Would be counted as quasi-equity.

  • Would be fully guaranteed through the Credit Guarantee Trust for Medium and Small Entrepreneurs (CGTMSE).

  • The corpus of the CGTMSE would accordingly be augmented by the government.

  • Window for MSME’s debt restructuring by RBI to be extended till March 31, 2021.

  • More than five lakh MSMEs have already been benefitted.

  • An app-based invoice financing loans product for MSMEs to be launched in order to prevent the problem of delayed payments and consequential cash flows mismatches.

  • Export promotion of MSMEs for selected sector such as pharmaceuticals, auto components and others.

  • For selected sector such as pharmaceuticals, auto components and others.

  • An Rs 1000 crore scheme anchored by EXIM Bank together with SIDBI.

  • Hand holding support for technology upgradations, R&D, business strategy etc.

(J) Direct Tax

  • Direct Tax Proposals

To stimulate growth, simplify tax structure, bring ease of compliance, and reduce litigations.

  • Start-ups:

  • Start-ups with turnover up to Rs. 100 crore to enjoy 100% deduction for 3 consecutive assessment years out of 10 years.

  • Tax payment on ESOPs deferred.

  • 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. 

  • Tax concession for foreign investments:

  • 100% tax exemption to the interest, dividend and capital gains income on investment made in infrastructure and priority sectors before 31st March, 2024 with a minimum lock-in period of 3 years by the Sovereign Wealth Fund of foreign governments.

(K)       Indirect Tax

  • GST

  • Cash reward system envisaged to incentivise 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 1st April, 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 dummy or non-existent units.  

  • GST rate structure being deliberated to address inverted duty structure.

  • Trade Policy Measures

  • Customs Act being amended to enable proper checks of imports under FTAs.

  • Provisions relating to safeguard duties to be strengthened to enable regulating such surge in

imports in a systematic way.

  • Provisions for checking dumping of goods and imports of subsidized goods being strengthened.

  • Suggestions for reviews of exemptions from customs duty to be crowd-sourced.

  • Anti-dumping duty on PTA abolished to benefit the textile sector.

For more information on the Union Budget 2020-21, please follow the link for the following:

(1) Customs Notifications

(2) Explanatory Notes

(3) Highlights of Union Budget 2020-21 (Key Features)

(4) Summary of Union Budget 2020-21

Members are requested to send us your suggestions / views on the Union Budget provisions latest by 7th February, 2020 (Friday) so that the same can be included in the Post Budget Memorandum which the Council will be shortly forwarding to the Government.             

Thanking You,

Yours faithfully,