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The
Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman
presented the Union Budget 2021-22 in Parliament today, which is the first
budget of this new decade and also a digital one in the backdrop of
unprecedented COVID-19 crisis. Laying a vision for AatmaNirbhar Bharat, she
said this is an expression of 130 crore Indians who have full confidence in
their capabilities and skills. She said that Budget proposals will further
strengthen the Sankalp of Nation First, Doubling Farmer”s Income, Strong
Infrastructure, Healthy India, Good Governance, Opportunities for youth,
Education for All, Women Empowerment, and Inclusive Development among others.
Additionally, also on the path to fast-implementation are the 13 promises of
Budget 2015-16-which were to materialize during the AmrutMahotsav of 2022, on
the 75th year
of our Independence. They too resonate with this vision of AatmaNirbharta, she
added.
The
Budget proposals for 2021-22 rest on 6 pillars.
1. Health
and Wellbeing
2. Physical
& Financial Capital, and Infrastructure
3. Inclusive
Development for Aspirational India
4. Reinvigorating
Human Capital
5. Innovation
and R&D
6. Minimum
Government and Maximum Governance
There
is substantial increase in investment in Health Infrastructure and the Budget
outlay for Health and Wellbeing is Rs 2,23,846 crore in BE
2021-22 as against this year”s BE of Rs 94,452 crore, an
increase of 137 percentage.
The Finance Minister announced that a new centrally sponsored scheme, PM AatmaNirbhar Swasth Bharat Yojana, will be launched with an outlay of about Rs 64, 180 crore over 6 years. This will develop capacities of primary, secondary, and tertiary care Health Systems, strengthen existing national institutions, and create new institutions, to cater to detection and cure of new and emerging diseases. This will be in addition to the National Health Mission. The main interventions under the scheme are:
a. Support
for 17,788 rural and 11,024 urban Health and Wellness Centers
b. Setting
up integrated public health labs in all districts and 3382 block public health
units in 11 states;
c. Establishing
critical care hospital blocks in 602 districts and 12 central institutions;
d. Strengthening
of the National Centre for Disease Control (NCDC), its 5 regional branches and
20 metropolitan health surveillance units;
e. Expansion
of the Integrated Health Information Portal to all States/UTs to connect all
public health labs;
f. Operationalisation
of 17 new Public Health Units and strengthening of 33 existing Public Health
Units at Points of Entry, that is at 32 Airports, 11 Seaports and 7 land
crossings;
g. Setting
up of 15 Health Emergency Operation Centers and 2 mobile hospitals; and
h. Setting
up of a national institution for One Health, a Regional Research Platform for
WHO South East Asia Region, 9 Bio-Safety Level III laboratories and 4 regional
National Institutes for Virology.
Vaccines
Provision
of Rs 35,000 crore made for Covid-19 vaccine in BE 2021-22.
The
Pneumococcal Vaccine, a Made in India product, presently limited to only 5
states, will be rolled out across the country aimed at averting 50,000 child
deaths annually.
Nutrition
To
strengthen nutritional content, delivery, outreach, and outcome, Government
will merge the Supplementary Nutrition Programme and the PoshanAbhiyan and
launch the Mission Poshan 2.0. Government will adopt an intensified strategy to
improve nutritional outcomes across 112 Aspirational Districts.
Universal
Coverage of Water Supply and Swachch Bharat Mission
The
Finance Minister announced that the JalJeevan Mission (Urban), will be
launched for universal water supply in all 4,378 Urban Local Bodies with 2.86
crore household tap connections, as well as liquid waste management in 500
AMRUT cities. It will be implemented over 5 years, with an outlay of Rs. 2,87,000
crore. Moreover, the Urban Swachh Bharat Mission will be implemented with
a total financial allocation of Rs 1,41,678 crore over a period of 5
years from 2021-2026. Also to tackle the burgeoning problem of air pollution,
government proposed to provide an amount of Rs. 2,217 crore for 42 urban
centres with a million-plus population in this budget. A voluntary vehicle
scrapping policy to phase out old and unfit vehicles was also announced.
Fitness tests have been proposed in automated fitness centres after 20 years in
case of personal vehicles, and after 15 years in case of commercial vehicles
2. Physical
and Financial Capital and Infrastructure
AatmaNirbhar
Bharat-Production Linked Incentive Scheme
Finance
Minister said that for a USD 5 trillion economy, our manufacturing sector has
to grow in double digits on a sustained basis. Our manufacturing companies need
to become an integral part of global supply chains, possess core competence and
cutting-edge technology. To achieve all of the above, PLI schemes to create
manufacturing global champions for an AatmaNirbhar Bharat have been announced
for 13 sectors. For this, the government has committed nearly Rs.1.97
lakh crore in the next 5 years starting FY 2021-22. This initiative will help
bring scale and size in key sectors, create and nurture global champions and
provide jobs to our youth.
Textiles
Similarly,
to enable the textile industry to become globally competitive, attract large
investments and boost employment generation, a scheme of Mega Investment
Textiles Parks (MITRA) will be launched in addition to the PLI scheme.
This will create world class infrastructure with plug and play facilities to
enable create global champions in exports. 7 Textile Parks will be established
over 3 years.
Infrastructure
The
National Infrastructure Pipeline (NIP) which the Finance Minister announced in
December 2019 is the first-of-its-kind, whole-of-government exercise ever
undertaken. The NIP was launched with 6835 projects; the project pipeline has
now expanded to 7,400 projects. Around 217 projects worth Rs 1.10 lakh crore
under some key infrastructure Ministries have been completed.
Infrastructure
financing - Development Financial Institution (DFI)
Dwelling
on the infrastructure sector, Smt Sitharaman said that infrastructure needs
long term debt financing. A professionally managed Development Financial
Institution is necessary to act as a provider, enabler and catalyst for
infrastructure financing. Accordingly, a Bill to set up a DFI will be
introduced. Government has provided a sum of Rs 20,000 crore to capitalise this
institution and the ambition is to have a lending portfolio of at least Rs 5
lakh crore for this DFI in three years time.
Asset
Monetisation
Monetizing
operating public infrastructure assets is a very important financing option for
new infrastructure construction. A “National Monetization Pipeline” of
potential Brownfield infrastructure assets will be launched. An Asset
Monetization dashboard will also be created for tracking the progress and to
provide visibility to investors. Some important measures in the
direction of monetisation are:
a. National
Highways Authority of India and PGCIL each have sponsored one InvIT that will
attract international and domestic institutional investors. Five operational
roads with an estimated enterprise value of Rs 5,000 crore are being
transferred to the NHAIInvIT. Similarily, transmission assets of a value
of Rs 7,000 crore will be transferred to the PGCIL InvIT.
b. Railways
will monetize Dedicated Freight Corridor assets for operations and maintenance,
after commissioning.
c. The
next lot of Airports will be monetised for operations and management
concession.
d. Other
core infrastructure assets that will be rolled out under the Asset Monetization
Programme are: (i) NHAI Operational Toll Roads (ii) Transmission Assets of
PGCIL (iii) Oil and Gas Pipelines of GAIL, IOCL and HPCL (iv) AAI Airports in
Tier II and III cities, (v) Other Railway Infrastructure Assets (vi)
Warehousing Assets of CPSEs such as Central Warehousing Corporation and NAFED
among others and (vii) Sports Stadiums.
Roads
and Highways Infrastructure
Finance
Minister announced that more than 13,000 km length of roads, at a cost of Rs
3.3 lakh crore, has already been awarded under the Rs. 5.35 lakh crore
Bharatmala Pariyojana project of which 3,800 kms have been constructed. By
March 2022, Government would be awarding another 8,500 kms and complete an
additional 11,000 kms of national highway corridors. To further augment road
infrastructure, more economic corridors are also being planned. She also
provided an enhanced outlay of Rs. 1,18,101 lakh crore for Ministry of Road
Transport and Highways, of which Rs.1,08,230 crore is for capital, the highest
ever.
Railway
Infrastructure
Indian
Railways have prepared a National Rail Plan for India – 2030. The Plan is to
create a “future ready” Railway system by 2030. Bringing down the logistic
costs for our industry is at the core of our strategy to enable “Make in
India”. It is expected that Western Dedicated Freight Corridor (DFC) and
Eastern DFC will be commissioned by June 2022.
For
Passenger convenience and safety the following measures are proposed:
a. Introduction
of aesthetically designed Vista Dome LHB coach on tourist routes to give a
better travel experience to passengers.
b. The
safety measures undertaken in the past few years have borne results. To further
strengthen this effort, high density network and highly utilized network routes
of Indian railways will be provided with an indigenously developed automatic
train protection system that eliminates train collision due to human error.
c. Budget
also provided a record sum of Rs. 1,10,055 crore, for Railways of which Rs.
1,07,100 crore is for capital expenditure.
Urban
Infrastructure
Government
will work towards raising the share of public transport in urban areas through
expansion of metro rail network and augmentation of city bus service. A new
scheme will be launched at a cost of Rs. 18,000 crore to support augmentation
of public bus transport services.
A
total of 702 km of conventional metro is operational and another 1,016 km of
metro and RRTS is under construction in 27 cities. Two new technologies i.e.,
“MetroLite” and “MetroNeo” will be deployed to provide metro rail systems at
much lesser cost with same experience, convenience and safety in Tier-2 cities
and peripheral areas of Tier-1 cities.
Power
Infrastructure
The
past 6 years have seen a number of reforms and achievements in the power sector
with the addition of 139 Giga Watts of installed capacity, connecting an
additional 2.8 crore households and addition of 1.41 lakh circuit km of
transmission lines.
Expressing
a serious concern over the viability of Distribution Companies, the Finance
Minister proposed to launch a revamped reforms-based result-linked power
distribution sector scheme with an outlay of Rs. 3,05,984 crore over 5
years. The scheme will provide assistance to DISCOMS for Infrastructure
creation including pre-paid smart metering and feeder separation, upgradation
of systems, etc., tied to financial improvements.
Ports,
Shipping, Waterways
Major
Ports will be moving from managing their operational services on their own to a
model where a private partner will manage it for them. For the purpose
the budget proposes to offer more than Rs. 2,000 crore by Major Ports on
Public Private Partnership mode in FY21-22.
A
scheme to promote flagging of merchant ships in India will be launched by
providing subsidy support to Indian shipping companies in global tenders
floated by Ministries and CPSEs. An amount of Rs. 1624
crore will be provided over 5 years. This initiative will enable greater
training and employment opportunities for Indian seafarers besides enhancing
Indian companies share in global shipping.
Petroleum
& Natural Gas
Smt
Sitharaman said that the government has kept fuel supplies running across the
country without interruption during the COVID-19 lockdown period. Taking note
of the crucial nature of this sector in people”s lives, the following key
initiatives are being announced:
a. Ujjwala
Scheme which has benefited 8 crore households will be extended to cover 1 crore
more beneficiaries.
b. Government
will add 100 more districts in next 3 years to the City Gas Distribution
network.
c. A
gas pipeline project will be taken up in Union Territory of Jammu &
Kashmir.
d. An
independent Gas Transport System Operator will be set up for facilitation and
coordination of booking of common carrier capacity in all-natural gas pipelines
on a non-discriminatory open access basis.
Financial
Capital
The
Finance Minister proposed to consolidate the provisions of SEBI Act, 1992,
Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and
Government Securities Act, 2007 into a rationalized single Securities Markets
Code. The Government would support the development of a world class
Fin-Tech hub at the GIFT-IFSC.
Increasing
FDI in Insurance Sector
She
also proposed to amend the Insurance Act, 1938 to increase the permissible FDI
limit from 49% to 74% and allow foreign ownership and control with safeguards. Under
the new structure, the majority of Directors on the Board and key management
persons would be resident Indians, with at least 50% of Directors being
Independent Directors, and specified percentage of profits being retained as
general reserve.
Disinvestment
and Strategic Sale
In
spite of COVID-19, Government has kept working towards strategic disinvestment.
The Finance Minister said a number of transactions namely BPCL, Air
India, Shipping Corporation of India, Container Corporation of India, IDBI
Bank, BEML, Pawan Hans, NeelachalIspat Nigam limited among others would be
completed in 2021-22. Other than IDBI Bank, Government propose to take up the
privatization of two Public Sector Banks and one General Insurance company in
the year 2021-22.
In
2021-22, Government would also bring the IPO of LIC for which the requisite
amendments will be made in this Session itself.
In
a very important announcement, the Finance Minister said that in the
AtmaNirbhar Package, she had announced to come out with a policy of strategic
disinvestment of public sector enterprises and said that the Government has
approved the said policy. The policy provides a clear roadmap for
disinvestment in all non-strategic and strategic sectors. Government has
kept four areas that are strategic where bare minimum CPSEs will be maintained
and rest privatized. In the non-strategic sectors, CPSEs will be privatised,
otherwise shall be closed. She said that to fast forward the disinvestment
policy, NITI Aayog will work out on the next list of Central Public
Sector companies that would be taken up for strategic disinvestment. Government
has estimated Rs. 1,75,000 crore as receipts from disinvestment in BE 2020-21 .
Under
the pillar of Inclusive Development for Aspirational India, the Finance
Minister announced to cover Agriculture and Allied sectors, farmers” welfare
and rural India, migrant workers and labour, and financial inclusion.
Agriculture
Dwelling
on agriculture, she said that the Government is committed to the welfare of
farmers. The MSP regime has undergone a sea change to assure price that
is at least 1.5 times the cost of production across all commodities. The
procurement has also continued to increase at a steady pace. This has
resulted in increase in payment to farmers substantially.
In
case of wheat, the total amount paid to farmers in 2013-2014 was Rs. 33,874
crore. In 2019-2020 it was Rs. 62,802 crore, and even better, in 2020-2021,
this amount, paid to farmers, was Rs. 75,060 crore. The number of wheat
growing farmers that were benefitted increased in 2020-21 to 43.36 lakhs as
compared to 35.57 lakhs in 2019-20.
For
paddy, the amount paid in 2013-14 was Rs. 63,928 crore. In 2019-2020, this
increased to Rs.1,41,930 crore. Even better, in 2020-2021, this is further
estimated to increase to Rs. 172,752 crore. The farmers benefitted
increased from 1.24 crore in 2019-20 to 1.54 crore in 2020-21.
In
the same vein, in case of pulses, the amount paid in 2013-2014 was ` 236 crore.
In 2019-20 it increased to Rs. 8,285 crore. Now, in 2020-2021, it is at
Rs.10,530 crore, a more than 40 times increase from 2013-14.
The
receipts to cotton farmers have seen a stupendous increase from Rs. 90 crore in
2013-14 to Rs. 25,974 crore (as on 27th January 2021).
Early
this year, Honourable Prime Minister had launched SWAMITVA Scheme. Under this,
a record of rights is being given to property owners in villages. Up till now,
about 1.80 lakh property-owners in 1,241 villages have been provided cards and
the Finance Minister proposed during FY21-22 to extend this to cover all
states/UTs.
To
provide adequate credit to our farmers, Government has enhanced the
agricultural credit target to Rs. 16.5 lakh crore in FY22. Similarly, the
allocation to the Rural Infrastructure Development Fund increased from Rs.
30,000 crore to Rs. 40,000 crore. The Micro Irrigation Fund, with a corpus of
Rs.5,000 crore has been created under NABARD will be doubled.
In
an important announcement to boost value addition in agriculture and allied
products and their exports, the scope of “Operation Green Scheme” that is
presently applicable to tomatoes, onions, and potatoes, will be enlarged to
include 22 perishable products.
Around
1.68 crore farmers are registered and Rs. 1.14 lakh crore of trade value has
been carried out through e-NAMs. Keeping in view the transparency and
competitiveness that e-NAM has brought into the agricultural market, 1,000 more
mandis will be integrated with e-NAM. The Agriculture Infrastructure Funds
would be made available to APMCs for augmenting their infrastructure
facilities.
Fisheries
Finance
Minister proposed substantial investments in the development of modern fishing
harbours and fish landing centres. To start with, 5 major fishing harbours –
Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat – will be developed as
hubs of economic activity.
Migrant
Workers and Labourers
Government
has launched the One Nation One Ration Card scheme through which beneficiaries
can claim their rations anywhere in the country. One Nation One
Ration Card plan is under implementation by 32 states and UTs, reaching about
69 crore beneficiaries – that”s a total of 86% beneficiaries covered. The
remaining 4 states and UTs will be integrated in the next few months.
Government
proposes to conclude a process that began 20 years ago, with the implementation
of the 4 labour codes. For the first time globally, social security benefits
will extend to gig and platform workers. Minimum wages will apply to all
categories of workers, and they will all be covered by the Employees State
Insurance Corporation. Women will be allowed to work in all categories and also
in the night-shifts with adequate protection. At the same time, compliance
burden on employers will be reduced with single registration and licensing, and
online returns.
Financial
Inclusion
To
further facilitate credit flow under the scheme of Stand Up India for SCs, STs,
and women, the Finance Minister proposed to reduce the margin money
requirement from 25% to 15%, and to also include loans for activities allied to
agriculture. Moreover, a number of steps were taken to support the MSME sector
and in this Budget, Government has provided Rs. 15,700 crore to this sector –
more than double of this year”s BE.
4.
Reinvigorating Human Capital
The
Finance Minister said that the National Education Policy (NEP) announced
recently has had good reception, while adding that more than 15,000 schools
will be qualitatively strengthened to include all components of the National
Education Policy. She also announced that 100 new Sainik Schools will be set
up in partnership with NGOs/private schools/states. She also proposed to set up
a Higher Education Commission of India, as an umbrella body having 4 separate
vehicles for standard-setting, accreditation, regulation, and funding. For
accessible higher education in Ladakh, Government proposed to set up a Central
University in Leh.
Scheduled
Castes and Scheduled Tribes Welfare
Government
has set a target of establishing 750 Eklavya model residential schools in
tribal areas with increase in unit cost of each such school from Rs. 20 crore
to Rs. 38 crore, and for hilly and difficult areas, to Rs. 48 crore. Similarly,
under the revamped Post Matric Scholarship Scheme for the welfare of Scheduled
Castes, the Central Assistance was enhanced and allocated Rs. 35,219
crore for 6 years till 2025-2026, to benefit 4 crore SC students.
Skilling
An initiative is underway, in partnership with the United Arab Emirates
(UAE), to benchmark skill qualifications, assessment, and certification,
accompanied by the deployment of certified workforce. The Government also has a
collaborative Training Inter Training Programme (TITP) between India and Japan
to facilitate transfer of Japanese industrial and vocational skills, technique,
and knowledge and the same would be taken forward with many more countries.
5.
Innovation and R&D
The
Finance Minister said that in her Budget Speech of July 2019, She
had announced the National Research Foundation and added that the NRF outlay
will be of Rs. 50,000 crore, over 5 years. It will ensure that the overall
research ecosystem of the country is strengthened with focus on identified
national-priority thrust areas.
Government
will undertake a new initiative – National Language Translation Mission (NTLM).
This will enable the wealth of governance-and-policy related knowledge on the
Internet being made available in major Indian languages.
The
New Space India Limited (NSIL), a PSU under the Department of Space will
execute the PSLV-CS51 launch, carrying the Amazonia Satellite from Brazil,
along with a few smaller Indian satellites.
As
part of the Gaganyaan mission activities, four Indian astronauts are being
trained on Generic Space Flight aspects, in Russia. The first unmanned launch
is slated for December 2021.
6.
Minimum Government, Maximum Governance
Dwelling
on the last of the six pillars of the Budget, the Finance Minister proposed to
take a number of steps to bring reforms in Tribunals in the last few years for
speedy delivery of justice and proposes to take further measures to
rationalised the functioning of Tribunals. Government has introduced the
National Commission for Allied Healthcare Professionals Bill in Parliament,
with a view to ensure transparent and efficient regulation of the 56 allied
healthcare professions. She also announced that the forthcoming Census could be
the first digital census in the history of India and for this monumental and
milestone-marking task, Rs. 3,768 crore allocated in the year
2021-2022.
On
Fiscal position, she underlined that the pandemic”s impact on the economy
resulted in a weak revenue inflow. Once the health situation stabilised, and
the lockdown was being slowly lifted, Government spending was ramped up so as
to revive domestic demand. As a result, against an original BE expenditure of
Rs. 30.42 lakh crore for 2020-2021, RE estimates are Rs. 34.50 lakh crore and
quality of expenditure was maintained. The capital expenditure, estimated in RE
is Rs. 4.39 lakh crore in 2020-2021 as against Rs. 4.12 lakh crore in BE
2020-21.
The
Finance Minister said fiscal deficit in RE 2020-21 is pegged at 9.5% of
GDP and it has been funded through Government borrowings, multilateral
borrowings, Small Saving Funds and short term borrowings. She added that the
Government would need another Rs 80,000 crore for which it would be approaching
the markets in these 2 months. The fiscal deficit in BE 2021-2022 is
estimated to be 6.8% of GDP. The gross borrowing from the market for the next
year would be around 12 lakh crore.
Smt
Sitharaman announced that the Government plan to continue the path of fiscal
consolidation, and intend to reach a fiscal deficit level below 4.5% of GDP by
2025-2026 with a fairly steady decline over the period. “We hope to achieve the
consolidation by first, increasing the buoyancy of tax revenue through improved
compliance, and secondly, by increased receipts from monetisation of assets,
including Public Sector Enterprises and land”, she said.
In accordance with the views of the 15th Finance Commission,
Government is allowing a normal ceiling of net borrowing for the states at 4%
of GSDP for the year 2021-2022.
The
FRBM Act mandates fiscal deficit of 3% of GDP to be achieved by 31st March 2020-2021.
The effect of this year”s unforeseen and unprecedented circumstances has
necessitated the submission of a deviation statement under Sections 4 (5) and 7
(3) (b) of the FRBM Act which the Finance Minister laid on the Table of
the House as part of the FRBM Documents.
On
9th December 2020,
the 15th Finance
Commission submitted its final report, covering the period 2021-2026 to the
Rashtrapatiji. The Government has laid the Commission”s report, along with the
explanatory memorandum retaining the vertical shares of the states at 41%.
On the Commission”s recommendation, the Budget provided Rs.
1,18,452 crore as revenue deficit grant to 17 states in 2021-22.
PART-B
In
Part B of the Budget Speech, the Union Minister Smt. Nirmala Sitharaman seeks
to further simplify the Tax Administration, Litigation Management and ease the
compliance of Direct Tax Administration. The indirect proposal focuses on
custom duty rationalization as well as rationalization of procedures and easing
of compliance.
DIRECT
TAX PROPOSALS
The Finance Minister provided relief to senior citizens in filing of income tax
returns, reduced time limit for income tax proceedings announced setting up of
the Dispute Resolution Committee, faceless ITAT, relaxation to NRIs, increase
in exemption limit from audit and relief for dividend income. She also
announced steps to attract foreign investment into infrastructure, relief to
affordable housing and rental housing, tax incentives to IFSC, relief to small
charitable trusts, and steps for incentivizing Start-ups in the country.
Smt.Nirmala Sitharaman, in her Budget speech, said that post-pandemic, a new
world order seems to be emerging and India will have a leading role
therein. She said in this scenario, our tax system has to be transparent,
efficient and should promote investment and employment in the country.
The Minister said that at the same time, it should put minimum burden on our
tax payers. She said that a series of reforms had been introduced by the
Government for the benefit of tax payers and economy, including slashing of
corporate tax rate, abolition of dividend distribution tax, and increasing of
rebate for small tax payers. In the year 2020, the income tax return
filers saw a dramatic increase to 6.48 crore from 3.31 crore in 2014.
The Budget seeks to reduce compliance burden on senior citizens who are of 75
years of age and above. Such senior citizens having only pension and
interest income will be exempted from filing their income tax return. The
paying Bank will deduct the necessary tax on their income. The Budget
proposes to notify rules for removing the hardship of non-Resident Indians
returning to India on the issue of their accrued incomes in their foreign
retirement account. The Budget proposes to make dividend payment to REIT/InvIT
exempt from TDS. For Foreign Portfolio Investors, the Budget proposes
deduction of tax on dividend income at lower treaty rate. The Budget
provides that advanced tax liability on dividend income shall arise only after
the declaration or payment of dividend. The Minister said that this was
being done as the amount of dividend income cannot be estimated correctly by
the shareholders for paying advance tax.
The Finance Minister 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. In order to increase the supply
of affordable houses, she also announced extension of eligibility period for
claiming tax holiday for affordable housing projects by one more year to 31st March,
2022. For promoting supply of affordable rental housing for the migrant
workers, the Minister announced a new tax exemption for the notified affordable
rental housing projects.
In order to incentivize start ups in the country, Smt. Sitharaman announced
extension in the eligibility for claiming tax holiday for start ups by one more
year till 31st March,
2022. In order to incentivize funding of start ups, she proposed
extending the Capital Gains exemption for investment in start ups by one more
year till 31st March,
2022.
The Finance Minister said that delay in deposit of the contribution of
employees towards various welfare funds results in permanent loss of
interest/income for the employees. In order to ensure timely deposit of
employee”s contribution to these funds by the employers, she announced that
late deposit of employee”s contribution shall never be allowed as deduction to
the employer.
In order to reduce compliance burden, the Budget provides reduction in the
time-limit for reopening of income tax proceeding for three years from the
present six years. In serious tax evasion cases, where there is evidence
of concealment of income of Rs. 50 lakh or more in a year, the assessment can
be reopened upto 10 years but only after the approval of the Principal Chief
Commissioner.
Stating the resolve of the Government to reduce litigation in the taxation
system, the Finance Minister said that the Direct Tax Vivad se Vishwas Scheme
announced by the Government has been received well. Until 30th January, 2021,
over one lakh ten thousand tax payers have opted to settle tax dispute of over
Rs. 85 thousand crores under the Scheme. To further reduce
litigation of small tax payers, she proposed to constitute a Dispute Resolution
Committee. Anyone with a taxable income upto Rs. 50 lakh and disputed
income upto Rs. 10 lakh shall be eligible to approach the Committee. She
also announced setting up of National Faceless Income Tax Appellate Tibunal
Centre.
To incentivize digital transaction and to reduce the compliance burden of the
person who is carrying almost all of the transactions digitally, the Budget
proposes to increase the limit for tax audit for persons who are undertaking 95
per cent of their transaction digitally from Rs. 5 Crore to Rs. 10 Crore.
To attract foreign investment into infrastructure sector, the Budget proposes
to relax certain conditions relating to prohibition on private funding,
restriction on commercial activities and direct investment in
infrastructure. In order to allow funding of infrastructure by issue of
zero coupon bonds, the Budget proposes to make notified infrastructure debt
funds eligible to raise funds by issuing tax efficient zero coupon bonds.
In order to promote International Financial Services Centre (IFSC) in GIFT
City, the Budget proposes more tax incentives.
The Budget proposes that details of capital gains from listed securities,
dividend income and interest from banks, post office etc. will also be
pre-filled to ease filing of returns. Details of salary income, tax
payment, TDS etc already come pre-filled in returns.
In order to reduce compliance burden on the small charitable trust running educational
institutions and hospitals, the Budget proposes to increase the limit on annual
receipts for these trusts from present Rs.1 Crore to Rs. 5 Crore for
non-applicability of various compliances.
INDIRECT
TAX PROPOSALS
On
the issue of Indirect Tax proposals, the Minister said that record GST
collections have been made in the last few months. She said several
measures have been taken to further simplify the GST. The capacity of
GSTN system has been announced. Deep analytics and artificial intelligence
have been deployed to identity tax evaders and fake billers, launching special
drives against them. The Finance Minister assured the House that every
possible measure shall be taken to smoothen the GST further and remove
anomalies such as the inverted duty structure.
With respect to the custom duty policy, the Finance Minister said that it has
the twin objectives of promoting domestic manufacturing and helping India get
on to global value change and export better. She said that the thrust now has
to be on easy access to raw materials and exports of value added
products. In this regard, she proposed to review 400 old exemptions
in the custom duty structure this year. She announced that extensive
consultation will be conducted and from 1st October, 2021, a revised custom duty
structure free of distortions will be put in place. She also proposed that any
new custom duty exemptions henceforth will have validity upto to the 31st March following
2 years of the date of its issue.
The Finance Minister announced withdrawal of a few exemptions on parts of
chargers and sub-parts of mobile phones further some parts of mobiles will move
from “NIL” rate to a moderate 2.5 per cent. She also announced reducing
custom duty uniformly to 7.5 per cent on semis, flat, and long products of
non-alloy and stainless steel. She also announced exempting duty on steel
scrap for a period upto 31st March
2022.
Stressing on the need to rationalize duty on raw material inputs to man-made
textile, the Finance Minister announced bringing nylon chain on par with
polyester and other man-made fibers. Announcing uniform deduction of the BCD
rates on Caprolactam, nylon chips and nylon fiber and yarn to 5 per cent, the
Minister said this will help the textile industry, MSMEs and exports too.
She also announced calibration of customs duty rate on chemical to encourage
domestic value addition and to remove inversions. The Minister also
announced rationalization of custom duty on gold and silver.
The Finance Minister said that a phased manufacturing plan for solar cells and
solar panels will be notified to build up domestic capacity. She
announced raising duty on solar inverter from 5 per cent to 20 percent and on
solar lanterns from 5 per cent to 15 per cent.
The Finance Minister in her Budget speech said that there is immense potential
in manufacturing heavy capital equipment domestically and the rate structure
will be comprehensively reviewed in due course. However, she announced
revision in duty rates on certain items immediately including tunnel boring
machine and certain auto parts.
The Budget proposes certain changes to benefit MSMEs which include increasing
duty on steel screws, plastic builder wares and prawn feed. It also
provide for rationalizing exemption on import of duty free items as an
incentives to exporters of garments leather and handicraft items. It also
provides withdrawing exemption on imports of certain kind of leather and
raising custom duty on finished synthetic gem stones.
To benefit farmers, the Finance Minister announced raising custom duty on
cotton, raw silk and silk yarn. She also announced withdrawing end-use
based concessions on denatured ethyl alcohol. The Minister also proposed
an Agriculture Infrastructure and Development Cess on a small number of
items. She said “while applying the cess, we have taken care not to put
additional burden on consumers on most items.
Regarding rationalization of procedures and easing of compliance, the Finance
Minister proposed certain changes in the provisions relating to ADD and CVD
levies. She also said that to complete customs investigation, definite
time-lines are being prescribed. The Minister said that the Turant Custom
Initiative rolled out in 2020 has helped in putting a check of misuse of
FTAs.
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