Budget 2021: Highlights

Budget 2021 Highlights
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Budget 2021: Highlights

The first budget of the new decade has been presented today, on 1st February 2021, Monday by  Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman Union Budget 2021. Announcements made through this Budget will be applicable for the Financial Year 2021-22 corresponding to Assessment Year 2022-23.

The budget this year is extremely critical from the point of view of revival of the economy as well as managing the taxpayer’s expectations at the outset of Covid-19 pandemic circumstances, which were like never before.

Halwa Ceremony held on 23rd January 2021

A new mobile application “Union Budget Mobile App” was launched. It will provide quick easy and hassle-free access to Union Budget information to all stakeholders. Click here to know the details to all the details about the mobile app.

Economic Survey 2020-21 on 29th January 2021

The theme of the Economic Survey 2020-21 #SavingLives&Livelihoods #VshapedRecovery was presented by India’s Chief Economic Advisor Shri Krishnamurthy Subramanian. A detailed assessment of the impact of the coronavirus pandemic on the Indian economy was presented in Volume I Volume II 

The government has also launched an official mobile app for the Economic Survey of India.

Highlights of Budget 2021

“Atmanirbhar” packages were like mini-budgets for covid- support which accelerated the reforms. Total covid supports packages announced before the Budget amount to Rs. 27.1 lakh crores.

Vision for Atmanirbhar Bharat –

The budget has been prepared considering 6 pillars of the economy – Health & Wellbeing, Physical and financial capital and Human capital & Infrastructure, Innovation & RD

Health & Wellbeing

The importance of Infrastructure was noted and Rs 64,180 crores has been outlayed for Atmanirbhar Swasth Bharat for over 6 years. Mishan Poshan 2.0 will be launched.

  • Waste Management and Air Pollution – Rs. 2270cr
  • Voluntary Vehicle scrapping policy announced

Physical and financial capital and Human capital & Infrastructure

Mega investment in 7 textile parks over 3 years.

  • Long-term debt financing – Development Financial Institution with Rs. 20000cr capital to be set up with a lending portfolio of 5 lakh crores in 5 years. Augmenting funds for infrastructure development.
  • Monetizing public infrastructure assets. National Asset monetization dashboard.
  • Capital Expenditure Rs. 5.54 lakh crores against 4.39lakh crores last year. Additionally more than 2 lakh cr for capital expenditure for states.
  • National corridors and infrastructure development for metro /rail as well as the road were announced
  • Power infrastructure – Hydrogen energy mission was announced.
  • Consolidation of Acts to create a single Securities Markets Code
  • To launch investor charter for investor protection.
  • Regulated Gold Exchanges proposed
  • FDI limit in Insurance proposed to be increased to 74% from 49%
  • FY 22 PSU Bank recapitalization plan to Rs 20,000 crores
  • To Incentivise startups, a one-person company with a relaxed capital limit proposed.
  • All divestments announced earlier will be completed by FY 22. The target of Rs 1.75 lakh crores from divestment.
  • To set up a separate administrative structure for co-operatives

Inclusive development for Aspirational India 

  • FM demonstrated that the government is promoting Agricultural development and enriching farmers by mentioning the payments to farmers in the current government’s tenor.
  • Boosted Agriculture and Poultry
  • Agri infra fund increased to 40,000 crores and will be available for APMC
  • Development for 5 National fishing
  • Social security benefits to be extended to all sectors

Regenerating Human capital

  • Setting up of Central University in Leh proposed for higher education in Ladakh
  • Bench-marking skill initiative with many countries

Innovation and R&D

  • Financial assistance earmarked for Digital payments developments
  • Research needs to be addressed

Fiscal deficit for FY 20-21 pegged at 9.5% of GDP

Fiscal deficit for FY 21-22 pegged at 6.8% of GDP

Revenue deficit grant for states at Rs 1.18 lakh crores

Direct Tax Proposals

  • Relief to Senior citizens (over 75yrs) – exemption to file tax returns if income consists only pension and interest income.
  • Re-opening of cases for concealment of income – period limited to 3 years. Only for concealment above Rs 50 lakh, 10 years.
  • Faceless ITAT for faceless dispute resolution
  • Relaxations to NRI – for the avoidance of Double taxation proposes to notify rules
  • The limit for tax Audit increased for 10 crores from 5 crores if digital payments 95%
  • Advance tax for dividend income only on declaration or receipt of dividend income by the recipient. Dividends will be exempt from TDS.
  • Infra debt funds can issue zero coupon tax saving bonds
  • Tax exemption for notified affordable rental housing projects
  • Tax holiday for capital gains for aircraft leasing companies
  • Pre-filled income tax returns for salaried as well as capital gains on securities, bank interest, etc
  • Tax holiday for startups – Capital gain exemption for Investment in startups extended by 1 more year
  • No deduction to the employer for late deposit of employee contribution of PF
  • Vivad Se Viswas Scheme Last Date of filing extended to 28th February 2021

Indirect Taxes 

  • GST collection in the last few months reached a record high.
  • GST Audit abolished.
  • A new condition is likely to be imposed for claiming the input tax credit.(Section 16(2)(aa).
  • Section 50 Interest on net tax liability will be made effective retrospectively.
  • Custom Duty Policies have been updated to ensure easy access to raw materials and value-added products.

Key Takeaways of 43rd GST Council Meeting as it met for the first time after the Budget 2021

 

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About CA Janhavi Phadnis 73 Articles
Chartered Accountant and financial consultant. She has worked with corporates for 14 years with expertise in Forex-Treasury, Accounting, and Corporate Tax. She can be contacted at info.financepost@gmail.com

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