Announcements made in the Union Budget 2020 have failed to cheer investors, with the Sensex falling by nearly 1000 points. After initially falling by over 500 points, the Sensex closed 987.96 points (2.43%) lower a 39,735.
The Nifty too, nosedived by 318.30 points (2.66%) ending at 11,643.80. Infra, metals and PSU bank index ended losing 3-4%.
Some of the stocks at fell the most were ITC, Tata Motors, Larsen and Tubro (L&T) and HDFC, which were down by over 6% each. In total, shares of 1689 companies declined.
Several investors were of the opinion that the budget was rather disappointing since there werenâ€™t any major announcements to revive growth. This comes at a time when the country has been reeling from a slowdown, with the GDP expected to grow at a 11-year low.
There were no specific sops announcement for the real estate sector, or even the auto sector that has faced an unprecedented slowdown.
At 1.20 p.m., the Sensex was trading at 40,375.84, lower by 347.65 points or 0.85 per cent from the previous close of 40,723.49 points.
It had opened at 40,753.18 and has so far touched an intra-day high of 40,905.78 and a low of 40,375.84 points.
The Nifty50 on the National Stock Exchange was trading at 11,881.35, lower by 80.75 points or 0.68 per cent from its previous close.
The Finance Minister, in the budget, announced a new optional income tax regime.
Those earning upto Rs 5 lakh do not have to pay any income tax â€“ which is the same as the existing tax regime. Those earning between Rs 5 lakh and Rs 7.5 lakh per annum will be taxed at 10%, against the existing 20%. Individuals earning between Rs 7.5 lakh and Rs 10 lakh per year will be taxed at 15%, against the existing 20%. Meanwhile those earning between Rs 10 lakh and Rs 12.5 lakh will be taxed at 20%, instead of the existing 30%. And those earning between Rs 12.5 lakh and Rs 15 lakh will be taxed at 25% against the current 30%.
The Finance Minister said that this move would make it easier for people to comply with the tax laws, and make it easier for them to file their returns by themselves, without the help of accountants. But the new regime will not allow individuals to claim deductions at all, the Finance Minister clarified.
FM Sitharaman also announced that the government will be selling part of its holding in LIC through the IPO route. It will also be selling the remaining of its holding in IDBI to a private retail investor.
In the budget, it has also been proposed to remove Dividend Distribution tax removed from at present, 15% plus other charges.
The government also announce a 16-point action plan for the agricultural sector and overall allocation Rs 2.8 lakh crore for the sector.