The Finance Minister introduced Union Budget
2021 presented in the parliament on February 1, 2021.
Here are the highlights of
the Union Budget 2021:
Atmanirbhar Bharat
The FM outlined six pillars of proposals to
strengthen the vision of Atmanirbharta, namely health and wellbeing, capital
and infrastructure, inclusive development, reinvigorating human capital,
innovation and R&D and minimum government and maximum governance.
Shot in the arm for healthcare
The allocation to healthcare in this budget has
been increased substantially. The areas of focus will be preventive and
curative healthcare as well as well being, she said. The allocation is likely
to be around Rs 2,23,846 crore, a 137% percentage rise from the previous
budget. Rs 35,000 cr has been budgeted for COVID-19 vaccination expenditure in
FY22.
A bank for roads
TThe Govt is set to introduce a 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. National
Monetisation Pipeline for brownfield projects will be launched, the FM
announced with NHAI and PGCIL having sponsored one InvIT each. She also added
that vehicles will undergo fitness tests after 20 years for PVs, 15 years for
CVs, announcing a voluntary vehicle scrapping policy.
Projects galore
FM says projects for building 8,500 km of
highways will be awarded by March 2022. While presenting the Union Budget
2021-22 in Parliament, the finance minister also said poll-bound West Bengal
will see highway projects worth Rs 25,000 crore.
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.
No tax change
The
government has left direct taxes unchanged, but took steps in direct tax
incentives to ease compliance for taxpayers. The FM proposed making it so that
advance tax liability on dividend income shall arise only after payment of
dividend. The Budget also looked at pre-filled tax forms with respect to
details like salary income, tax payment and TDS.
Relief for seniors, small taxpayers
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.
Fuel and Liquor cess
Agri Infrastructure and Development Cess on a
number of items including fuel and liquor was announced today but the finance
minister also said there would be no additional burden on the consumer overall.
Budget imposed a Rs 2.5 per litre agri infra cess on petrol, Rs 4 on diesel,
and of 100% on alcoholic beverages.
Access to deposits
The finance minister announced that in case a
bank fails or withdrawals from the bank are stopped due to financial pressure
on the bank, the depositors will be able to get immediate access to their
deposits up to the deposit insurance amount of Rs 5 lakh.
Divestment target
The
Govt sees FY22 fiscal deficit at 6.8%, according to the FM, while she had
pegged deficit at 3.5% for FY21 in the last Budget. Govt aims to get Rs 1.75
lakh crore through divestments in 2021-22, according to Budget documents. In
FY21, it planned to raise Rs 2.1 lakh crore through divestments, falling short.
CPSEs in all but four sectors will be eventually privatised.
Monetising land
The Budget 2021 gave a renewed push to
disinvestment and asset monetisation as the government strives for capital
creation. “Monetising of land will be taken up. A SPV will be launched to carry
out this activity,” said the FM.
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.
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
Banking and companies
The
Govt plans to allot Rs 20,000 crore for bank recapitalisation of PSBs. The FM
also proposed to revise definition under Companies Act, 2013 for small
companies by increasing their threshold for capitalisation.
Cell Phone parts
The government has raised basic customs duty on
import of sub-parts of mobile phones and battery chargers from nil to 2.5% in
FY21-22. The price impact will be known once the details are clear.
Textile parks
India will set up seven textile parks over
three years under the scheme of mega investment textile parks which was
announced in Budget FY22. The parks to be setup over 1,000 acres of land with
world class infrastructure, and plug-and-play facilities, will be addition to
the Rs 10,683-crore production linked incentive (PLI) scheme for technical
textiles and manmade fibres.
Agricultural Credit
The Budget set agriculture credit target of
Rs 16.5 lakh crore for FY22, and will further increase provision to rural infra
development fund to Rs 40,000 crore from earlier Rs 30,000 crore. Mrs. Sitharaman
said the govt is committed to welfare of farmers, pointing at how 1.54 crore
farmers benefited from MSP in paddy and wheat in FY21. Furthermore, underlined
that Rs 75,060 crore was paid to farmers for wheat in FY21 versus Rs 62,802
crore in FY20.
Amendments
FM Sitharaman proposed to consolidate provisions
of the Sebi Act, Depositories Act, Securities Contracts Regulation Act, and the
Government Securities Act. Government aims to amend Insurance Act to allow
higher FDI, increasing FDI limit in insurance to 74% from 49% and allowing
foreign ownership.
Railways
An allocation of Rs 1,10,055 crore to be made.
Of this, Rs 1.07 lakh crore is for capital expenditure for FY22. The eastern
and western dedicated freight corridors will be commissioned by June 2022, it
was announced. The FM also announced plans for east coast corridor, east-west
corridor, north-south corridors. 100% electrification of broad-gauge routes
will be completed by December 2023, she said.
Ujjwala boost
The
government on Monday said the free cooking gas LPG scheme, Ujjwala will be
extended to one crore more beneficiaries. She further said city gas
distribution network of providing CNG to automobiles and piped cooking gas to
households will be expanded to 100 more districts.
MSME allocation
The FM
proposed doubling of MSME allocation, setting aside Rs 15,700 crore for medium
and small enterprises in FY22.
One-person companies
The
govt 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.
Mergers and Acquisitions
The government has withdrawn a tax benefit for
mergers and acquisitions (M&A) that would result in marginal increase in
the cost of transactions. The government in the Budget 2021 said that no
depreciation would be allowed on goodwill.
First Digital Census
Finance Minister Sitharaman allocates Rs
3,726 crore for the forthcoming Census, calling it "the first digital
census".
Tax Holiday extended
Govt to
extend eligibility of erstwhile tax sop on home loan up to FY22. The FM also
said that affordable housing projects can further avail tax holiday for one
more year. The FM proposed extension of tax holiday for start-ups by one more
year, a tax exemption for relocating funds to IFSC, and tax holiday for aircraft
leasing business in Gift city.
Tax audit limit doubled
Exemption from tax audit limit
doubled to Rs 10 crore turnover for companies doing most of their business
through digital modes.
Revised customs duty structure
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%.
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