Everyone was glued to their TV/mobile screens as our Finance Minister Nirmala Sitharaman began her Union Budget 2021-22 speech on Feb 1, 2021. Nearly every industry was hit by Covid-19, which became the key reason for setting the expectations high from this year’s budget. Let’s have a look at the highlights of Budget 2021.
- First digital budget in the history of India
- Vehicle Scrapping Policy. Vehicles will undergo a fitness test after 20 years in the case of personal vehicles, and 15 years in the case of commercial vehicles.
- 64,180 Crore allocated to the healthcare sector for New Health Schemes
- 35,000 Crore allocated for Covid-19 vaccine
- 7 Mega Textile Investment Parks will be launched in 3 years
- 54 Lakh Crore provided for Capital Expenditure
- 18 Lakh Crore for Ministry of Road Transport and Highways
- 10 Lakh Crore allocated to the Railways
- Proposal to amend Insurance Act. Proposal to increase FDI from 49% to 74%
- Deposit Insurance cover. Easy and time-bound access of deposits to help depositors of stressed banks
- Proposal to revive the definition of ‘Small Companies’ under the Companies Act 2013. Capital less than 2 Cr. and turnover less than 20 Cr.
- Disinvestment: IPO of LIC, Announced Disinvestment of Companies will be completed in FY 2021-22
Direct and Indirect Tax
- Senior Citizens: Reduced compliance burden for senior citizens above 75 years. Proposal not to file ITR in case the person receives only pension income and interest income.
- Reduction in time for IT Proceedings: Reopening of Assessments period reduced from 6 years to 3 years, except in cases of serious tax evasion cases
- Proposal to constitute ‘Dispute Resolution Committee’. (Taxable income 50 Lakh and disputed income 10 Lakh)
- National Faceless Income Tax Appellate Tribunal (ITAT) Centre
- Relaxations to NRIs: Propose to notify rules for removing hardship for double taxation
- Tax Audit Limit: Proposal of tax audit increased from 5 Cr. to 10 Cr. (Only for 95% digitized payments business)
- Propose to provide relief on advance tax liability on dividend income
- Propose to include tax holidays for aircraft leasing companies
- Small Charitable Trusts. Compliance limit increased from 1 Crore to 5 Crore
- Late deposit of employee’s contribution by the employer will not be allowed as a deduction
- An incentive to start-ups: Tax holiday exemption for one more year
- Duties reduced on various textile, chemicals, and other products
- Gold and Silver (BCD reduced)
- Agriculture Products: Custom duty increased on cotton, raw silk, alcohol, etc.
There have been mixed reviews about the Union Budget 2021-22. The leading brands in the Indian automotive sector have welcomed the voluntary vehicle scrapping policy. It will not only help boost the demand for new vehicles but also encourage the manufacturing of fuel-efficient vehicles, thereby reducing air pollution. The Finance Minister also got praised for allocating 64,180 Crore for the new national health program. The program funds will be used for developing primary, secondary, tertiary healthcare in India.
Though the popular economists of our country hailed the Finance Minister for giving a budget that is focused on fiscal expansion, they showed concerns over not addressing the problems of inequitable growth. In a nutshell, this budget might have got some negative points for specific industries; but it also gives several positive signals with significant structural reforms.