This year, Union Budget papers have not been printed for the first time since Independence due to Covid-19 pandemic. All Parliament members will receive the soft copies of Union Budget 2021.
The Union Finance Minister said that the Union Budget 2021 stands on six pillars—
Health and Wellbeing
A new scheme, PM Atmanirbhar Swasth Bharat Yojana, will be launched for a period of 6 years. It will strengthen the primary, secondary, and tertiary care Health Systems to detect and cure new and emerging diseases. It will be in addition to the National Health Mission.
Nutrition
To strengthen the nutritional content, delivery, outreach, and outcome, Supplementary Nutrition Programme and the Poshan Abhiyan will merge to make Mission Poshan 2.0. An intensified strategy will be adopted to improve nutritional outcomes.
Universal Coverage of Water Supply
The WHO has stressed the importance of clean water, sanitation, and a clean environment. A prerequisite to achieving universal health, enhancing the same Jal Jeevan Mission (Urban), will be launched.
Swachch Bharat, Swasth Bharat
For swachhta of urban India, a complete focus is upon wastewater treatment, reduction in single-use plastic, source segregation of garbage, reduction in air pollution by effectively managing waste from construction and demolition activities bio-remediation of all legacy dump sites.
Scrapping Policy
This scrapping policy is to phase out old and unfit vehicles. It will encourage fuel-efficient, environment-friendly vehicles, thereby reducing vehicular pollution and oil import bill. Vehicles will undergo fitness tests after 20 years in personal vehicles and after 15 years in the case of commercial vehicles.
Vaccines
The Pneumococcal Vaccine is a Made in India product, is presently limited to only five states will be rolled out across the country.
Physical and Financial Capital and Infrastructure Covered under Union Budget 2021
Following initiatives taken by the government in the different sectors under Union Budget 2021:
Atmanirbhar Bharat (PLI) Production Linked Incentive Scheme
Indian manufacturing companies need to become an integral part of global supply chains and possess core competence and cutting-edge technology. Hence, the PLI Production Linked Incentive scheme is to create manufacturing global champions for an Atmanirbhar Bharat. The initiative will help bring scale and size in key sectors, create and nurture global champions, and provide youth jobs.
Textiles
To facilitate the textile industry to become globally competitive, boost employment generation, and attract large investments, a scheme of (MITRA) Mega Investment Textiles Parks will be launched in addition to PLI scheme. It will create a world-class infrastructure with plug and play facilities to create global champions in exports.
Infrastructure financing – Development Financial Institution (DFI)
Infrastructure needs long term debt financing. Therefore a professionally managed Development Financial Institution is necessary to act as a provider, enabler, and catalyst for infrastructure financing.
Roads and Highways Infrastructure
Under the Bharatmala Pariyojana project, 3,800 km have been constructed. By March 2022, the aim is to complete an additional 11,000 km of national highway corridors.
Railway Infrastructure
Indian Railways have made a National Rail Plan to create a ‘future-ready’ Railway system by 2030. Strategy to be made to bring down the logistic costs and enable Make in India. The Western Dedicated Freight Corridor and Eastern Dedicated Freight Corridor (DFC) will be commissioned by June 2022.
Ports, Shipping, Waterways
A scheme to promote merchant ships’ flagging in India will be launched by giving subsidy support to Indian shipping companies in global tenders by Ministers and CPSEs. India has enacted the Recycling of Ships Act, 2019, and acceded to the Hong Kong International Convention. More ships to be brought to India from Europe and Japan. The recycling capacity of 4.5 Million Light Displacement Tonne (LDT) will be doubled by 2024.
Petroleum & Natural Gas
The following initiatives are being announced under Union Budget 2021:
- Ujjwala Scheme, which has given benefits to 8 crore households, will be extended to cover 1 crore more beneficiaries.
- Adding 100 more districts in the next 3 years to City Gas Distribution network.
- A gas pipeline project for the Union Territory of Jammu & Kashmir.
- An independent Gas Transport System Operator must be set up to facilitate and coordinate the booking of common carrier capacity in all-natural gas pipelines on the non-discriminatory open access basis.
Financial Capital
To consolidate the provisions related to SEBI into a rationalized single Securities Markets Code. The Government supports the development of a world-class Fin-Tech hub. An investor charter has to be introduced as a right of all financial investors across all financial products.
Increasing FDI in Insurance Sector
An amendment in the Insurance Act, 1938, increases the permissible FDI limit from 49% to 74% in Insurance Companies and allows foreign ownership and control with safeguards.
Deposit Insurance
An amendment to the DICGC Act, if a bank is temporarily unable to fulfill its obligations, the depositors of such a bank can get easy and time-bound access to their deposits to the extent of the deposit insurance cover.
NBFCs
To improve credit discipline while protecting small borrowers’ interest, for NBFCs with a minimum asset size of 100 crores, a minimum loan size eligible for debt recovery under the SARFAESI Act, 2002 is reduced from the existing level of ’50 lakhs to ’20 lakhs.
Company Matters
- The decriminalizing of procedural and technical compoundable offenses under the Companies Act, 2013, and same is to do with the Limited Liability Partnership (LLP) Act, 2008.
- The definition under the Companies Act, 2013 is to revise for Small Companies by increasing their thresholds for Paid-up capital from “not exceeding ’50 Lakh” to “not exceeding `2 Crore” and turnover from “not exceeding `2 Crore” to “not exceeding ’20 Crore”.
- Allowing OPCs to grow without restrictions on paid-up capital and turnover, allowing their conversion at any time into any type of company, reducing the residency limit to set up an OPC from 182 days to 120 days, and allowing the Non-Resident Indians (NRIs) to incorporate OPCs in India.
- For faster resolution of cases, the NCLT framework will get strengthened. The e-Courts system is likely to be implemented, and alternate debt resolution methods and special frameworks for MSMEs shall be introduced.
- During the coming fiscal 2021-22, a launch of data analytics, artificial intelligence, and machine learning-driven MCA21 Version 3.0. It will have additional modules for e-scrutiny, e-Adjudication, e-Consultation, and Compliance Management.
Disinvestment and Strategic Sale
- Other than IDBI Bank, there is a proposal for privatization of two Public Sector Banks and one General Insurance company in 2021-22. The government would bring the IPO for LIC to sell its shares.
- In the AtmaNirbhar Package, the government has a policy of strategic disinvestment of public sector enterprises. The policy provides a roadmap for disinvestment in all non-strategic and strategic sectors.
Government Financial Reforms
Under the Treasury Single Account System, autonomous bodies directly draw funds from the Government’s account at the time of the actual expenditure, saving interest costs.
Inclusive Development for Aspirational India
The following initiatives are taken by the government in the different sectors under Union Budget 2021:
Agriculture
Under SWAMITVA Scheme, a record of rights is being given to property owners in villages. An adequate credit will be given to farmers. The focus will on ensuring increased credit flows to animal husbandry, dairy, and fisheries. To maintain transparency and competitiveness, e-NAM has brought into the agricultural market, 1,000 more mandis will be integrated with e-NAM.
Fisheries
The development of modern fishing harbors and fish landing centers, starting with 5 major fishing harbors – Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat – will be developed hubs of economic activity.
Migrant Workers and Labourers
- Launch of One Nation One Ration Card scheme, under this Migrant worker, staying away from their families can partially claim their ration where they are stationed, while their family can claim the rest in their native places.
- Minimum wages shall apply to all categories of workers, and the Employees State Insurance Corporation will cover it.
- Women will be allowed to work also in the night-shifts with adequate protection.
- Simultaneously, employers’ compliance burden will be reduced with a single registration and licensing and online returns.
Financial Inclusion
To facilitate credit flow under the Stand Up India scheme for SCs, STs, and women, reducing the margin money requirement from 25% to 15% and including loans for activities allied to agriculture.
Reinvigorating Human Capital
The National Education Policy (NEP) announced recently has had good reception.
Education
- Proposals of 100 new Sainik Schools will be set up in partnership with NGOs/private schools/states.
- Setting up the Higher Education Commission of India
- Setting up of Central University in Leh for higher education in Ladakh.
Scheduled Castes and Scheduled Tribes Welfare
- Establishing 750 Eklavya model residential schools in tribal areas
- Providing Post Matric Scholarship Scheme, for the welfare of Scheduled Castes
Skilling
Under the Union Budget 2021, the Government proposes to amend the Apprenticeship Act to enhance apprenticeship opportunities for our youth further. The existing scheme of the National Apprenticeship Training Scheme (NATS) provides post-education apprenticeship, training of graduates and diploma holders in Engineering.
Innovation and R&D
- There has been a manifold increase in digital payments in the recent past.
- A new initiative – National Language Translation Mission (NTLM)-provides knowledge on the Internet being made available in major Indian languages.
- As prescribed in Union Budget 2021, The New Space India Limited (NSIL), a PSU under the Department of Space, will execute the PSLV-CS51 launch, carrying the Amazonia Satellite from Brazil and a few smaller Indian satellites.
- As part of the Gaganyaan mission activities, four Indian astronauts are trained on Russia’s Generic Space Flight aspects. The first unmanned launch is for December 2021.
Minimum Government, Maximum Governance
- Enhancing governance, the steps would be taken for reforming the Tribunals for delivery of speedy justice.
- The National Commission for Allied Healthcare Professionals Bill to ensure transparent and efficient regulation. Also, the National Nursing and Midwifery Commission Bill will be introduced.
- A scheme by the government for the welfare of Tea workers, especially women and children in Assam & West Bengal.
PART-B
Direct Tax Proposals
- The series of reforms in the Direct tax system for the benefit of our taxpayers and economy, such as the corporate tax rates, were the lowest in the world. The Dividend Distribution Tax was also abolished. The burden of taxation on small taxpayers is eased by increasing rebates.
- Newly introduced Faceless Assessment and Faceless Appeal, the government further plans to ease compliance and reduce litigation as mentioned in Union Budget 2021.
Relief to Senior Citizens under Union Budget 2021
The senior citizens of 75 years of age and above, who only have a pension and interest income, will get an exemption from filing their income tax returns. The paying bank is likely to deduct the necessary tax from their income.
Reduction in time for Income Tax Proceedings
An assessment can be re-opened up to 3 years, earlier it was for 6 years, and in serious tax evasion cases only where there is evidence of concealment of income of ’50 lakh or more in a year can the assessment be re-opened up to 10 years fraud cases.
Setting up Dispute Resolution Committee
The Government has come out with the Direct Tax Vivad Se Vishwas Scheme to allow taxpayers to settle long-pending disputes and be relieved of further strain on their time and resources.
Faceless ITAT
The Income Tax Appellate Tribunal can be faceless as the National Faceless Income Tax Appellate Tribunal Centre’s new establishment. All communication between the Tribunal and appellant will be electronic. The personal hearing will be done through video-conferencing.
Relaxation to NRI
Removal of double taxation for NRIs (Non-Resident Indians) returns to India.
Exemption from Audit
A tax audit is required for such persons if their turnover exceeds Rs 10 crore now.
Relief for Dividend
To provide ease of compliance, making dividend payments to REIT/ InvIT will exempt from TDS. Further, as the amount of dividend income cannot be estimated correctly by the shareholders for paying advance tax, government to provide that advance tax liability on dividend income shall arise only after the dividend declaration/payment.
Affordable Housing/Rental Housing
The Government wants ‘Housing for All’ and affordable housing as priority areas. The additional deduction of `1.5 lakh shall therefore be available for loans taken up till 31st March 2022 to purchase an affordable house. The tax exemption given for notified Affordable Rental Housing Projects for migrant workers.
Tax Incentives to IFSC
The tax holiday for capital gains for aircraft leasing companies, a tax incentive for relocating foreign funds in the IFSC; tax exemption for aircraft lease rentals paid to foreign lessors; and to allow tax exemption to an investment division of foreign banks located in IFSC.
Pre-filing of Returns
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 the filing of returns, details of capital gains from listed securities, dividend income, and interest from the post office, banks, etc., will also be pre-filled.
Relief to Small Trust
To reduce the compliance burden on the charitable trusts running educational institutions and hospitals. The exemption is given to entities whose annual receipt does not exceed 5 crores.
Incentives for Start-ups
To extend eligibility for claiming tax holiday for start-ups by one more year – till 31st March 2022.
Custom Duty Rationalization
Custom Duty Policy must have the twin objective of promoting domestic manufacturing and helping India get onto a global value chain and export better. From 1st October 2021, a revised customs duty structure will be implemented as prescribed in Union Budget 2021. Any new customs duty exemption will have validity up to the 31st March following two years from the date of its issue.
MSME Products
There will be rationalizing exemption on import of duty-free items as an incentive to exporters of garments, leather, and handicraft items. Almost all these items are made domestically by the MSMEs.
Agriculture Products
The customs duties are raised on cotton from nil to 10% and raw silk and silk yarn from 10% to 15%. The government is withdrawing end-use based concession on denatured ethyl alcohol. As per Union Budget 2021, Agriculture Infrastructure and Development Cess (AIDC) on a small number of items will be implemented. However, while applying this, the government has not put an additional burden on consumers on most items.
Conclusion
This budget provided every opportunity for the economy to capture the pace it needs for sustainable growth. The Atmanirbhar Packages accelerated the pace of structural reforms. Redefining MSMEs, Commercialization, Agriculture and Labour Reforms, Privatisation of Public Sector Undertakings, a policy of One Nation One Ration Card, & Production Linked Incentive Schemes were some of the notable reforms. Faceless Income Tax Assessment and Financial Inclusion are other initiatives of the government.
