Union Budget 2021 In Detail

Finance Minister Nirmala Sitharaman tabled the Union Budget for 2021-22 on February 01 emphasizing six pillars on which the budget rests.With the Sensex soaring up to 600 pts and Nifty reaching close to 13,800 before budget, the finance minister started with the Union Budget 2021 quoting Rabindranath Tagore in her speech.With a vision of building a Atmanirbhar Bharat, this year’s budget proposals are based on six pillars:

1. Health & Well-being
2. Physical and Financial Capital and Infrastructure
3. Inclusive Development for Aspirational India
4. Reinvigorating human capital
5. Innovation and R&D
6. Minimum Government and Maximum Governance

To allocate 2.2 trillion rupees ($30.20 billion) for healthcare in 2021/22. Taking a holistic approach to healthcare, this Union Budget 2021 will focus on three verticals: Preventive, Curative and Well-being.

• A centrally sponsored scheme PM AtmaNirbhar Swasth Bharat Yojana, will be launched with an outlay Rs 64,180 crore will be invested over 6 years to improve primary, secondary and tertiary healthcare to detect and cure new emerging diseases. The total budget outlay for healthcare is 2.23 lakh crore. This is an increase of 137% from last year. FM announces Rs 35,000 crore for Covid-19 vaccines. Two more vaccines will be rolled out across the country.

• Aatmanirbhar Bharat packages, including measures taken by RBI, was about Rs27.1 lakh crore, more than 13% of GDP. Atmanirbhar is an expression of 130 crore Indians who have full confidence in their capabilities and skills.

• Sitharaman proposes Rs 2,217 crore outlay for 42 urban centres to tackle air pollution. Finance minister announces outlay of Rs 2.87 lakh crore for Jal Jeevan Mission. The Urban Swatch Bharat Scheme will be implemented with an outlay of 1.4 lakh crore. Health outlay to be used to establish critical care units and hospital blocks.

To allocate 2.2 trillion rupees ($30.20 billion) for healthcare in 2021/22. Taking a holistic approach to healthcare, this Union Budget 2021 will focus on three verticals: Preventive, Curative and Well-being.

• Aims to propose policies to allow foreign investors to invest in India's infrastructure projects

• Propose to make dividend payments to REIT (estate investment trusts) and Invit's (Infrastructure investment trusts) exempt from TDS

• To simplify tax filing and make compliance easier, details of capital gains and interest from banks, post offices, etc will be pre-filled.

• ITR exemption for those above 75 years old is a big relief to pensioners. Reopening of income-tax assessment cases from 6 years to 3 years. This is expected to reduce instances of tax harassment of income tax-payers.

• Tax exemption for notified affordable housing for migrants workers and the deduction on payment of interest for affordable housing has been extended by 1 year

• Infrastructure debt funds may issue tax efficient zero coupon bonds.

• Tax exemption for Aircraft Leasing Companies

• Proposed to make I-T Appellate Tribunal Faceless for individual tax payers. Govt to set-up a faceless dispute resolution mechanism for small taxpayers.

• Tax audit threshold raised to Rs 10,000 crore for digital transactions.

• Advance tax liability to arise only after payment of dividends.

• Govt proposes to increase threshold for tax audit to Rs.10 crore vs Rs. 5crore (for those transacting 95% digitally).

• Advance tax liability on dividend to arise only after declaration.

• FPI to get deduction of tax on dividend at lower treaty rate.

• Tax holiday for start-ups extended to 31st March, 2022. Capital Gains exemption on investment in start-ups also extended to 31s March, 2022

To review more than 400 old exemptions in customs this year, the government has put into place new customs duty structure that will be applicable by 1 October 2021.

• Revoking ADD and CVD on certain steel products.

• Reducing duties on copper scrap from 5% to 2.5%

• Some parts of mobiles to move from NIL to 2.5% rate.

• Cutting duty on copper scrap 2.5% from 5%.

• Exempting duty on steel scrap for a specified period.

This will help textile MSMEs and overall exports.

The government announces Rs. 111 lakh crore for National Infrastructure Pipeline to cover more projects by 2025. This will enable to recover loss from the pandemic-induced recession.National Infrastructure Pipeline or NIP was launched with 6835 projects, now expanded to include 7,400 projects. To complete the projects, the government announces three concrete ways:

• Institutional structure

• Monetisation of assets

• Enhancing share of capital expenditure in central and state budget

• Union Finance Minister Nirmala Sitharaman has allocated Rs.25,000 crore road projects in West Bengal, Rs 65,000 crore for road, highway projects in Kerala, and Rs. 3,400 crore for Assam.

• FM announces Rs 18,000 crore scheme to augment public transport in urban areas.

• Recycling capacity of ports to be doubled by 2024.

• The government aims to provide Rs. 1.15 lakh crore for railways, privatizing airports.

• Airport management cost rise as govt announces monetising more airports

• The government is proposing to create a framework to give consumers alternatives to choose from more than one power distribution company, Finance Minister Sitharaman announced.

• The move is aimed at offering competition at operator level and more choice to consumers in terms of will provide assistance to smart metering, upgradation etc. Targets better efficiency levels in the distribution sector.

• Rs 1,000 crore to solar energy corporation and Rs 1,500 to renewable energy development agency: FM

• Government has proposed farm cess of Rs 2.5/litre on petrol, Rs 4 on diesel.

• Announcement of transport system operator (TSO) to regulate common carrier capacity in gas pipelines to boost gas-based economy. This measure is taken to ensure for unbiased allocation of natural gas transportation capacity

• Pradhan Mantri Ujjwala Yojana (LPG scheme) to be extended to cover 1 crore more beneficiaries. The scheme, which provides LPG connections with financial assistance from the central government and currently benefits 12 crore households, will be extended further to provide clean cheap cooking fuel.e move is aimed at offering competition at operator level and more choice to consumers in terms of will provide assistance to smart metering, upgradation etc. Targets better efficiency levels in the distribution sector.

• The finance minister announced to hike the FDI limit in Insurance from 49% to 74%. She however said that majority directors on board and Key management personnels will be Indians

• The move will help increase capital inflow in insurance companies and enhance their expansion and growth.

• FM announces infusion of Rs 20,000 crore for public sector banks. FM says definition of small companies to be revised by raising capital base to Rs. 2 crore from current limit of Rs 50 lakhThe FM proposed doubling of MSME allocation, setting aside Rs. 15,700 crore for medium and small enterprises (MSMEs) in FY22.

• The government plans to further strengthen the NCLT (The National Company Law Tribunal is a quasi-judicial body in India that addresses issues relating to Indian companies) framework and continue with the e-court system for faster resolution of bad debts.

• A separate framework for MSMEs will also be made by the government.

• The reason for taking this move: Since a number of MSMEs have been unable to earn enough due to the government imposed moratorium, the new framework can eliminate the insolvency.

• The framework may help MSME owners avoid losing their company while continuing to pay the debt.

• The government proposes to set up Asset Reconstruction and Management Company for Stressed Assets to take over bad loans.

• The Union Budget 2021 announces a Rs 20,000 crore equity infusion for PSBs. This aims to strengthen the state-owned banks and hasten the process of clean up of their balance sheet.

• Proposes to increase in agriculture credit target to Rs 16.5 lakh crore.

• A special scheme for welfare of women and children in Assam and West Bengal. Rs 1,000 crore for Bengal, Assam tea workers

• In view the farm protests, there are no radical reform proposals in the Union Budget for agriculture sector. No announcements with regard to bringing urea under the nutrient-based subsidy regime or rationalising PDS issue prices of foodgrain as suggested in the Economic Survey.

• In case of wheat, total payment paid to farmers in 2013-14 was Rs 33,874 cr. In 2019-20 it was Rs 62,802 cr. In 2020-21, it was Rs 75,060 crores, FM Nirmala Sitharaman in her Budget 2021 speech.

• Women will be allowed to work in all categories and also in night shifts with adequate protection. To further extend efforts towards unorganised labour force, the government proposes to launch a portal to collect relevant information on gig workers, building/construction workers among others. This will benefit health, housing, skill, insurance credit & food schemes for migrant workers.

• This proposal will benefit around 15 million gig workers working in sectors such as transportation (Uber and Ola), food delivery staff, and the contract workers in IT and software firms.

• Disinvestment target for FY2022 at Rs 1.75 lakh cr. Two PSBs and one general insurance company to be divested.

• In FY21, the government had anticipated to raise Rs 2.1 lakh crore through divestments but fell short.

• Apart from IPO of LIC, Strategic disinvestment of companies including BPCL, Air India, Pawan Hans, IDBI Bank, Container Corporation of India is expected to be completed in 2021-22.

• Fiscal support in FY22 depends on revenue generation from the success of these programmes.

While it will help raise revenue for the government, it is expected to improve efficiency and provide momentum to privatisation.

Over 15,000 schools to be qualitatively strengthened under National Education Policy

• NRIs allowed to operate One Person Companies or OPCs in India. The move will benefit startups and innovators and will also help NRIs with entrepreneurial potential to enter the Indian market.

• The Union Budget 2021 has changed this requirement with regards to the restricted paid-up capital. Now, OPCs will be allowed to grow without any restriction on paid up capital and turnover, allowing conversion into any other type of company at any time.

• In its continuing focus on AtmaNirbhar Bharat, Finance Minister Nirmala Sitharaman announced in her budget speech the establishment of seven textile parks across the country. The move is expected to be a boost for the local textile industry, with investment sops expected for downstream manufacturing.

• Fiscal deficit estimated at 9.5% of GDP for 2020-21.

• Allocation of Rs 3,726 crore for forthcoming Census. This will be the first digital census, Sitharaman said.

• Scheme for promoting flagging of merchant ships in India will be launched by providing subsidy support

• Aims to provide Rs 300 crore to the Government of Goa for celebration of Goa's Liberation from Portuguese rule.
• Proposes to allot Rs 1,500 crore for promoting digital mode of payment