Budget 2019 Current Affairs - 2020

Category Wise PDF Compilations available at This Link

GoI merges three Insurance PSUs

The GoI will merge 3 public Sector Insurance Companies as announced in budget 2019-20. The merger includes United India Insurance Limited, National Insurance Co Limited and Oriental Insurance Company Limited.

Highlights

  • The Budget 2019-2020 did not make provision of funds for insurers and the Department of Financial Services. Therefore, the government institutions in the financial sector are forced to seek supplementary demands to fulfil their purposes. The Budget allocated Rs 12,000 crore for this.
  • The General Insurance Companies have sought Rs 500 crore to Rs 3000 crore each to avoid falling below solvency ratio. However, the three companies that are to be merged are struggling to maintain minimum solvency ratio of 1.5

Laws on solvency Ratio

According to the Guidelines of Insurance Regulatory and Development Authority of India, an insurance company has to compulsorily maintain a minimum solvency ratio of 1.5.

The solvency ratio is calculated by dividing company’s tax net operating income by its total debt obligation. The ratio indicates if the enterprise is able to meet its debt obligations. The lower the ratio, the greater is its probability to default its debt obligations.

Get these updates on Current Affairs Today Android App

Interim Budget 2019: Changes in Income Tax Regime

The Union Minister of Finance Piyush Goyal presented the interim budget. The changes proposed related to the income tax regime are listed below:

  • The Finance Minister has increased the tax slab for zero tax to Five Lakh rupees and the standard deduction introduced in the 2018 budget has been increased to Fifty thousand rupees from current forty thousand.

Standard Deduction

Standard Deduction refers to deduction allowed as per the Income Tax irrespective of the expenses met or the investment made by the individual. An individual is not required to disclose any investment proofs or expense bills for this purpose, the Standard Deduction is allowed at a standard rate.

  • Additionally, those individuals with gross income up to 6.5 lakh rupees would be exempted from payment of tax if they make investments in provident funds and prescribed equities.
  • The TDS threshold for home rent has been increased to 2.4 lakh from Rs 1.8 lakh.
  • Interest accruals up to Rs 40,000 in post offices and banks have been made tax free.
  • The budget also increased the Income-tax relief on notional rent from unsold houses extended to 2 years from 1 year.
  • The exemptions under the capital gain tax have been increased to two crores. Capital gains exemption to be available on 2 house properties
  • IT returns would be processed within 24 hours and returns will be paid immediately.

The Minister also announced that within a span of two years all assessment and verification of IT returns will be done electronically by an anonymised tax system without any intervention by officials.

Get these updates on Current Affairs Today Android App