02/02/2021
The budget2021 announcement started with the challenges faced by us during the pandemic time and the vision of Pradhan Mantri Garib Kalyan Yojana. Finance Minister Nirmala Sitharaman also announced a total spend of around Rs 2 lakh crore on healthcare.
Here are the key announcements made by Finance Minister Nirmala Sitharaman on Feb 1st, 2021:
The definition of small companies is modified: Companies with a paid-up capital below 2cr. & a turnover not exceeding 20cr. are to be considered as small companies. Over 3 lakh+ companies benefit from this provision.
For Startups and Innovators, the OPC can be incorporated without a limit for turnover or paid-up capital. This also allows NRIs to incorporate OPC in India.
Rs 15,700 crores allocated to the MSME sector, besides laying a special framework of Data Analytics, Machine Learning (ML), and Artificial Intelligence (AI) to assist the sector.
Sitharaman earmarked Rs 1,500 crore for a proposed scheme to provide financial incentives for MSMEs to promote digital modes of payment among MSMEs to boost digital transactions.
The Budget also gives a helping hand to small producers through boosting cotton and silk raw material producers as well as fabric manufacturers.
The IPO of the LIC will be carried out in FY 2021-22. Also, for the disinvestment strategy, two PSUs and 1 insurance company will be considered.
The Finance Minister has also put certain Tax proposals, as follows:
Tax rates, both corporate and individual, remain unchanged. However, there is a relief to Senior Citizens aged 75 year and above, who get pension and earn interest from deposits will not be required to file an income tax.
The reopening window for IT assessment –
-The time limit has been reduced to 3 years from 6 years in normal cases
-However, in case of serious tax fraud only where concealment of income of 50 lakh or more in a year, the assessment may be reopened in 10 years.
A Dispute Resolution Committee is set up for the resolution of disputes of assessees with a taxable income up to ₹ 50 lakh and disputed income up to Rs. 10 lakh.
Proposed Faceless Income Tax Appellate Tribunal (ITAT) for providing online resolution.
Small Business turnover threshold for audit is increased from Rs 5 cr to Rs 10 cr. This will reduce the compliance burden on small retailers, traders & shopkeepers. However, this applies only to those businesses who carry 95% of business transactions digitally.
Agriculture infrastructure and development cess proposed on certain items including urea, apples, crude soya bean and sunflower oil, crude palm oil, Kabuli chana, and peas.
An agriculture Infrastructure and Development of ₹ 2.5 per liter has been imposed on petrol and ₹ 4 per liter on diesel.
An increase in import duties for certain products and rationalization of duties in the case of many items manufactured by MSMEs will help local industries compete against imports and boost their revenues. Custom duties increased to restrict low-quality imports:
– Duty of copper scrap reduced to 2.5%
– Customs duty on gold and silver to be rationalized
– Duty on naphtha reduced to 2.5%.
– Duty on solar inverters raised from 5% to 20%, and on solar lanterns from 5% to 15%
– All nylon products charged with 5% customs duty
– Tunnel boring machines to attract customs duty of 7%
– Customs duty on cotton raised from 0 to 10%
– The Finance Minister proposed to withdraw exemption on import of leather as they are domestically produced.
– The ‘Turant Customs’ has to be initiated for faceless, paperless, and contactless customs measures.
Finance Minister Nirmala Sitharaman said the budget for 2021-22 rests on six pillars:
1st Pillar – healthcare & wellbeing:
Support to rural & urban health centers
A new scheme with an outlay of Rs.64K crore to be spread over 6 yrs in addition to the National Health Mission
Rs. 2.87 lakh crores will be allocated for Jal Jeevan Mission. The mission’s goal is to provide safe and adequate water to each and every household in rural India through individual household tap connections by 2024.
Rs1.41 lakh crores are proposed for the Urban Swacch Bharath 2.0. over a period of 5 Years.
Rs.1.47 lakh crores have been assigned for initiatives such as
Wastewater treatment
Reduction in plastic waster
reduction in pollution, over a 5-year-period from 2021
The Vehicle scrapping policy has been announced in the Budget2021. The policy aims to remove inefficient vehicles to reduce vehicular pollution.
An amount of Rs.35 Thousand crores is proposed to manufacture the COVID19 vaccine.
2nd Pillar – Focus on physical, financial capital and infrastructure:
To start this year with an increasing number of jobs for the youth and to nurture global manufacturing champions Rs. 1.97 lakh crores are proposed over 5 years.
To boost the local textile industry and help India become one of the leading manufacturers of textiles in the world, The finance minister announced a mega-investment textile park to be launched over the next 3 years along with 7more textile parks to be established
Rs.5 lakh crores propose to set up a Development Financial Institution.
The Budget2021 will focus on the NHAI operational toll roads, airports in tier-2 and 3 cities, and sports stadiums
A measure of 3,800 km highway-stretch has already been constructed and an additional km will be constructed under the Bharat Mala project till now
following National Highway budget proposed for the below states:
Tamil Nadu: 3500km . 1.03 lakh crores
Kerala: 1100km .65,000 crores
West Bengal: 675km .25,000 crores
A national highway project of around 19,000 crores is in progress in Assam
Overall a total of Rs.1,18,101 lakh crore for the Ministry of Road Transport and Highways.
An Infra-National Rail plan to prepare a future rail system in India by 2030 has been proposed to bring down logistics costs. This may help India to get generate sufficient and sustainable employment
Extension of Pradhan Mantri Ujjwala Scheme up to 1 crore beneficiaries from the existing 8 crore beneficiaries are proposed by the finance minister.
Rs.1,000 crores have been granted to the Solar Energy Corporation of India for the growth of the Solar Energy Sector.
Rs. 5.54 lakh crore will be the capital expenditure for the year 2021-22 with a 34.5% Y-o-Y growth rate. Out of that more than Rs.2 lakh crores will be allocated for capital expenditure in the states and other autonomous bodies. By increasing the threshold for capitalization, MSMEs will get certain relief and exemptions provided by the government.
3rd Pillar – Inclusive Development for aspirational India:
The FM proposed to enhance the scope of the ‘Operation Green Scheme’ to include 22 perishable crops, and 1.68 crore farmers have registered. Also, 1,000 mundis to be integrated under the said scheme.
In the Agriculture sector, the MSP regime has undergone a change to provide 1.5 times the product cost across all commodities.
The agricultural credit will be increased to 16.5 lac crore.
The “1 nation-1 ration card’ plan has been implemented in 32 states and UTs and workers benefit from this scheme as they can claim ration from anywhere
4th Pillar- Reinvigorating human capital:
More than 15,000 schools to be qualitatively strengthened, with all components of National Education Policy, to emerge as exemplar schools in their region
Over ₹ 3,000 crores allocated to realign National Apprenticeship Promotion and Training Scheme, for providing post-education apprenticeship and training for graduates and diploma holders in engineering
5th Pillar – Innovation & R&D:
National Language Translation Mission to be launched to make available governance-related documents online in different languages.
New Space India Limited will execute PSLV-C51 launch.
Deep Ocean Mission with an outlay of more than ₹ 4,000 crores over 5 years to be launched for deep-ocean exploration and ocean biodiversity conversation.
6th Pillar – Minimum Govt & Maximum Governance:
National Commission for Allied Healthcare Professionals Bill introduced to ensure transparent and efficient regulation of 56 allied healthcare professions.
Over ₹ 3700 crores allocated for the first-ever digital census to be held soon.
₹ 1,000 crores allocated for the welfare of Tea workers, especially women and their children in Assam and West Bengal.
To enhance ease of doing business in India, a mandatory Conciliation mechanism will be set up for those who deal with Government.
FM reiterated that the government is fully prepared to support the economy’s reset.
