The Budget 2020 is based on three themes - Aspirational India, Economic Development for all, and Caring Society. The key takeaways from Finance Bill and Budget Speech, 2020 related to corporate and allied laws has been mentioned as follows:
I. The government recommends to exempt levy of stamp duty on transactions in stock exchanges established in IFSCs.
The Finance Bill, 2020 proposes to exempt levy of stamp duty in respect of instruments of transaction in stock exchanges and depositories established in IFSC set up under SEZ Act, 2005 which is aimed at boosting investment and generating employment in a wide range of economic activities, including in the infrastructure sector.
To give effect to the proposed amendment, a new proviso has been proposed to be inserted to Section 9A (2) of the Indian Stamp Act, 1899 that deals with Instruments chargeable with duty for transactions in stock exchanges and depositories.
II. The Finance Bill, 2020 further proposes to include new regulation for issuing the directions and authorize SEBI and RBI to issue instructions, circulars or guidelines for carrying out the provisions of Part AA of Chapter II and the rules made thereunder which regulate the liability of instruments of transactions in stock exchanges and depositories to duty.
III. Deposit Insurance Coverage limit to be increased from Rs. 1 Lakh to Rs. 5 Lakh per depositor.
The Finance minister assured that a powerful mechanism is in place to monitor the financial health of all Scheduled Commercial Banks and the Deposit Insurance and Credit Guarantee Corporation (DICGC) has been allowed to increase Deposit Insurance Coverage for a depositor, which is now Rs 1 lakh to Rs. 5 lakh per depositor.
As per Section 2(j) "insured deposit" means the deposit or any portion thereof the repayment whereof is insured by the Deposit Insurance and Credit Guarantee Corporation under the provisions of the Deposit Insurance and Credit Guarantee Corporation Act, 1961.
IV. The government announced that it will seek amendments to the Companies Act, 2013 to decriminalize various offenses.
The government does not want a law that could treat every business house with suspicion and the number of sections leading to criminal liability and penalties in Company Law and thus the criminality clause on tax issues will be removed.
V. Eligibility limit for NBFCs for debt recovery under SARFAESI Act to be reduced to loan size of Rs. 50 Lakh.
The limit for NBFCs to be eligible for debt recovery under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002 which allows banks and other financial institution to auction residential or commercial properties (of Defaulter) to recover loans is proposed to be reduced from Rs. 500 crore to asset size of Rs. 100 crore or loan size from existing Rs. 1 crore to Rs. 50 lakh.
NBFCs can, thus, enforce the security interest for lower ticket size loans. This would enhance their ability to settle smaller loans.
VI. Separation of NPS Trust for government employees from PFRDA.
Finance Minister has proposed amendments in the PFRDA Act and the forming of pension trusts by employees other than government employees.
This move will safeguard employees and their corpus across all the sectors.
The PFRDA regulates the National Pension System (NPS), subscribed by employees of central and state governments as well as by employees of private sector organizations those in unorganized sectors through Atal Pension Yojana (APY).