Analysis of India’s union budget 2021-22 

On 1st February, 2021 at 11 A.M India union finance minister Nirmala Sitharaman presented the budget in the parliament.  Nirmala Sitharaman has replaced the standard budget brief used by the ministers with the traditional red “Bhai-Khata” and  she announced budget carrying a tablet in a red sleeve with the national emblem embossed on it. The mission made in India is followed by the minister as the tablet was “Made in India” device also the finance minister launched the mobile app called “union budget mobile app” to access budget documents easily.

The pandemic has punched a bigger hole in the budget this year for India. India fiscal deficit and expenditure, borrowing of the fiscal year are the deficit of 2020/21 seen at 9.5% of GDP, the revised expenditure of 2020/21 ₹4.39 trillion, the borrowing of India says will need ₹800 billion in next two months from the bond market and 12 trillion in 2021/22 from the gross market. The country is facing challenges like day to day the farmer protest, job losses and it happened once in a century. The finance minister has promised a “never before budget; measures announced in 4-5 mini budgets in 2020” for a pandemic-hit nation. During the pandemic the declaring of three-week lockdown the prime minister announced the Pradhan Mantri Garib Kalyan yojana and it was valued ₹2.76 lakh crores, free food grains to 800 million people, free cooking for over 80 million farmers and money to the elders, farmers, the poor and the needy.

Atma Nirbhar Bharat Package:-

Our government is trying to reset the economy and give resource & benefits to the poor. The Atma Nirbhar Baharat Yojana and PM Garib Kalyan Yojana are two subsequent announcements so these two are mini five budgets in themselves. The finance minister announced the Atma Nirbhar Bharat Package and two more packages, all it was about 27.1 lakh crores.

India has two vaccines and going to launch super soon and allocated 35,000 crores for covid-19 vaccine and this package amount to 13% of the gross domestic product (GDP).

Announcing the budget, Sitharaman said the Budget proposals for 2021-12 rest on six pillars including — Health & Well-Being, Physical & Financial Capital & Infrastructure, Inclusive Development For Aspirational India, Reinvigorating Human Capital, Innovation & R&D, Minimum Govt & Maximum Governance.

Health & Well-being Sector

In the Health Sector, the first scheme was newly launched named Atma Nirbhar Swatch Bharat Yojana and the Aim is to strengthen at the primary, secondary and tertiary sector. The scheme budget is an amount of ₹64,180 crores over 6 years and create new institutions, cure of new and emerging diseases. This is an addition to the national health mission. The main points in the scheme are under the 17,788 rural and 11,024 urban health centres, set public health units in 11 states, operationalization of public health units on 32 airports, 11 seaports and 7 land crossings and set 15 health emergency operation centre and 2 mobile hospitals and establish biosafety laboratories and virology. Strengthening of the national centre disease control its 5 regional branches and 20 metropolitan health surveillance units.

The Nutrition Poshan 2.0 mission has been highlighted as an integral part and the programmes had merge the nutrition programme and poshan Abhiyan in the umbrella of improving nutrition across 112 districts.

The WHO is repeatedly the importance of clean water, environment, sanitization facilitates to achieve good health. The Jal Jeevan Mission will be launched with the Aim of clean water supply in all local urban bodies 4,378 local bodies with 2,86  crores as well as liquid waste management in 500 AMRUT cities with an outlay of  ₹ 2,87,000 crores.

Swachh Bharat, Swasth Bharat

Its focus on complete the sludge management and water treatment, segregation, garbage, non-use of plastic, reduce the air pollution effectively managing and biodegrade the waste. The Swachh Bharat mission total allocation of  ₹ 1,41,678 over a period of 5 years from 2021-2026. To tackle the problem of clean air union, provide a number of  ₹ 2,217 crores for 42 urban centres with a million population.

The vehicle scrapping policy to phase out old and unfit vehicles. This action will encourage fuel-efficient, environment friendly and reduce the oil. Vehicular pollution and import bill. The vehicles will undergo a fitness test in centres if 20 years to personal and 15 years to commercial, Child death rate is 50,000 annually. Once the policy approved, India will become an automobile hub and reduction will be in automotive sector. The pneumococcal vaccine, product made in India and Union provided 35000 crores for COVID-19 vaccines for the further fund. The budget is 2,23,846crores and an increase of 137 precent.

Physical & Financial Capital & Infrastructure

The government is prepared to facilitate and “economic result” in India. The Physical and Financial Capital and Infrastructure the reinvigorating human capital and innovation, union minister total financial package is estimated about 27.1 crores with more than 13% of GDP. The manufacturing sector is growing in double digits on a sustained basis. This is an important part of supply chains and achieves all, PLI schemes to create global manufacturing units for an Atmanirbhar Bharat announced in 13 sectors. Government is committed ₹ 1,97lakh over 5 years and this will bring jobs to our youth.

The textile industry competitive globally and 7 textile parks will be established in 3 years.

1. The most important unit is the infrastructure:

2. The national infrastructure pipeline (NIP) announced in 2019 with 6835 projects, the project is now expanded by value of ₹ 1.10  crores. This requires significant funding in both government and financial sector in three ways: firstly, by creating an institutional structure secondly, through the the big push of monetizing assets and last by enhancing the share capital of centre and state spending.

3. The Infrastructure needs financing and act as provider, facilitator and provided the sum of ₹ 20,000 crores. To capitalize the institution.

4. Monetizing public assets is a very important financing option for new infrastructure. The national infrastructure dashboard will be created for tracking the process to provide visibility to investors. NHAI & PGCIL will take lead in this. Transmission assets worth ₹7,000 crores will be transferred to PGCIL. Railways will monetise dedicated to the freight corridor assets. The next batch of the airports will be monetised for operation and management. Central Warehousing Corp, sports stadiums will also be monetised, she said.

5. The finance minister proposed a steep hike of 34.5% in capital expenditure to ₹ 5.54lakh crores to the growth of the country. Additional ₹ 2 lakh crores for capital expenditure over and above its own commitment.  Y21 Capital expenditure at ₹ 4.39 lakh crores; 3500 kms of national highway works in Tamandu with an investment of ₹1.03 lakh  crores, 1500 kms of national highway road in Kerala at a cost of ₹ 65,000  crores

6. An enhanced outlay of ₹ 1.18 lakh crores for the Ministry of Road Transport and Highway. 702 km of metro rail already operation in 26 cities 1016 km in the works.

7. Eastern and western dedicated freight corrido ₹ to be commissioned by June 2022.

8. Power distribution: Consume ₹ have choice of quite more than one distribution company; share of conveyance to be enhanced with an outlay of ₹ 18,000 crores.

9. 10) The DFI is activated to be capitalized with ₹ 20,000 crores and is expected to have a lending portfolio of at least ₹ 5 lakh crores within three years’ time

10. Ujjwala Scheme is going to be extended to hide 1 cr more beneficiaries, will add 100 more districts to urban gas distribution network.

11. 7 port projects to be offered in private-public partnership mode, plan to support Indian shipping cost with subsidy.

12. Allocation of ₹ 1,000 cr to Solar Energy Corporation of India.

13. Corporate bond market: Permanent institutional framework to be put in place to purchase investment-grade papers.

14. start of Hydrogen energy mission generation using clean sources

15. allow depositor of stressed banks to access up to ₹ 5 lakh as per DICGC; small companies. The threshold for paid-up capital rose as much as ₹ 2 crores.

The financial capital in order to consolidate the provisions of the SEBI act, 1992 and all the related acts the government would support the development of world-class FIN-TECH HUB at the gift-Ifsc. The participants in the corporate market will boost the confidence of investors during the time of stress an enhance the liquidity and SEBI will be notified as a regulator and development authority of the company to boost this union minister provide ₹1000 crores to Indian solar corporation and ₹1500 crores to Indian renewable energy development agency.

1. The increase in FDI from the insurance limit from 49% to 74% in insurance companies and allow the foreign ownership and control with safeguards.

2. Under this the majority of directors with at least 50% Indians resident and being independent directors.

3. The public sector banks will clean up the books and be established to consolidate and take over stressed debt manage and dispose the assets for funds.

4. The recapitalization of public sector banks ₹20,000 crores to proposed in 2021-22.

5. The improvisation in credit facility for small borrowers for NBFCS With a minimum asset size of₹100   crores and the loan size are eligible for recover under the securitization and reconstruction of financial assets of (SARFAESI)act, 2002 is reduced from the existing level of ₹ 50 lakhs to ₹ 20 lakhs.

The ministry of finance decriminalises the procedure and crime under the companies act 2013, now complete, Nirmala Sitharaman revises the definition for small companies by increasing their paid-up capital from “not to exceeding Rs. 50 Lakh” and “not exceeding Rs. 2 crores” and turnover from “not exceeding Rs.  2 crores” to “not exceeding Rs. 20 crores. This benefit more than two lakh companies.

1. The one person companies to incentivize allowing them to grow their conversion into any other business at any time and reduced the residency limit from 182 days to 120 days and allow NRI to incorporate in India.

2. Make sure cases are resolved quickly by NCLT.

3. The estimated disinvestment of ₹1,75,000  crores in 2021-22

4. Extend the treasury single account (for actual expenditure and cost) application from 2021-22, this consolidates the outlays for better impact.

 Inclusive Development for Aspirational India:

Agriculture

1. Our government is especially inclined towards the farmers and agricultures the endured MSP at minimum 1.5 times of costs all goods.

2. SAMITVA program to be extended to all the states / uts. 1.80 lakh property owners and provided cards to the villagers

3. Agriculture credit target enhanced to ₹16.5   crores in FY22-to all fisheries, animal husbandry dairy etc.

4. To double the micro fund to ₹10000 crores.

5. Rural infrastructure fund was increased from 30,000   crores to ₹ 40,000   crores.

Fisheries:

1. The Finance Minister proposed substantial investments in the development of modern fishing harbours and fish landing centres.
2. To start with 5 major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghatare to be developed hubs of economic activity
3. Multipurpose Seaweed Park in Tamil Nadu to promote seaweed cultivation

Migrant Workers and Labourers

• Government has launched the One Nation One Ration Card scheme which allow beneficiaries to claim their rations anywhere in the country.
• One Nation One Ration Card plan is under implementation by 32 states and its, reaching about 69  crores beneficiaries – that’s a total of 86% beneficiaries covered.
• The remaining 4 states and utilities will be integrated in the next few months.
• Government proposes to conclude a process that began 20 years ago, with the implementation of the four labour codes.
• For the first time globally, social security benefits will extended to gig and platform worker. Minimum wages will apply to all categories of workers, all of these are covered by the Employees State Insurance Corporation.
• Women will be allowed to work in all categories and also in the night-shifts with adequate protection.
•  At the same time, the compliance burden on employers will be reduced with a single registration and licensing, and online returns.

Financial Inclusion

For the SC, ST and WOMEN reduced the margin money requirement from 25% to 15% for loan and agriculture. The major steps to the MSME sector and budget provided is ₹15,700   crores.

Reinvigorating human capital:

1. The Finance Minister recently announced National Education Policy (NEP) announced recently has had good reception while adding that more than 15,000 schools will be qualitatively strengthened to include all components of the National Education Policy.

2. She also announced that 100 new Sainik Schools will be set up in partnership with NGOs/private schools/states.

3. Higher Education Commission of India: The Minister also proposed to set up a Higher Education Commission of India, as an umbrella organisation with 4 separate vehicles for standard-setting, accreditation, regulation, and funding.

Creation of formal umbrella structure to cover all Govt. Colleges, government research institutions, universities in a city for greater synergy:

1. For accessible higher education in Ladakh, the Government proposed to establish Central University in Leh.

2. Scheduled Castes and Scheduled Tribes Welfare:

3. Government has set a goal of establishing 750 Eklavya model residential schools in tribal areas with an increase in the unit cost of these school from ₹20  crores to ₹ 38  crores, and for hilly and difficult areas, to ₹ 48  crores.

4. Similarly, under the revamped Post Matric Scholarship Scheme for the welfare of Scheduled Castes, the Central Assistance was enhanced and allocated ₹ 35,219  crores for 6 years till 2025-2026, to benefit four  crores SC students.

Skilling:

1. An initiative is underway, in partnership with the United Arab Emirates (UAE), to benchmark skill qualifications, assessment, and certification, accompanied by the deployment of certified workforce.

2. The Government also has a collaborative Training Inter Training Programme (TITP) between India and Japan to facilitate the transfer of Japanese industrial and vocational skills, technique, and knowledge and the same would be taken forward with many more countries.

3. The proposed amendment to Apprenticeship Act to enhance opportunities for youth.

4.  ₹3000   crores for realignment of existing National Apprenticeship Training Scheme (NATS) towards a post-education apprenticeship, training of graduates and diploma holders in Engineering.

Innovation in R & D, the national research foundation

the outlay will be ₹ 50   crores over 5 years. There has been a manifold in digital payments this will boost digital transactions. A new initiative will be taken by the government in which anything topic-related knowledge on the internet will be available in all languages. The new space India limited will execute the PSLV -CS51 from brazil, along with a few smaller Indian satellites. Our oceans of living and non-living resources will launch a mission in the depth of ocean with a budget outlay of more than ₹4000 crores. This mission will cover a deep survey of marine biodiversity.

Minimum governance, maximum governance

The number of reforms already adopted for the speedy trials and delivery of justice proposes to rationalize the functioning of tribunals. Introduced the national commission for the allied healthcare bill in parliament to ensure transparent and efficient regulation. Granted ₹300   crores to goa golden jubilee for celebrations. Union minister proposed  ₹1000   crores for the welfare of tea workers especially in Assam and West Bengal

Let’s come to the second part of the speech:

Indirect tax :

1. The Corporate tax rate reduced to make it one of the most lowest in the world.

2. Tax burden on small taxpayer relieved by increasing refunds.

3. Return file ₹ almost doubled to 6.48 crores in 2020 from 3.31 crores in 2014

4. Faceless Assessment and Faceless Appeal were introduced.

Senior citizens

Exclusion from recording expense forms for senior residents more than 75 years old and having just annuity and premium payment; it must be deducted through the bank payment.

Reduction in time for income tax proceedings:

The assessment can be reopened and time limit reduced from 6 year to 3 years in serious tax fraud cases up to 10 years.

Setting up the dispute resolution committee:

The government came out with the direct tax Vivad Se Vishwas to give taxpayers an opportunity to resolve pending disputes. The 1 lakh 10 thousand taxpayers have been opted this and settle tax dispute for over ₹ 85,000   crores this scheme.

The eligible one can approach the committee whose taxable income up to ₹ 50 lakh and disputed income up to ₹10 lakh.

Faceless ITAT Centre:

Income Tax Appellate Tribunal to become Faceless where personal hearings will be conducted through Video Conferences. There is Only electronic communication will be done.

Dividend Tax

The dividend is exempt from TDS. The input tax liability on dividend income will arise only after declaration of dividend has been declared.

Tax Audit Limit

Tax Audit Limit to be increased to ₹10   crores from  ₹5   crores for those having less than 5% cash transactions.

Attracting foreign investment into the infrastructure sector

Earlier, union granted 100% tax exemption but now in order to allow funding of infrastructure issue zero-coupon bonds and eligible to raise funds by issuing tax-efficient zero-coupon bonds.  

Affordable Housing

Additional Interest deduction (Sec 80EEA) of ₹1.5 lakhs to be extended for loans taken till 31st March 2022. Affordable Housing Projects – Tax Holiday extended till 31st March 2022.

Pre-filled Income Tax Return

It will have pre-filled data on Dividend, postal interest income, salary etc. Details of Capital Gains, Dividend Income and Interest income will be pre-filled in the returns.

Relief to Trusts

Relief to Charitable trusts running Hospitals and Educational Institutions relief increased from  ₹1  crores to  ₹5  crores.

EPF Employee Contribution

Late deposit of employee contribution of PF will not be allowed as deduction.

Start-up Benefits

Tax holiday for Start-Ups extended to 31st March 2022. Capital Gains exemption on investment in start-ups also extended to 31st March 2022.

In custom act, 1962:

The revised custom duty is structured manner is proposed to be free from bias.

New customs duty exemption will validity up to 31st march following two years GST:

The indirect tax proposals, the GST is now four years old. Some of the measures include:

1. Nil return through SMS,A quarterly return and monthly payment for small taxpayers.

2. Electronic invoice system,

3. Validated input tax statement,

4. Pre-filled editable GST return, and

5. Staggering of returns filing.

Electronic and mobile phone industry:

This industry is growing rapidly, there is a greater value of addition in the part of charges and sub-parts of mobiles phones ‘nil to moderate 2.5%.

Iron and steel:

MSM and other industry need a recent sharp rise in iron and steel. Therefore the custom duties are reduced uniformly to 7.5% on semi-flat and non-alloy and stainless-steel. Reduced the copper scrap from 5% to 2.5%.

Textile:

This sector generates more employment and contributes states, there is a need for raw material. The nylon chips, fibre and yearn are 5% and this will help MSME too.

Chemicals:

The custom duty reduced to 2.5%

Gold and silver:

Gold and silver attract a basic customs duty of 12.5%. Since the duty was raised from 10% in July and now to bring closer to previous levels union rationalize custom duty on gold and silver.

Renewable energy:

This is huge promise to India to build domestic capacity in manufacturing of solar panels and cells and currently, it is currently 5% to 20% on inverters and 5% to15% in flashlights.

Capital equipment and auto parts:

In India, there is immense potential in manufacturing heavy capital equipment and propose the withdraw exemptions on tunnel boring machine with attach customs duty of 7.5% and at par 15%

MSME products:

Nirmala Sitharaman made a provision of  Rs.15,700 crores for the micro small, medium enterprises more than the double previous year.

Agriculture products;

For the benefits of farmers, the customs duty has been raised from nil to 10% on raw silk and silk yarn from 10% to 15 5. Currently rates are being calibrated to 155 on items like maize, bran, oil and animal feed activities. She immediately needs to improve the agriculture infrastructure to produce more and process more output efficiently.

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Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Author: Sakshi Jain – College-St. Wilfred college of law- Date:4^th Feb. 2021