Finance Minister Nirmala Sitharaman presented the Union Budget 2021-2022 on the 1st of February 2021, based on six pillar some being: health and well-being; financial capital and infrastructure, development for aspirational India, reinvigorating human capital, etc. The budget also focuses on the challenges brought in by the pandemic and the vision of Pradhan Mantri Garib Kalyan Yojana. The finance minister also stated in the budget presentation that the government is fully prepared to support the economic reset.
Key Highlights of Union Budget 2021-22
Health and Well-Being
- The finance minister addressed the Covid 19 circumstances and stated that two vaccines are being made available currently and that two more vaccines will be made available soon.
- The budget has set aside an increased sum for the health care sector and new schemes have been introduced with disbursement of Rs. 64,000 crore for a period of six years. These schemes have been made as an addition to the National Health Mission.
- The finance minister has also promised financial support for urban and rural health centers in the union budget 2021-2022.
- PM Atma Nirbhar Swasthya Bharat Yojana was also launched with the intention to develop primary, secondary and tertiary healthcare facilities.
- The budget also proposed the modernization of the existing healthcare units in 32 airports, 15 seaports and also the land ports.
- The budget proposed in making 17 new public health units operational.
Access to Water Supply and Cleaner Air
- The Finance Minister emphasized on the importance of clear water supply by the WHO and stated that India has taken initiatives such as Jal Jeevan Mission with an outlay of 2.87 lakhs to ensure water supply in 4,378 urban local bodies and residential tap connections. The budget also proposed Rs.1.47 lakh crore assigned for five years towards as wastewater treatment, reduction in plastic waster, reduction in pollution, etc.
- The union budget also proposed fund for Urban Swacch Bharath 2.0 for a period of five years.
- The budget also introduced the Scrapping policy with the aim to remove ineffective vehicles to reduce pollution caused by such vehicles and also oil import bills.
Focus on Infrastructure and Connectivity
- The budget of 2021-2022 also proposed to set up a Development Financial Institution with Rs.5 lakh crore and the finance minister further stated that the focus point of the budget 2021 is on NHAI operational toll roads, airports in tier-2 and 3 cities, and sports stadiums.
- The budget also dealt with the National highway budget focusing mainly on Tamilnadu (3500km at Rs. 1.03 lakh crore), Kerala (1100km at Rs.65, 000 crore) and West Bengal (675km at Rs.25, 000 crore). The budget also laid emphasis on the National highway project in Assam which costs around 19,000 crore.
- The Finance Minister also stated that the India proposes to take metro project in metro cities. The minister also introduced the concept of ‘Metro Lite’ & ‘Metro New’ for tier 1& 2 cities.
The Securities Market
- The budget also proposed certain amendments to the Insurance Act to add FDI of 74% to insurance companies.
- The budget also proposed the amendment of the DICGC Act, 1961, in regards to the provision which allows depositors of bank to get access to the deposit easily, through insurance in case of stressed banks.
- The budget further proposed various laws of security market to be combined with the Securities Market Code.
- Certain amendments were also made in the Companies Act of 2013 whereby the finance minister announced the decriminalization process complete. Amendments have been made in regards to the definition of the term “small companies”. The budget also provided that the startups and innovators may set up one Person Company without turnover or paid-up capital. This has been incorporated to enable NRI investments in India.
- A special framework has also been introduced for the Ministry of Micro, Small and Medium Enterprises.
- The budget also introduced MCA 21 V3.0 with additional modules for the purpose of e-scrutiny and e-adjudication.
Inclusive Development for Aspirational India
- The budget proposed Rs. 1.97 lakh crore, over a period of five years to nurture global manufacturing champions and also to increase job opportunities for the youth.
- Certain changes brought into the agricultural sector includes the minimum support price being changed to 1.5 times the cost of the product out of all the commodities.
- The agricultural credit has also been increased to 16.5 lac crore in the Union budget 2021-2022.
- 22 perishable crops, 1,000 mundis and 1.68 crore farmers have registered by enhancing the scope of ‘Operation Green Scheme’.
- The budget also proposed for the development of fishing harbors and fish landing centers.
- Highlighted the importance of ‘1 nation-1 ration card’ plan and stated that the implementation of the same has enabled migrant workers to collect their rations anywhere in the country.
- The finance minister further in the budget stated that the senior citizens, with no income other than pension and interest on income, to be exempted from filing Income Tax Return.
- The budget also proposed the reopening of assessment and stated that in normal cases, the time limit has been reduced to three years and in serious tax evasion cases, it can be reopened till 10 years only if the concealment amount exceeds Rs. 50 lakhs.
- The ‘Faceless dispute resolution committee and mechanism’ have been set up with the intention to reduce litigations for small taxpayers (with taxable income up to 50 lakh) and to provide online resolution to the problems.
- The limit of tax audit specified under section 44AB of the Income Tax Act, has been increased from Rs 5 crore to Rs 10 crore in the Budget 2021-2022. The budget also pronounced that the ‘advance tax liability’ becomes payable only after declaration or payment of dividend.
- Deduction under section 80EEA of the Income Tax Act, has also been extended and granted to loans taken until 31st March 2022 and the deductions under section 80IAC has also been extended to 31st March 2021.
- The direct taxes have been left unchanged by the budget of 2021. Thus the restructuring of the tax slabs set out in the budget 2020 shall remain and continue. The Budget of 2020 has proposed an optional tax slab with lower tax rates. To avail the benefits of this new slab, it is necessary to give up all deductions and exemptions. Since it was optional, individuals also had the right to continue with their old tax slab as well.
- The tax slab for the financial year 2021-2022:
Rs.0- Rs. 2.5 Lakhs
Rs. 2.5 Lakhs – Rs. 5 Lakhs
Rs. 5 Lakhs – Rs. 7.5 Lakhs
Rs. 7.5 lakhs – Rs. 10 Lakhs
Rs. 10 Lakhs- Rs. 12.5 Lakhs
Rs. 12.5 Lakhs – Rs. 15 Lakhs
Rs. 15 Lakhs and above
- In addition to this, 4% education cess was imposed on the tax amount as well. 10% Surcharge was also applied in case the income was greater than Rs. 50 Lakhs and for income above Rs.1 crore, surcharge was payable at 15%.
- Opting for the new tax slab may result in you losing the following deductions and exemptions:
- Standard Deduction of Rs 50,000 for salaried individuals and Leave Travel Allowance
- House Rent Allowance (HRA) and interest on home loan mentioned under Section 24B.
- Section 80C which includes insurance premiums, EPF, PPF, home loan repayment (principal), tax-saving ELSS funds, etc.
- Health Insurance Premiums provided under Section 80D.
- The budget also proposed tax holidays until 31 March 2022 to be granted on affordable housing projects. Tax holidays have also be granted to aircraft leasing and rental companies.
- The finance ministry has also rationalized the customs duty imposed on copper, textile, gold and silver.
- The customs duty has been increased on solar inverters and solar lanterns by 20% and 15% respectively.
Withdrawal of exemptions granted on the import of leather has also been made in the budget on grounds that they are domestically produced.
The pandemic has had a huge impact on the economy of our country as it has affected the functioning of various industrial sectors. The Union budget provides for the manufacturing of coronavirus vaccinations and the opening of new healthcare centers. The budget also provided for the water supply and pollution control as well. The budget also discussed amendments to the existing provisions of Company law, insurance law, and taxation laws.
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