No relief for salaries people, senior citizens exempted from tax
Finance Minister Nirmala Sitharaman presented the Union Budget 2021 on Monday noon. It is touted as one of the most significant in recent memory, given the economic situation of the country due to the COVID-19 lockdown.
No major announcements were made for the Direct Tax front during the 1 hour and 50 minutes speech, which is both the bad news and good news for the salaried class. The FM said capital expenditure would be increased to Rs 5.54 lakh crore, a 34 per cent increase from the last year’s budget. The FM proposed doubling of MSME allocation, setting aside Rs 15,700 crore for small and medium enterprises in the financial year 2021-22. Minimum wages now won’t apply to all categories of workers and women will be allowed to work in all categories.
Here are the highlights of the Union Budget 2021.
Finance Minister Nirmala Sitharaman outlined 6 pillars of proposals to strengthen the vision of self-reliance, namely health and wellbeing, inclusive development, capital and infrastructure, innovation and R&D, reinvigorating human capital, and minimum government and maximum governance.
The government has increased allocation to healthcare to Rs 2,23,846 crore, a 137 per cent rise from the previous budget. A total of Rs 35,000 crore has been dedicated to the vaccination process for the COVID-19. The area of focus will be preventive and curative healthcare along with well-being.
The government is set to introduce a DFI (Development Financial Institution). The FM announced Rs 20,000 crore for DFI, which aims for a portfolio of 5 lakh crore in 3 years. Nirmala Sitharaman proposed 3 steps for the National Infrastructure Pipeline, which involves monetizing assets, creating institutional structures, and enhancing the share of capex in central and state budgets.
Highway Projects allocation
The government will award projects for building 8,500 km of highways by March 2020. Nirmala Sitharaman also added that the poll-bound West Bengal will see highway projects worth Rs 25,000 crore.
The government has set an agriculture credit target of Rs 16.5 crore for the financial year 2021-22. The government will also increase rural development fund to Rs 40,000 crore from the earlier Rs 30,000 crore. The finance minister said that the NDA government is committed to the welfare of farmers, pointing that 1.54 crore farmers benefited from MSP in wheat and paddy in the financial year 2020-21. She also underlined that Rs 75,060 crore was paid to wheat farmers in the year 2020-21, which was Rs 62, 802 in FY 2019-20.
The Govt sees fiscal deficit at 6.8 per cent in the upcoming financial year, while it had pegged for a deficit of 3.5 per cent for the FY 2020-21 in the last Budget.
74 per cent FDI in Insurance companies
FM Nirmala during her 110 minutes long speech, proposed to consolidate provisions of the Sebi Act, Government Security Act, Securities Contracts Regulation Act and Depositories Act. FDI limit in insurance has been increased to 74 per cent from the earlier 49 per cent, hence allowing foreign ownership.
Rs 1.07 lakh crore from the total Rs 1,10,055 crore, is for capital expenditure in the Railway sector for the upcoming financial year. She announced that dedicated freight corridors will be commissioned by June 2022. A new plan for the east-west corridor, the east coast corridor and the north-south corridor were also announced. 100 per cent electrification of broad-gauge routes is expected to be completed by the end of 2023.
FM Sitharaman announced plans to privatise 2 PSU (Public Sector Unit) banks and 1 general insurance company in the financial year 2021-22. LIC IPO will be finally brought and there would be disinvestments of SCI, BPCL and CONCOR in FY 22.
The government plans to allow incorporation of one-person companies (earlier two people were required for one company) with no restriction on turnover and paid-up capital. NRIs will also be allowed to incorporate one-person companies in the country.
Deep Ocean Mission
India is looking to launch Deep Ocean Mission, for which Rs 4,000 crore has been allotted over the next four years.
Tax relief for seniors, small taxpayers
In a big relief for senior citizens, the FM announced that the compliance burden will be reduced for senior citizens of 75 or above years of age. Those senior citizens who have only one pension and interest scheme will be exempted from filing income tax returns. Small taxpayers (taxable income of up to Rs 50 lakh and dispute income of up to Rs 10 lakh) would be eligible to approach dispute resolution committee.
Revised customs duty structure
The government will put a revised custom duty structure free of any distortions by reviewing more than 400 old exemptions to custom duty. It also plans on reducing customs duty uniformly to 7.5 per cent on products for alloy, stainless steel and non-alloy, exempting duty on steel scrap till March 2022. To provide relief to copper recyclers, the customs duty would be reduced to 2.5 per cent from earlier 5 per cent.
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