Key Highlights of Union Budget 2021-22
Every eye was on the date of 1st February 2021, when our Finance minister Mrs. Nirmala Sitharaman will present the budget in the Parliament. The day has arrived and the main considerations are given to Healthcare and infrastructure sectors to give an impetus to the Covid hit economy.
Let us discuss some of the most important highlights of the Union budget 2021 –
Introduction of New Agri infra cess to be applicable from 2nd Feb 2021
- New Agri infra cess of Rs.2.5 per litre on petrol and Rs.4 per litre on diesel.
- New Agri infra cess of 2.5% on gold, silver and dore bars.
- New Agri infra cess of 17.5% on crude palm oil
- New Agri infra cess of 100% on Alcoholic beverages.
- Govt. decided to spend a total amount of Rs.64180 crore on primary, secondary and tertiary health care sectors over 6 years.
- The Budget of Rs.35000 crore for development and inoculation of Covid-19 vaccine in FY22. Two Covid-19 vaccines already available, two more to come soon.
- Setting up of 17,000 rural and 11,000 urban health and wellness centres.
- Setting up of integrated public health labs in each district.
- Govt. plans to introduce a bill to set up a development financial institution.
- Govt. proposal for new rationalised securities markets code.
- Govt. to allocate Rs.20000 crore for bank recapitalisation.
- NHAI and PGCIL to set up INVITs in order to attract funds globally.
- Govt. to spend Rs.1.1 lakh crore for the railway sector in FY22.
- Govt. to spend Rs.1.41 lakh crore for urban clean India mission.
- Govt. to invest Rs.1.18 lakh crore on the ministry of Road Transport and Highways.
- More airports to be privatised in the next lot for tier 2 and tier3 towns and cities.
- Govt. proposes Voluntary Vehicle Scrappage policy.
- National railway plan for 2030.
- Govt. to launch the faceless dispute resolution committee for small taxpayers.
- Senior citizens above 75 years of age with interest in being the only income source are exempted from filing IT returns.
- Tax deduction on the dividend at lower treaty rate for Foreign Portfolio Investors (FPI)
Minimum government, Maximum governance
- Govt. proposes modification in the definition of “Small companies”
- Govt. to raise the Foreign Direct Investment (FDI) permissible limit for insurance companies from 49% to 74%.
- No change in direct taxes.
- Advance tax liability on dividend income to arise only after the dividend payment.
- Ease in compliance for taxpayers, salary income details, interest and dividend income to also get pre-filled in the tax form.
- Extension in eligibility of provision for an additional deduction of Rs.1.5 Lakh.
- Tax exemption for aircraft leasing companies.
Copper and steel
- Duty reduction on copper scrap from 5% to 2.5%.
- Duty exemption of steel scrap for a specified period.
- Duty on some mobile parts rises from Nil to 2.5%.
- ADD and CVD to be revoked from certain steel products.
- MSME allocation to be doubled and will stand at Rs.15700 crore in FY22.
- Reduction in margin money requirement for start-ups from 25% to 15%.
- All category workers are now eligible for minimum wages.
- Extension of Social Security benefits to gig and platform workers.
- 2 PSU banks and one general insurance company to be privatised in FY22.
- Govt. to double the micro-irrigation corpus to Rs.10000 crore. Agriculture infra fund will be made available to APMC’s.
- Government planning to increase the “Provision to rural infra development fund” from Rs. 30000 crore to Rs.40000 crore.
- Setting up of new 5 major fishing harbours to be used as hubs for economic activity.
One Person company
- Non-residents Indians are now allowed to set up one-person companies in India.
- One person company conversion to any other business entity.
- Residency limit to be reduced from 182 days to 120 days.
- No restrictions to be put on paid-up capital and turnover for incorporating one-person companies.
- Increase in FDI limit of insurance companies from 49% to 74%.
- Foreign ownership to be allowed in insurance with safeguards.
- Extension of a scheme to cover 1 Crore beneficiaries.
- More 100 districts to be covered over the next 3 years for distribution of city gas.
- Setting up of an independent gas transport system operator.
Urban Clean India Mission
- Investment of Rs.1.41 lakh crore in urban Swachh Bharat 2.0 mission over 5 years.
- Investment of Rs.2.87 lakh crore in Jal Jeevan mission urban.
Public expectations from Union Budget 2021
Every eye was on the date of 1st February 2021, when our Finance minister Mrs Nirmala Sitharaman presented the Budget 2021 in the Parliament. The common man is undoubtedly looking up to the Modi’s Government for incentives, exemptions, tax reliefs and expecting a lot of other things in the upcoming budget 2021 to come out from the bad phase of 2020. Let us discuss the most important things that the Indian public is expected from this budget –
- Enhancing medical deduction limits – As we know that after facing Covid, people are now diverting towards health consciousness and want that government should also take some significant steps towards it. Limit enhancement to catch up the ever-increasing medical costs, raising the current limit deductions on tests, preventive treatments and health check-ups is the first and the foremost demand of the Indian public.
- Withdrawal of pre-closure of deposits and bonds – Withdrawals from provident funds attracts tax liability if an individual has not completed the tenure of 5 years in the company. Thus, the relaxation in tenure can be offered for the people who lost their jobs during the pandemic.
- Standard deduction for Work from home – As we know due to Covid, work from home is a new normal and the salaried class people have to spend an extra amount of money in fulfilling their requirements related to communication, infrastructure etc. It will be a welcome step if the government provides a standard deduction on such expenditures.
- Deduction enhancement for Income from house property – Due to Covid, we have seen a downward trend in demand for real estate and reduction in the landlord’s rental income. Also, it becomes difficult for the house-owners to spend on high maintenance in excess of the standard deduction of 30% allowed by the tax department. Thus, in order to provide support to the property owners, it is expected that the government should take a welcome step of increasing the standard deduction for at least 2 years.
- Allowing exemptions and tax reliefs in the new tax regime – We know that to avail benefit from reduced tax rates in the new tax regime, we have to forego exemptions and reliefs. Because of which many people are still following the old tax regime. Thus, people expect that the government should allow us to avail some tax reliefs and exemptions this time in the budget 2021.
- Tax benefit on purchase of a vehicle – We are already availing tax benefits on a home purchase (Tax benefit of Rs.2 Lakh on Loan interest, Rs.1.5 Lakh on Principal payment) and Electric vehicle (Tax benefit of Rs.1.5 Lakh on Loan interest). Now, common people expect the same tax benefit on purchasing two or four-wheelers. It will boost the demand for vehicles and auto sector as well.
- Increase the interest limit of Rs.2 Lakh on a home loan – In the year 2017, the government increased the interest limit of home loan from Rs.1.5 Lakh to Rs.2 Lakh but common people are not finding this enough as they are demoralising the investors. If the government increases this interest limit of Rs.2 Lakh under section 24, it will provide a tax benefit to the home buyers who are majorly purchasing the home for investment purposes and revive the real estate sector too.
- Increase the interest deduction limit for senior citizens under Section TTB – We know that the government reduced the interest rates and interest income is the only income source for senior citizens. Thus, senior citizens interest deduction limit should be increased from Rs.50,000 to Rs.1 lakh under section TTB.
We hope that the Indian public's expectations will be fulfilled in the budget 2021, and this blog will give you information about the several important decisions taken by the government in the Union budget 2021 for the people of India and help in planning your year ahead in the most efficient way.
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