Finance minister Nirmala Sitharaman provided a major boost to healthcare and infrastructure in Union Budget 2021. However, there was no change in Income Tax slabs this year.

FM Nirmala Sitharaman has announced FDI limit in insurance increase to be increased to 74% from now existing 49%. The govt will also launch a Securities Market Code which will include SEBI Act, Govt Sec act, Depositories Act. SEBI will be notified as regulator for a gold exchange. FM said that the govt is proposing to strategically divest 2 PSU banks and 1 general insurance company. In 2021-22, this would also bring the IPO of LIC for which it will be bringing the requisite amendments in this session itself, she said. The govt will now also incentivize one-person companies. She added that the NCLT system will be strengthened, e-Courts will be adopted and alternate mechanism of debt resolution will be set up. She also announced decriminalisation of LLP Act.

On the farmers issue, The MSP regime has undergone a change to assure price that is at least 1.5 times the cost of production across all commodities.

On Jal Jeevan Mission For Urban sectors will be launched with an outlay of ₹ 2.87 lakh crore over 5 years which is aimed at universal water supply in all 4,378 urban local bodies, with 2.86 crore household tap connections and liquid waste management in 500 AMRUT cities. She also announced Urban Swachh Bharat Mission 2.0 with outlay of ₹ 1,41,678 crore over 5 years from 2021 focused on complete fecal sludge management, waste water treatment, source segregation, management of waste from urban construction, bioremediation of legacy dump sites.

For infrastructure Sector FM announced highway works in various states including 3,500 km corridor in Tamil Nadu, 1,100 km in Kerala at investment of Rs 65,000 crore, 675 km in West Bengal at a cost of Rs 95,000 crore and 1,300 km in Assam in the next 3 years. In May 2020, Govt announced the Atmanirbhar Bharat package, to sustain the recovery further we also rolled out two more Atmanirbhar packages. Total financial impact of all packages including measures taken by RBI was estimated to be about Rs 27.1 lakh crores on infrastructure.

For Railways Budget, the FM announced that Indian Railways will have a National Rail Plan for upto 2030. For aviation sector, FM said that the next lot of airports will be privatized in tier 2 and 3 towns and cities.

for health & well-being budget is increase up 138%, and is at Rs 2,23,846 crore. Govt has also allocated Rs 35,400 crore towards COVID vaccines for FY22 and is committed to more if required.

She said Modi govt is committed to achieving targets laid out under the national infrastructure pipeline. Ujjwala scheme will be expanded to over 1 crore more beneficiaries. We will add 100 more districts in the next three years to the city gas distribution network. A gas pipeline project will be taken up in Jammu and Kashmir.

ON DIRECT TAXES

Fiscal deficit

Sitharaman pegged FY21 fiscal deficit at 9.5% of GDP, with FY22 fiscal deficit target at 6.8% of GDP. Hope to get to back to fiscal consolidation path by FY26. Fiscal deficit will reach below 4.5% by FY26. FY22 gross expenditure seen at Rs 34.83 lakh crore.

Capital expenditure

FY22 capital expenditure provided is up 34.5% (vs FY21 BE) at Rs 5.54 lakh crore, said the Finance Minister. Rs 44,000 crore under capital expenditure will be given to Department of Economic Affairs in FY22, she added. FY21 capital expenditure is seen at Rs 4.39 lakh crore.

No tax change

The government has left direct taxes unchanged, but took steps in direct tax incentives to ease compliance for taxpayers. The FM proposed making it so that advance tax liability on dividend income shall arise only after payment of dividend. The Budget also looked at pre-filled tax forms with respect to details like salary income, tax payment and TDS.

Relief for seniors, small taxpayers

No tax filing for seniors above 75 with only pension, interest income. A dispute resolution committee for small taxpayers is being planned. Anyone with taxable income of up to Rs 50 lakh, disputed income of up to Rs 10 lakh eligible to approach dispute resolution committee.

NRI Boost

Government to notify rules to eliminate double tax for NRIs on foreign retirement funds

Tax Holiday extended

Govt to extend eligibility of erstwhile tax sop on home loan up to FY22. The FM also said that affordable housing projects can further avail tax holiday for one more year. The FM proposed extension of tax holiday for start-ups by one more year, a tax exemption for relocating funds to IFSC, and tax holiday for aircraft leasing business

Tax return filers almost doubled

She said that income tax return filers increased to 6.48 crore in 2020 from 3.31 crore in 2014.

Revised customs duty structure

Propose to review more than 400 old exemptions to customs duty, and from October 1 will put in place a revised customs duty structure free of any distortion, the FM said. Govt plans on reducing customs duty uniformly to 7.5% on products of non-alloy, alloy and stainless steel, exempting duty on steel scrap till March 2022. The FM added that to provide relief to copper recyclers, the govt will be reducing duty on copper scrap from 5% to 2.5%

Talking about GST, FM Sitharaman said that the government is focused to further ease the process. “Customs duty on copper scrap cut to 2.5 per cent. Customs duty on some auto parts to be raised to 15 per cent.”

OTHER SECTORS 

  • Reducing the rate of TDS on fees for technical services (other than professional services).
  • Sitharaman announced Rs 3.05 lakh crore outlay for the power sector and added that 100 more cities to be added in the next 3 years to the gas distribution network.
  • Coming to Jammu and Kashmir, Finance Minister Nirmala Sitharaman announced a new gas pipeline project for the state.
  • Rs 1,000 crore to solar energy corporation and Rs 1,500 to renewable energy development agency were also announced.
  • Also, as per the Budget 2021, the FDI in insurance sector proposed to be hiked to 74% from 49% now.
  • Government will support the development of a world-class fintech hub at GIFT and an investor charter will be introduced, said Sitharaman.
  • The FM announced further infusion of Rs 20,000 crore for public sector banks. “The government plans to sell part of its holding in Life Insurance Corporation of India through an initial public offering in the coming year. An amendment to the existing Act to facilitate the public offer.
  • National Education Policy also got mentioned in Sitharaman’s Budget speech. Asserting that the policy got a good reception, the FM said, “Over 15,000 schools to be qualitatively strengthened under National Education Policy.”
  • The Finance Minister announced a special scheme for welfare of women and children in Assam and West Bengal and Rs 1,000 crore for Bengal and Assam tea workers.
  • Agri infra cess has been imposed on several things including 100% on alcoholic beverages, 30% on kabuli chana, 10% on peas, 50% on bengal gram/chick peas, 20% on lentil (mosur); 5% on cotton,17.5% on crude palm oil, 20% on crude soyabean, sunflower oil, 2.5% on gold, silver and dore bars; 35% on apples; 5% on specified fertilizer; 1.5% on coal, lignite and peat.

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