The Finance minister in her Budget 2021 speech announced a slew of taxation reforms along with increased spending on healthcare and other sectors. The budget received a lukewarm response from the citizens. However, the budget was praised by the International Monetary Fund for its futuristic approach and focus on growth. Addressing the nation after the Budget, Modi said it speaks of “all-round development.” Here are the measures announced in the budget for each category – Employees, Businesses, Investors, Passengers and Students. Tweet this or Share on Whatsapp
Budget for Employees & Businesses
• No ITR filing for people above 75 years
Senior citizens above 75 years who get pension and earn interest from deposits. Banks to directly deduct the tax liability (if any).
• Reopening window for Income Tax Assessment
cases reduced from 6 to 3 years. However, in case of serious tax evasion cases (Rs. 50 lakh or more), it can go up to 10 years.
• Ensuring timely EPF contribution by recruiters
Delay in deposit of the contribution of employees towards various welfare funds by employers result in permanent loss of interest/income for the employees. In order to ensure timely deposit of employees’ contribution to these funds by the employers, the union budget has proposed that the late deposit of employees’ EPF contribution by the employer shall never be allowed as income tax deduction to the employer.
• Affordable housing projects to get a tax holiday for one year.
In order to incentivise purchase of affordable house, the Union budget has proposed to extend the eligibility period for claim of additional deduction for interest of Rs 1.5 lakh paid for loan taken for purchase of an affordable house to 31st March 2022.
• Relief for Dividend gained
In order to provide relief to taxpayers, advance-tax liability on dividend income shall arise only after the declaration/payment of dividend. The dividend paid to Real Estate Infrastructure Trusts or Infrastructure Investment Trusts (REIT/InvIT) shall be exempt from TDS. It is also proposed to clarify that deduction of tax on incomes including dividend income of Foreign Portfolio Investors may be made at treaty rate. It is also proposed to exempt dividend payment from levy of Minimum Alternate Tax (MAT) for foreign companies if the applicable tax rate is less than the rate of MAT.
Compliance burden of small trusts whose annual receipts does not exceed Rs. 5 crore to be eased.
Custom duty on gold and silver to be rationalised.
Budget for MSMEs & Startups
• Incentivising OPC Setup
In order to benefit startups in setting up one person companies (OPCs), Sitharaman announced OPCs to grow without any restrictions on paid-up capital and turnover. The Minister also allowed their conversion into any other type of company at any time and reduced the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and also allow NRIs to incorporate OPCs in India.
• Extending Tax Holiday
To boost startup investments in the country, the budget proposed an extension of eligibility for claiming tax holidays for startups along with the capital gains exemption for investment in startups till March 31, 2022, to incentivise funding.
• Withdrawing Exemption on Imports
The budget announced withdrawing exemption on imports of ‘certain’ kind of leathers as they are domestically produced in good quantity and quality, mostly by MSMEs, according to Sitharaman.
• Revising Definition
FM Sitharaman proposed a revision in the definition of small companies in the budget by increasing thresholds for paid-up capital from Rs 50 lakh to Rs 2 crore and turnover from Rs 2 crore to Rs 20 crore. “This will benefit more than two lakh companies in easing their compliance requirements,” the minister said.
• Customs Duty Slashed
The government said that it is reducing Customs duty uniformly to 7.5 per cent on semis, flat, and long products of non-alloy, alloy, and stainless steels to help MSMEs and other user industries that have been severely hit by a recent jump in iron and steel prices. Sitharaman also announced exempting duty on steel scrap for a period up to 31st March, 2022 to provide relief to metal recyclers, mostly which are MSMEs. The minister also proposed an increase in duty from 10 per cent to 15 per cent on steel screws and plastic builder wares to benefit MSMEs.
Budget for Investors
• A Unified Securities Market Code to be created, consolidating provisions of the Sebi Act, Depositories Act, and two other laws.
• Proposal to increase FDI limit from 49% to 74%.
• An asset reconstruction company will be set up to take over stressed loans.
• Deposit insurance increased from Rs 1 lakh to Rs 5 lakh for bank depositors.
• Proposal to decriminalise Limited Liability Partnership Act of 2008.
• Two PSU banks and one general insurance firm to be disinvested this year.
• An IPO of LIC to debut this fiscal.
• Strategic sale of BPCL, IDBI Bank, Air India to be completed.
Budget for Passengers
• Vehicle scrapping policy to phase out old and unfit vehicles – all vehicles to undergo fitness tests in automated fitness centres every 20 years (personal vehicles), every 15 years (commercial vehicles).
• Highway and road works announced in Kerala, Tamil Nadu, West Bengal and Assam.
• National Rail Plan created to bring a future ready Railway system by 2030.
• 100% electrification of Railways to be completed by 2023.
• Metro services announced in 27 cities, plus additional allocations for Kochi Metro, Chennai Metro Phase 2, Bengaluru Metro Phase 2A and B, Nashik and Nagpur Metros.
• National Hydrogen Mission to be launched to generate hydrogen from green power sources .
• Recycling capacity of ports to be doubled by 2024.
Budget for Students
• 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.
Bonus: We have made detailed videos on the Proposals in the Union Budget for Businesses, Employees, Investors & Students. Click here to watch the videos.
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