Who gets what? Key Highlights of Union Budget 2021-22

Amid the path for recovery from the most traumatic COVID 19 pandemic and the lockdown being carved, the Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman presented the Union Budget 2021 on 1st February 2021. Let’s have a look at the Key highlights or Key takeaways from the Union Budget 2021-22.

The Key Highlights of Union Budget 2021 shows that it happened for the first time in a decade that the budget kept the direct taxes unchanged. The Finance Minister presented that the government is proposing to provide a package totalling Rs. 27.1 lakh crore to deal with COVID-19 pandemic aftermath under the Aatmanirbhar Package. She also said that the Aatmanirbhar package has accelerated the structural reforms across the country. Further, she stated that India has started the nation-wide vaccination programme which is the largest in the world.

The key highlights on the Union Budget 2021-22 presented on 1st February, 2021

Six pillars of the Budget proposals for 2021-22

• Health and well-being
• Physical and financial capital and infrastructure
• Inclusive development for aspirational India
• Reinvigorating human capital
• Innovation and R&D
• Minimum government and maximum governance

Estimation for the financial year is as follows

• Fiscal deficit target is set at 6.8% of GDP for FY 2021-22.
• Expectations are set to get back on the fiscal consolidation path by FY 2026.
• Gross expenditure estimated at Rs. 34.83 lakh crore FY 2021-22.
• For FY 2021-22 capital expenditure provided is up by 34.5% at Rs. 5.54 lakh crore, for FY 2020-21 capital expenditure is seen at Rs. 4.39 lakh crore.
• Rs. 44,000 crores under capital expenditure will be given to the Department of Economic Affairs in FY22.

No change in tax, Relief for seniors, small taxpayers

• No change in Direct taxes.
• However, relaxation has been granted for the senior citizens.
• The tax burden on senior citizens above 75 years has been reduced.
• Pensioners over 75 years of age are exempt from filing the Income Tax Returns.
• Advance tax liability on dividend income will arise only after payment of the dividend.
• Anyone with a taxable income of up to Rs 50 lakh, disputed income of up to Rs 10 lakh eligible to approach dispute resolution committee.
• To ease the compliance for taxpayers the details of capital gains from listed securities, dividend income, and interest income will also be pre-filled in tax forms.
• The aircraft leasing companies have given exemption from tax.
• The Government proposes tax audit limit for NRIs to be increased from Rs. 5 crores to Rs. 10 crores.

Provident Fund Tax

• The interest earned by the Provident Fund contributions above Rs 2.5 lakh a year will now be taxed at the normal rates.
• This will only apply to the employee’s contribution and not that of the employer.
• It will hit high-income salaried people who use the Voluntary Provident Fund to earn tax-free interest.

Customs duty structure- Revised

• The new and revised custom duty structure will be applicable from 1st October
• The new structure will be free of any distortion
• Also, the Government is planning to reduce customs duty uniformly to 7.5% on products of non-alloy, alloy and stainless steel, exempting duty on steel scrap till March 2022.

The following are a few areas where custom duty rate has been revised:

Budget for the Healthcare sector

• The allocation of healthcare in this budget has been increased substantially.
• The allocation is proposed to be around Rs 2,23,846 crore, a 137% percentage rise from the previous budget.
• Health outlay to be used to establish critical care units and hospital blocks.
• Rs 64,180 crore spending plan announced for healthcare over the next six years.
• Rs 35,000 crore is the target budget for Covid-19 vaccines.
• India has two COVID vaccines. Fight against COVID 19 continues in 2021 as well.

One-person companies

• The government plans to allow incorporation of one person companies with no restriction on paid-up capital and turnover.
• Non-resident Indians will also be allowed to incorporate one-person companies in India, the FM added.
• For the purpose of the conversion of the one-person company to any other kind of business structures, the residency limit has been reduced from 182 days to 120 days.

New threshold limit of Small Companies.

• The companies will be under the purview of small companies as per the new threshold limit as per the new definition.
• FM increased the threshold limit for capitalization from not exceeding Rs 50 lakh to not exceeding Rs 2 crore and turnover not exceeding Rs 2 crore to not exceeding Rs 20 crore.

Roads, Highways and Railways

• An allocation of Rs 1,10,055 crore to be made for building the railway infrastructures.
• The eastern and western dedicated freight corridors is targeted to be commissioned by June 2022.
• The east coast corridor, east-west corridor, north-south corridors have also got a place in Budget 2021.
• 100% electrification of broad-gauge routes is targeted to be completed by December 2023.
• As far as highways are concerned,  projects for building 8,500 km of highways will be awarded by March 2022.
• Also, West Bengal will see highway projects worth Rs 25,000 crore.

MSME allocation

• The FM proposed doubling of MSME allocation, setting aside Rs 15,700 crore for medium and small enterprises in the Financial year 2021-22.
• Also, Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs under the Aatmanirbhar Bharat Abhiyan package has been allocated.

Agricultural credits and Textile parts

• The Budget set agriculture credit target of Rs 16.5 lakh crore for Financial Year 2021-22 and will further increase provision to a rural infra development fund to Rs 40,000 crore from earlier Rs 30,000 crore.
• Also, the five fishing harbours will be developed as hubs for economic activity.
• Finds for Micro-irrigation corpus also doubled to Rs 10,000 crore- agriculture infra fund will be made available to APMCs.
• India will set up seven textile parks over three years under the scheme of mega investment textile parks which was announced in Budget FY22.
• Rs 10,683-crore production linked incentive (PLI) scheme for technical textiles and man made fibres.

LIC IPO

• A plan is set out to privatize 2 PSU banks and one general insurance company in Financial Year 2021-22.
• The Government will bring the long-awaited LIC IPO in 2021-22.

Ujjwala Scheme to reach more people

• Ujjwala scheme proposed to be expanded to cover over 1 crore more beneficiaries.
• The gas distribution network of providing CNG to automobiles and piped cooking gas to households will be expanded to 100 more districts.

Allocation of Funds to various sectors and programs

• The Department of Space has been allocated Rs 13,949 crore in this Budget, of which Rs 8,228 crore have been earmarked for capital expenditure. Rs 700 crore has been allocated for the New Space India Limited (NSIL), a newly formed PSU under the Department of Space.
• A total of Rs 39.67 crore has been allocated to the Lokpal for the next fiscal, as per the Union Budget 2021-22.
• Rs 1,000 crores for the welfare of tea workers especially women and their children in Assam and West Bengal
• The Centre has allocated about Rs 1,66,547 crore to the Ministry of Home Affairs for 2021-22 fiscal with a majority of the funds going to the police forces.
• Rs 30,757 crore has been allocated to two newly created Union Territories Jammu and Kashmir and Rs 5,958 crore for Ladakh.
• The Government is also going to notify rules to eliminate the double tax for NRIs on foreign retirement funds.
• Rs 44,000 crore under capital expenditure will be given to the Department of Economic Affairs.
• The Govt plans to allot Rs 20,000 crore for bank recapitalization of PSBs.

Mixed reviews are coming in for the Budget 2021-22. However, the market definitely welcomed the Budget presented by Finance Minister Nirmala Sitharaman on 1st February 2021.