Finance Minister Nirmala Sitharaman presented the Union Budget 2021 Today i.e 1st February 2021.
For the first time, our budget is digitised.No more endless paper prints. The traditional ‘bahi khata’ gets replaced by a Made in India tab, said FM Nirmala Sitharaman.
FM Nirmala Sitharaman provided a major boost to healthcare and infrastructure in Union Budget 2021. However, there was No significant change made in the area of income tax.
Budget 2021 proposals rest on six pillars :
- 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.
Below are the key highlights of Union Budget 2021 :
- Nation First Vision :
- Doubling Farmer’s Income,
- Strong Infrastructure,
- Healthy India, Good
- Opportunities for Youth,
- Education for All,
- Women Empowerment, and
- Inclusive Development, among others.
- Urban Swachh Bharat Mission 2.0 : To ensure ‘swachhta’ in India, Finance Minister Nirmala Sitharaman has introduced Swachh Bharat 2.0 which will be implemented with a total financial allocation of Rs 1,41,678 crores over a period of 5 years from 2021-2026.Government will focus on complete fecal sludge management. Apart from this, wastewater treatment, segregation of garbage, reduction in single use plastics, reduction in air pollution by managing waste from construction sites and demolition activities along with bioremediation of all legacy dump sites will be taken into consideration.
- PM Atmanirbhar Swasth Bharat Yojana : Will be launched with an outlay of Rs 64,180 crore over 6 years to develop capacities of health care systems, develop institutions for detection and cure of new and emerging disease – Support for Health and Wellness Centres, Setting up Integrated Public Health labs in all districts, Critical care hospital blocks, and Strengthening of NCDC. The main interventions under the scheme are :
- Support for Health and Wellness Centres,
- Setting up Integrated Public Health labs in all districts,
- Critical care hospital blocks, and
- Strengthening of NCDC (National Centre for Disease Control)
- Mission Poshan 2.0 : Supplementary Nutrition Programme and POSHAN Abhiyaan to be merged, Mission POSHAN 2.0 to be launched, To strengthen nutritional content, delivery and outcome, Intensified strategy for improving nutritional outcomes in aspirational districts
- Jal Jeevan Mission : Jal Jeevan Mission gets outlay of Rs 2,87,000 crore
- Air Pollution : To tackle the problem of air pollution provision of Rs 2,217 crore is made for 42 urban centres with a million-plus population.
- Vaccines :
- The Budget outlay for Health and Wellbeing is 2,23,846 crores.
- Centre to provide Rs 35,000 crore for Covid-19 vaccination
- The Pneumococcal Vaccine, a Made in India product, is presently
limited to only 5 states will be rolled out across the country. This will avert
more than 50,000 child deaths annually
- Scrapping Policy : A voluntary vehicle scrapping policy,to phase out old and unfit vehicles. This will help in encouraging fuelefficient, environment friendly vehicles, thereby reducing vehicular pollution and oil import bill. Vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles.
- Textile : A scheme of mega investment textile parks will be launched. 7 mega textile parks will be launched in three years as part of the scheme. The mega textile parks will have integrated facilities and quick turnaround time for minimizing transportation losses, eyeing big-ticket investments in the sector.
- Infrastructure financing – Development Financial Institution (DFI) : Rs 20,000 crore will be provided to capitalise the new DFI, with an aim to have a lending portfolio of Rs 5 lakh crore in 3 years.
- 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.
- Fiscal deficit : FM 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.
- Roads and Highway Infrastructure :
- Allocation of Rs 25,000 crore road projects in West Bengal, Rs 65,000 crore for road, highway projects in Kerala, and 3,400 crore for Assam
- More than 13,000 km length of roads, at a cost of 3.3 lakh crores, has already been awarded under the 5.35 lakh crores Bharatmala Pariyojana project of which 3,800 kms have been constructed.
- By March 2022, we would be awarding another 8,500 kms and complete an additional 11,000 kms of national highway corridors.
- Railway Infrastructure :
- Indian Railways have prepared a National Rail Plan for India – 2030. The Plan is to create a ‘future ready’ Railway system by 2030.Indian Railways gets 1,10,055 crore – Out of the total, Rs 1,07,100 crore will be provided for capital expenditure in 2021-22
- The Sonnagar – Gomoh Section (263.7 km) of Eastern DFC will be taken up in PPP mode in 2021-22. Gomoh-Dankuni section of 274.3 km will also be taken up in short succession.
- Future dedicated freight corridor projects namely East Coast corridor from Kharagpur to Vijayawada, East-West Corridor from Bhusaval to Kharagpur to Dankuni and North-South
corridor from Itarsi to Vijayawada. Detailed Project Reports will be undertaken in the first phase.
- Broad Gauge Route Kilometers (RKM) electrified is expected to reach 46,000 RKM i.e., 72% by end of 2021 from 41,548 RKM on 1st Oct 2020. 100% electrification of Broad-Gauge routes will be completed by December, 2023.
- Increasing FDI in Insurance Sector : Foreign Direct Investment (FDI) in the insurance sector will be increased from 49% to 74%.
- Recapitalization of PSBs : To further consolidate the financial capacity of PSBs, further
recapitalization of 20,000 crores is proposed in 2021-22.
- LIC IPO : The FM announced plans to privatise 2 PSU banks and one general insurance company in FY22. The Govt will bring the long-awaited LIC IPO in FY22, adding that it plans to complete the divestments of BPCL, CONCOR and SCI in 2021-22.
- Power Distribution : The government will enable electricity connections portability to consumers by introducing competition in the power distribution space and kickstart a Rs 3 lakh crore reforms scheme for state power distribution companies, finance minister Nirmala Sitharaman announced.
- MSME allocation : The FM proposed doubling of MSME allocation, setting aside Rs 15,700 crore for medium and small enterprises in FY22.
- Agriculture : The Government of India is committed to the welfare of farmers. The MSP regime has undergone a change to assure price that is at least 1.5 times the cost of production across all commodities,
- Migrant Workers and Labourers : One Nation One Ration Card plan is under implementation by 32 states and UTs, reaching about 69 crores beneficiaries – that’s a total of 86% beneficiaries covered. The remaining 4 states and UTs will be integrated in the next few months.
- School Education : 100 new Sainik Schools will be set up in partnership with NGOs/
- Big Borrowing : FM Sitharaman said govt will borrow Rs 80,000 crore in the remaining two months to meet FY21 expenditure, and is projected to borrow about Rs 12 lakh crore in FY22
- Disinvestment Target : Disinvestment target for FY22 at Rs.1.75 lakh cr. Asking Niti Aayog to work on the next list of PSU because that could be taken up for disinvestment.
- Direct Tax :
- Relief to Senior Citizens : 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.
- Faceless resolution : The Budget proposes setting up faceless dispute resolution committee for individual tax payers, making Income Tax Appellate Tribunal faceless, and constituting the dispute resolution committee for small taxpayers.
- Relaxation to NRI : To notify rules for removing their hardship of double taxation.
- Exemption from Audit : Increase in limit of tax audit from 5 Cr to 10 Cr for those who carry out 95% of their transactions digitally.
- Pre-filling of returns : In order to ease compliance for the taxpayer, details of salary income, tax payments, TDS, etc. already come pre-filled in income tax returns. To further ease filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also be pre-filled.
- Incentives for Start-ups : In order to incentivise start-ups in the country, eligibility for claiming tax holiday for start-ups ir increased by one more year – till 31st March, 2022. Further, in order to incentivise funding of the start-ups, the capital gains exemption for investment in start-ups is extended by one more year – till 31st March, 2022.
- Reduce time limit for reopening of tax assessment : to 3 years from present 6 years.
- Advance Tax on dividend : To accrue only after it is declared.
- Indirect Tax :
- GST : GST Council to take every possible measure to smoothen the GST further, and remove
anomalies such as the inverted duty structure.
- Custom Duty Rationalization : 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%.
- Electronic and Mobile Phone Industry : For greater domestic value addition, Government is withdrawing a few exemptions on parts of chargers and sub-parts of mobiles. Further, some parts of mobiles will move from ‘nil’ rate to a moderate 2.5%.
- Iron and Steel : Reduction in Customs duty uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels. Exemption of duty on steel scrap for a period up to 31st March, 2022. Reduction of duty on copper scrap from 5% to 2.5%.
- Textile : Reduction in the BCD rates on caprolactam, nylon chips and nylon fiber & yarn to 5%. This will help the textile industry, MSMEs, and exports, too.
- Chemicals : Reduction of customs duty on Naptha to 2.5% to correct inversion.
- Gold and Silver : Rationalization of custom duty on gold and silver.
- GST : GST Council to take every possible measure to smoothen the GST further, and remove
- Affordable housing is a priority area Rs1.5 lakh for loans to purchase affordable house is now extended by one more year.
- Decriminalisation under LLP Act Small Company definition changed, One Person Company revamped will be Big Boost to Startups.
- Introduce Investor Charter as a right of all investors across financial instruments.
- The total estimate of all relief measures announced by govt & RBI so far is Rs 27.1 lakh cr (13% of GDP) in Covd19.
- Forthcoming census will be a digital census, allocating Rs 3768 crores for the exercise.
- Govt proposes to amend apprenticeship law to enhance opportunities for youth.
- Contingency Fund of India corpus to be raised to Rs 30,000 crore.