The Finance Minister, Nirmala Sitharaman announced budget of financial year 2021-2022 on 1st Feb 2021. This finance budget was based on 6 pillars such as Health and Wellbeing, Physical & Financial Capital, and Infrastructure, Inclusive Development for Aspirational India, Reinvigorating Human Capital, Innovation and R&D, Minimum Government and Maximum Governance.
Every year budget brings many changes in the world so in this year as well. The Finance Budget 2021 has come up with major changes in following sectors such as;
· Direct Tax
· Indirect Tax
· Health & Lifestyle
· Capex & Infrastructure
1. Exemption from filing ITR
The very senior citizens whose age is 75 years or more are not required to file Income Tax Return if they are receiving income from pension and interest only.
Note: If the interest is received from bank other than bank where pension account is maintained, then this benefit is not available.
2. Exemption from Tax Audit
The threshold limit under Section 44AB of Tax Audit has been increased from Rs 5 Crore to Rs 10 Crore. But this exemption has been given to only those who are conducting 95% of their business transactions via digital mode.
3. Tax on Life Insurance Policy
The policies taken on or after 01/02/2021 and premium paid exceeding Rs. 2.5 lakhs will be taxed under the head Capital Gains.
4. Tax Liability on Dividend
Advance tax liability on dividend shall arise only after declaration and payment of dividend, whichever is earlier.
5. Re-opening of Income Tax Assessment
· In Normal Cases: the time limit has been increased to 3 years from 6 years
· In serious Tax Evasion Cases: It can be reopened till 10 years, only when concealment of income is more than Rs. 50 lakhs and proof of concealment is available.
6. Faceless Dispute Resolution Committee and Mechanism
This committee has been set-up to reduce the litigations for small and medium taxpayers. Any taxpayer with taxable income upto Rs 50 lakhs and disputed income upto Rs 10 lakhs can approach the committee.
7. Faceless Income Tax Appellate Tribunal (ITAT)
Faceless Income Tax Appellate Tribunal (ITAT) is proposed for providing online resolution.
8. The deduction under Section 80EEA i.e. Interest on Housing Loan is extended to loan taken up to 31st March 2022
9. Deduction under Section 80IAC i.e. tax exemption for start-ups will be extended up to 31st March 2022.
10. Affordable housing projects can avail tax holiday until 31 March 2022.
11. Employees contribution of Provident Fund amount deducted but not deposited by the employer, will not be allowed as deduction for employer
12. Timelines for filing belated return and revised return has been reduced by 3 months.
13. Section 194P is inserted for deduction of TDS by Banks on income to Senior Citizens (above 75 years having pension and interest income). TDS to be computed as per the Slab Rates.
14. Section 194Q is inserted for deduction of TDS @ 0.1% on purchase of goods valuing more than 50 Lakhs. The provision is applicable for purchaser having turnover more than 10 Crore in previous financial year.
15. Pre-filled ITR- Now in addition to Salary and Tax payments, details of Capital Gain and Dividend from listed securities will be pre-filled in the ITR
1.Removal of GST Audit u/s 35 (5)
Section 35 of CGST Act, 2017 has been omitted so far to remove mandatory requirement of getting Annual Accounts audited and reconciliation statement submitted by specified professionals (CA or Cost Accountant). This is a major step taken by Ministry of Finance.
2. Exemption from custom Duty
More than 400 old customs duty exemption will be reviewed through extensive consultants. Post this is a revised customs duty structure will be introduced. 80 outdated exemptions already eliminated.
3. Duty on Steel Scrap
Duty on Steel Scrap has been exempted up to 31st March, 2022.
4. Reduction in Custom Duty
· Customs duty reduced uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels
· Duty on Copper Scrap has been reduced to 2.5% from 5%
5. Increment in Custom Duty
· Duty on solar invertors raised from 5% to 20%, and on solar lanterns from 5% to 15% to encourage domestic production.
· Customs duty on cotton increased from nil to 10% and on raw silk and silk yarn from 10% to 15%.
6. Exemption on Import
Exemption on import of certain types of leather has been withdrawn to boost domestic production.
7. ‘Turant Customs’ initiative has been proposed for faceless, paperless, and contactless customs measures.
1. One Person Company (OPC)
To encourage the incorporation of One Person Company in India the government has made amendments in following such as;
· The OPC can now be converted into any other type of company at any time.
· Even a Non-Resident Individuals (NRI’s) are now allowed to incorporate OPC’s in India.
· There is no any restriction imposed on paid-up capital and turnover to incorporate OPC
· The residency limit for an Indian citizen has been reduced from 182 days to 120 days
2. Small Company
The definition of small company has been revised and eventually the limits of paid-up share capital and turnover has been amended.
· The threshold limit of paid-up capital has been increased from Rs. 50 crore to 2 crores and
· the limit of turnover has been increased from Rs 2 crores to 20 crores.
3. Exemption for Investment
Exemption for investment under capital gains has been extended till 31st March, 2022.
4. Tax Holiday Claim
In order to encourage setting-up of more start-ups in the country, it is proposed to extend the eligibility period to claim tax holiday for the start-ups by one more year to 31st March, 2022.
5. Stand-up India Scheme
Under Stand-up India Scheme, to get loans, the margin capital has been reduced from 25% to 15% Scheduled Caste (SC’s), Scheduled Tribes(ST) and Women.
6. Allocation to MSME Sector
The amount of Rs 15,700 crore has been allocated to MSME sector which is more than double amount allocated to current year.
Health & Lifestyle
1. Covid-19 Vaccine
The amount of Rs 35000 crores has been allocated to Covid-19 vaccine.
2. PM Atmanirbhar Swasthya Bharat Yojana
This new scheme/ yojana has been launched to develop primary, secondary & tertiary sectors of healthcare. The amount of Rs 64,180 crores has been allocated to over 6 years for this scheme.
3. Mission Poshan 2.0
The 2.0 version of Mission Poshan has been launched to improve the nutritional outcomes across 112 Aspirational Districts.
4. Jal Jeevan Mission (Urban)
· The amount of Rs 2,87,000 has been allocated over 5 years towards Jal Jeevan Mission.
· This scheme has been launched with an aim to provide 2.86 crore household tap connection, universal water supply and liquid waste management in 500 cities.
5. Swachh Bharat Mission
To strengthen the Urban Swachh Bharat Mission (Mission 2.0), the amount of Rs 1,41,678 crores has been allocated towards this scheme.
6. Air Pollution Control
Rs 2217 crore has been proposed to tackle air pollution of 42 urban centers with a million plus population.
7. Vehicle Scrapping Policy
· To phase out old & unfit vehicles, Vehicle Scrapping Policy has been introduced.
· In this policy, all vehicles are required to undergo fitness test in automated fitness center in every 20 years in case of personal vehicle and for commercial vehicles the limit is 20 years.
Capex and Infrastructure
1. Road Transport & Highways
· This time, the amount of Rs 1,18,101 crore has been allocated towards betterment of Road Transport & Highways.
· Among which Rs 1,08,230 crore has been allocated towards capital expenditure only.
· This is the highest ever outlay given by Ministry of Road Transport & Highways.
2. Bharatmala Pari Yojana
· It is new umbrella program for the highways sector. The foremost aim of this yojana is to improve the quality of roads to bring development in every corner of the country.
· Under this, more than 13,000 km length of roads worth Rs. 3.3 lakh crore awarded for construction.
3. Advanced Traffic Management System
· The advanced traffic management system will be installed in all the in all new 4 and 6 lane highways.
· This includes speed radars, variable message signboards, GPS enabled recovery vans and many more.
· The amount of Rs. 1,10,055 crores have been allocated towards railways among which Rs. 1,07,100 crores are for capital expenditures
· This includes,
- National Rail Plan for India (2030)
- 100% electrification of Broad-Gauge Routes
- Automatic Train Protection Systemin which eliminating train collision due to human error
- Vista Dome LHB coach on tourist routes for better travel
5. New Power Distribution System
· The amount of Rs. 3,05,984 crores over 5 years have been allocated for revamped, reforms-based and result linked new power distribution system.
· Consumers will have alternatives to choose the distribution company for enhancing competitiveness.
6. National Hydrogen Energy Mission 2021-22 to be launched
7. Indian shipping companies to get Rs. 1624 crore worth subsidy support over 5 years in global tenders of Ministries and CPSEs.
All the key highlights of budget has been specified in this article. The budget 2021 did not bring any major changes but has brought many small changes in various sectors.