FM Niramala Sitharaman announced her third Union Budget on 1st Feb 2021. All in all the budget was a balanced budget to fulfill all the expectations, especially amid Covid-19 situation. You may get confused with the huge budget. To simplify & make you understand better this article is all about the key highlights that you must know.
Expenditure: The government proposes to spend Rs 34,83,236 crore in 2021-22. As per the revised estimates, the government spent Rs 34,50,305 crore in 2020-21, 13% higher than the budget estimate.
Receipts: The receipts (other than borrowings) are expected to be Rs 19,76,424 crore in 2021-22, which is 23% higher than the revised estimates of 2020-21. In 2020-21, revised estimates for receipts were 29% lower than budget estimates. Given the impact due to COVID-19, it is useful to see the growth from 2019-20, an annual increase of 6%.
GDP growth: Nominal GDP is expected to grow at of 14.4% (i.e., real growth plus inflation) in 2021-22.
Deficits: Revenue deficit is targeted at 5.1% of GDP in 2021-22, which is lower than the revised estimate of 7.5% in 2020-21 (3.3% in 2019-20). The fiscal deficit is targeted at 6.8% of GDP in 2021-22, down from the revised estimate of 9.5% in 2020-21 (4.6% in 2019-20). The government aims to steadily reduce the fiscal deficit to 4.5% of GDP by 2025-26.
Ministry allocations: Among the top 13 ministries with the highest allocations, the highest annual increase over 2019-20 is observed in the Ministry of Jal Shakti (64%), followed by the Ministry of Consumer Affairs, Food and Public Distribution (48%) and the Ministry of Communications (31%).
Income Tax
- No, IT Returns filing for those above 75 earning from pension and interest from deposits.
- Additional deduction Rs. 1.5 lakh on home loan interest extended till March 2022.
- The reporting window for IT assessment cares reduced from 6 to 3 years.
Infrastructure
- Highway & road works announced in Kerala, Tamil Nadu, West Bengal & Assam.
- National Rail Plan created to bring a future-ready rail system by 2030.
- Vehicle scrapping policy to phase out old and unfit vehicles.
- Metro services announced in 27 cities.
Healthcare & Sanitation
- PM Atma Nirbhar Swasthya Bharat Yojana to be launched to develop healthcare.
- Mission POSHAN 2.0 to improve nutritional outcomes across 112 districts.
- Jal Jeevan Mission Urban aimed at better water supply nationwide.’
Economy & Finance
- Fiscal deficit stands at 9.5% of the GDP; estimated to 6.8% in 2021-22.
- Proposals to allow States to raise borrowings of upto 4% of GSDP this year.
- Two PSU bank and one general insurance firms to be disinvested this year.
- An IPO of LIC to debut this fiscal.
Education
- 100 new Sainik Schools to be set up
- 750 Eklavya schools to be set up in tribal areas
- A central University to come up in Ladakh
Gold
Import duties on gold & silver will reduce from 12.5% to 7.5% with a small 2.5% cess, which would aid agriculture and development.
Pre-filled ITR forms
The returns form will have capital gains dividends and interest incomes along with your TDS. This achieves two things.
- Reduce the time it takes to file taxes
- Reduces chances of error and then fearing the tax notices.
Double taxation
Getting tax credits in India is hard. Non-resident Indians (NRIs) usually have a complex task at hand when they have to consolidate income accrued in foreign accounts. The proposed alterations to double taxation rules will greatly simplify things for them
Stock transactions
No new taxes were announced for stock market transactions.
Re-evaluation of automobiles
The finance minister announced that passenger vehicles older than 20 years and commercial ones older than 15 years will be scrapped subject to a test.
Tax slabs
It is the same as last year and if you remember last year’s budget, then you know that it’s actually the same as the year before.
Startups
The government extended the tax holiday for startups till March 31, 2022 and have changed the definition of small companies to those with paid-up capital of ₹2 crore and turnover up to ₹20 crore.
Customs on Goods
Duties on over 4000 goods have increased steadily over the past 6 years. This is in a bid to protect the domestic industry from global competition. On a side note, expect ACs and refrigerators to rise in prices this year.
Other than this, this budget was good news for taxpayers:
The time to reopen tax assessments has been reduced to three years, half of the earlier limitation period.
