Budget 2021: Key Outcome from FM Sitharaman’s Speech

FM Nirmala Sitharaman presented her first paperless union budget and announced steps on healthcare and infrastructure as well as Scrapping Policy to stimulate the Covid-strike economy. 

Key Highlights from Budget 2021-22

Hon’ble Union Finance Minister Nirmala Sitharaman has started presenting the Budget 2021 by mentioning the challenges during the pandemic and the vision of the Pradhan Mantri Garib Kalyan Yojana. She says that India has two COVID19 vaccines made available and two more will be made accessible soon. 

1st Pillar of Budget 2021: Focus on Healthcare & Welfare Schemes:

• Spending has been increased
• A new scheme with an outlay of Rs.64K crore to be spread over 6 yrs
• The above is in addition to the National Health Mission
• Support to rural & urban health centers

FM announced the Jal Jeevan Mission with an outlay of 2.87 lakh crore, which intends to provide full water supply with household tap connections to all urban local bodies.

FM has proposed Rs 1.41 lakh crore for Urban Swachh Bharat 2.0 over a period of 5 years.

Over a period of 5 years from 2021, an amount of Rs..47 lakh crore has been assigned for wastewater treatment, plastic waste reduction, pollution reduction, and such initiatives.

The Scrapping Policy is announced in Budget 2021. The purpose of the voluntary vehicle scouring policy is to remove wasteful vehicles so as to reduce vehicular pollution and oil import bills.

FM has proposed an amount of Rs.5000 crores to manufacture and make the COVID 19 vaccine accessible.

2nd Pillar of Budget 2021: Focus on physical, financial capital, and infrastructure

• FM proposes an amount of Rs.1.97 lakh crores, in 5 years, beginning this fiscal year to nurture global manufacturing champions and increase employment for youth.
• FM has proposed to start a mega-investment textile park with the establishment of 7 more textile parks in the next 3 years.

FM has proposed to establish a development financial institution with an amount of Rs 5 lakh crore.

FM said that the budget 2021 would focus on NHAI operational toll roads, airports in Tier-2 and 3 cities, and sports stadiums.

Capital expenditure for the year 2021-22 will be 5.54 lakh crore with a Y-o-Y growth rate of 34.5%.

FM also stated that more than Rs 2 lakh crore would be allocated for capital expenditure in states and other autonomous bodies.

An announcement of 3,800 km of highway section has already been constructed and an extra km will be constructed under the Bharat Mala project.

The FM introduced the following National Highway budget for the below states:

• Tamil Nadu – 3500 km @Rs.1.03 lakh crores
• Kerala – 1100 km @Rs.65,000 crores
• West Bengal- 675 km @Rs.25,000 crores

Apart from this, a national highway project of about Rs 19,000 crore is underway in Assam. In total, FM introduces a total of Rs 1,18,101 lakh crore for the Ministry of Road Transport and Highways.

An infra-national rail scheme to design a future rail system in India by 2030 is proposed to reduce logistics costs.

The next few phases of metro projects will be engaged in metro cities. Apart from this, there are ‘Metro Light’ and ‘Metro Neo’ concepts for Line 1 and 2 cities that are also in the queue.

FM intended to increase the Ujjwala scheme to 1 crore beneficiaries out of the existing 8 crore beneficiaries.

FM aims to focus on various related laws of the securities market to be merged into the Securities Market Code.

FM declared that SEBI would be notified to regulate the establishment and arrangement of the commodity market system.

FM provisioned Rs 1,000 crore to the Solar Energy Corporation of India for the development of the solar energy sector.

FM offered an amendment to the Insurance Act to carry additional FDI from the existing 49% to 74% to insurance companies.

FM announced that a new asset reconstruction company was to be established to address stressed assets in public sector undertakings.

FM proposed to change the DICGC Act, 1961 to simplify its provision, where bank depositors can have an easy approach to deposits through insurance in case of a troubled bank.

FM proclaimed that decriminalization has been completed under the Companies Act, 2013, and now the decriminalization of LLP Act, 2008 will come into effect.

FM revised the definition of small companies: Companies with paid-up capital that does not exceed 2 crores and do not do the business of more than 20 crores are considered small companies. More than 2 lakh companies are going to benefit from this provision.

For startups and innovators, FM stated that OPC could be covered without a limit for turnover or paid-up capital. It also allows NRIs to follow OPC in India.

She also proposes a special framework for MSME.

FM stated that MCA 21 V3.0 will be presented with additional modules for e-scrutiny and e-judgment.

FM said that the IPO of LIC will be done in FY 2021-22. Also, for the disinvestment strategy, two PSUs and 1 insurance company will be considered.

FM stated that the recommendation of the 15th Finance Commission is to rationalize and reduce centrally sponsored schemes.

Pillar 3 of Budget2021: Focus on diverse growth for aspiring India.

In the agriculture sector, the MSP system has made a change to provide 1.5 times the product cost on all commodities.

The total amount paid to wheat farmers doubled in 2019-20 compared to 2013-14.

She further announced that agricultural credit will be increased to 16.5 lakh crore.

FM proposed to expand the scope of the ‘Operation Green Scheme’ to include 22 bad crops and 1.68 crore farmers registered. In addition, 1,000 mandis will be added under the said scheme.

The FM said the government would develop fishing ports and fishing centers along rivers and waterways.

FM announced that the ‘1 Nation-1 Ration Card’ scheme has been put into action by 32 states and union territories. The scheme benefits migrant workers as they can claim ration from anywhere in the country.

The total fiscal deficit is tightened at 9.5% of GDP and is acquired by the government. An additional Rs 80,000 crore is required to ensure that our economy gets the expected push.

The borrowing from the market for the next year will be 12 lakh crore.

FM announced that senior citizens who receive only pension and interest on income, need not file ITR.

4th Pillar of Budget2020: Focuses on Reopening of tax:

• In normal cases: The time limit has been reduced from 6 years to 3 years.
• In cases of serious tax evasion: Can be reopened for 10 years, only when the income hides is more than 50 lakhs.

FM announced that a ‘faceless dispute resolution committee and mechanism’ is established to reduce the litigation for small taxpayers. Any taxpayer with taxable income up to 50 lakh and disputed income up to 10 lakh can approach the committee.

FM proposed a faceless Income Tax Appellate Tribunal (ITAT) to provide online resolution.

Under section 44AB the ‘tax audit limit’ has been increased from Rs 10 crore to Rs. 5 crores where 95% of business deals are made in digital mode.

FM announced that the ‘advance tax liability’ on dividend income would increase only after the declaration or payment of dividend.

FM announced that the deduction under section 80EEA could be extended to loans taken up to 31 March 2022.

FM announced that affordable housing projects could avail of tax benefits till 31 March 2022.

FM declares tax considerations for IFSC and tax benefits for aircraft leasing and rental companies.

She announces the pre-filled ITR in Budget 2021: Salaries, tax payments, TDS are already filled. Capital gains, dividend income, and interest income will now be pre-filled.

The FM states that if the PF amount has been deducted but not deposited by the employer, it will not be allowed as a deduction for the employer.

FM announced that the deduction under section 80 IAC would be extended till 31 March 2021.

Under indirect taxation, FM proposes to review 400 old exemptions this year through extensive consultation. After which a revised customs duty structure will be added.

FM has copped out customs duty on copper, textile, gold, and silver.

FM raised customs duty on solar inverters from 5% to 20% and on solar lanterns from 5% to 15%.

FM proposed withdrawing the exemption on imports of leather as they are produced domestically.

The FM proposes the ‘Turant Customs’ initiative for faceless, paperless, and contactless customs measures.

The FM concluded the Budget2021 and the house has been adjourned after getting the approval for the Finance Bill, 2021.

She cut rates on Customs Duty and enforced a disproportionate amount of agricultural infra cess on some products like petrol and diesel. But there will be no extra burden on the end consumer.

A major call pout for banks was the NPA. FM has announced a capital infusion to resolve this issue. To clear the lists further, she announced the establishment of an ARC

Below are the industrialists’ responses to the budget proposals

Mahindra Group Chairman Anand Mahindra tweets: “In a time of unprecedented economic stress, the Govt”s responsibility was to spend enough to revive the economy or else face enormous human suffering. So I had one expectation from this budget: that we should be very liberal in terms of the targeted fiscal deficit. Box ticked.”

Dr. O P Agarwal, the CEO, WRI India, said, “With infrastructure and inclusive development as one of Budget 21-22’s six pillars, public transport has received a fillip. Allocation of Rs.18,000 crore for public buses in urban areas, pushing for 100% electrification of broad gauge rail tracks and bringing down logistics cost for railway by 2030, and the introduction of Metro-lite and Metro-neo for smaller cities, will impact a change in people’s commuting patterns. This will improve our air quality, reduce road congestion and enable an equitable urban infrastructure for the future. Now, there is a need to strengthen the end-to-end connectivity to boost the use of public transport further.”

Kiran Mazumdar Shaw, Executive Chairperson, Biocon says Overall, a reassuring Budget with no negative surprises has buoyed overall sentiment.

RPG Enterprises Chairman Harsh Goenka tweets: “Combination of Pujara & Pant innings – consistency and flamboyance! A steady focus on infra, commercial laws, ease of business with big shots of monetizing PSU assets, new divestments, insurance FDI. India won in Australia. Now India shall rise above in new world order!”

Vedanta Resources Executive Chairman Anil Agarwal tweets: “Congratulations to @narendramodi and FM @nsitharaman for a very reformist #Budget2021 with many big ideas including strategic disinvestment of two public sector banks & one insurance company. Thrust on infrastructure will boost growth.”

PM Narendra Modi has praised the budget presented by FM Nirmala Sitharaman and called it a budget that reflects India’s confidence and boosts confidence.

Image Source: India TV