Highlights of 2021 Budget

Feb 02 , 2021

So the Union Budget 2021 is here. It is the ‘Annual Financial Statement’ or the Statement of the estimated receipts and expenditure of the central government for a financial year that runs from April 1 to March 31.

The 2021-22 budget has been presented by the government and it has given major emphasis to healthcare and infrastructure sectors this time.  

In order to understand the budget better, we have bifurcated the significant information of the budget into ‘General’ and ‘Direct & Indirect Tax’ highlights.

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Let us have a look at the General Highlights

  • The budget presented this time was paperless. This year for the first time ever, the Finance Minister (FM) presented and read out the budget through a Made In India tablet.
  • The FM announced a voluntary vehicle scrapping policy to phase out old vehicles. The vehicles would be required to undergo fitness tests in automated fitness centres after 20 years (Personal vehicles) and 15 years (Commercial vehicles).
  • For the ongoing pandemic, the government has allocated Rs 35,000 crore for the COVID vaccine drive.
  • 7 Mega textile parks will be established over 3 years.
  • Government has proposed a sharp increase in capital expenditure at Rs 5.54 lakh crore, from Rs 4.39 lakh crore in 2021.
  • The FM has proposed to amend the DICGC Act, 1961 to streamline its provision where the depositors of the bank can get easy access to deposits through insurance in the case of a stressed bank.
  • Rs 1.18 lakh crore allocated for Ministry of Road Transport and Highways.
  • The FM also announced Rs 1.10 lakh crore outlay for railways, of which Rs 1.7 lakh crore is for capital expenditure.
  • The FM announced disinvestment of LIC and two public sector banks this year.  
  • The FDI in Insurance has been increased to 74% from 49%.
  • The government will increase the maximum threshold paid-up capital of small companies from Rs 50 lakh to Rs 2 crore and increase the threshold of maximum turnover from Rs 2 crore to Rs 20 crore.

Direct and Indirect Tax Highlights

  • In a major relief to the elder people, senior citizens over 75 years of age with only pension and interest income will be exempt from filing Income Tax Returns (ITR).
  • Serious tax offences of concealment of income of over Rs 50 lakh can be reopened after 10 years.
  • In a major relaxation to NRIs, the government has proposed to introduce new rules for the removal of double taxation for the NRIs.
  • Exemption from tax audit limit doubled to Rs. 10 crore turnover for companies doing most of their business through digital modes.
  • The government has proposed capitalization of state-owned banks and earmarked Rs 20,000 crore for the purpose.
  • Reduction in time for IT Proceedings: Reopening of Assessments period reduced from 6 years to 3 years except in cases of serious tax evasion.
  • FM announced that the ‘Faceless dispute resolution committee and mechanism’ will be set up to reduce litigation for small taxpayers. Any taxpayer with taxable income up to 50 lakh and disputed income up to 10 lakh can approach the committee. 
  • The FM announced that the ‘advance tax liability’ on dividend income shall rise only after the declaration or payment of dividend.
  • FM announced tax incentives for the IFSC and tax holiday for aircraft leasing and rental companies. 
  • FM will introduce the pre-filled Income-Tax Return (ITR) forms for taxpayers with data on their capital gains from mutual funds, shares, dividend income and interest received from banks.
  • FM states that in case the PF amount was deducted but not deposited by the employer, it will not be allowed as a deduction for the employer.
  • Compliance burden of small trusts whose annual receipts does not exceed Rs. 5 crore to be eased. 

We hope you find the budget explanation helpful. To get more guidance on budget and taxation, you can watch FREE video lectures by the ‘Dream Team’ on the OnePrep app.

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