Union Budget 2021-22-Top 100 Highlights of Historic Budget 2021 by FM-Compiled By Er Sundeep Bansal
Highlights of Union Budget 2021-22.
General 1. First digital Budget in the history of India 2. Vehicle Scrapping Policy. Vehicle Fitness Test after 20 years in case of Personal vehicle and 15 years in case of commercial vehicles 3. 64,180 crores allocated for New Health Schemes 4. 35,000 crores allocated for Covid Vaccine 5. 7 Mega Textile Investment parks will be launched in 3 years 6. 5.54 lakh crore provided for Capital Expenditure 7. 1.18 lakh crore for Ministry of Roads 8. 1.10 lakh crore allocated to Railways 9. Proposal to amend Insurance Act. Proposal to increase FDI from 49% to 74 %. 10. Deposit Insurance cover (DICGC Act 1961 to be amended). Easy and time bound access of deposits to help depositors of stress banks. 11. Proposal to revive definition of ‘Small Companies’ under Companies Act 2013. Capital less than 2 Cr. and Turnover Less than 20 Cr. 12. Disinvestment: IPO of LIC, Announced Disinvestment of Companies will be completed in FY 2021-22
Direct and Indirect tax 1. Senior Citizens: Reduced Compliance burden. 75 years and above. Proposal not to file ITR if only pension income and interest income. 2. Reduction in time for IT Proceedings: Reopening of Assessments period reduced from 6 years to 3 years except in cases of serious tax evasion cases 3. Proposal to constitute ‘Dispute Resolution Committee’. (Taxable income 50 lakhs and disputed income 10 lakh). 4. National Faceless Income Tax Appellate Tribunal Centre 5. Relaxations to NRI: Propose to notify rules for removing hardship for double taxation. 6. Tax Audit Limit: Proposal of tax audit increased from 5 Cr. to 10 cr. (Only for 95% digitized payments business) 7. Propose to provide relief on advance tax liability on dividend income. 8. Propose to include tax holidays for Aircraft leasing companies 9. Prefiling of returns (Salary, Tax payments, TDS etc.) Details of Capital gains from listed Securities, dividend income, etc. will be prefilled 10. Small Charitable Trusts. Increased from 1 crore to 5 crores (Compliance limit) 11. Late deposit of employee’s contribution by employer will not be allowed as deduction 12. Incentive to startup: Tax holiday exemption for one more year 13. Duties reduced on various textile, chemicals and other products 14. Gold and Silver (BCD reduced) 15. Agriculture Products: Custom duty increased on cottons, silks, alcohol etc.
1. Senior citizen having an age of more than 75 years with an income of interest and pension exempted from filing of return. 2. Threshold exemption limit under section 10(23C) for Charitable Institution (Educational & Medical Universities for charitable purpose only) raised from Rs. 1 Crore to Rs. 5 crores (aggregate receipts). 3. Dispute resolution committee: Anyone with total income less than 50 lacs and disputed income less than 10 Lacs can approach this, faceless committee. 4. Pre-Filling of Returns – Details of Capital Gains, Dividend Income and Interest income will be pre-filled in the returns. 5. The time limit for reopening of assessment reduced from 6 years to 3 years, Re-assessment can be done within 10 years if the concealed income exceeds Rs. 50 lakhs and approval of Principal CCIT is must. 6. Threshold limit for exemption from tax audit for digital transactions (95%) increased from Rs. 5 Crores to Rs. 10 Crores otherwise the old limit. 7. Vivad Se Viswas Scheme Last Date of filing extended to 28th February, 2021. 8. Advance tax liability on the dividend to accrue only after it is declared. 9. Dividend paid to InVITs and REITs shall be exempt from TDS. 10. Time limit for incorporation of a start up to claim deduction under Section 80-IAC further extended by one more year. 11. Government to notify rules to eliminate the double tax for NRIs on foreign retirement funds. 12. No deduction for any delay in deposit of employee’s contribution to the welfare schemes
13. Govt. provides a big boost to the Startups by allowing Non-Residents to incorporate OPCs in India, residency for a person setting up a One person company from 182 days to 128 days in India. 14. ‘Capital’ (Rs 50 lacs) and ‘Turnover’ ( Rs 2 crs) qualifying criteria for ‘One Person Company’ are proposed to be removed 15. Definition of small companies to be raised by increasing the capital limit from Rs 50 lakh to Rs 2 crore and turnover from Rs 2 crore to Rs. 20 crores 16. Govt. to introduce Data Analytics, Artificial Intelligence, Machine language-driven 3.0 version of MCA portal
17. Govt. to consolidate SEBI Act, 1992, Depositories Act, 1996 and SCRA into a single Securities Market Code 18. FDI in the Insurance sector to be increased from 49% to 74% with foreign control but with safeguards 19. SEBI will be notified as a regulator for a gold exchange 20. FM proposes the decriminalization of LLP Act, 2008 21. Affordable housing 1.5 lac deduction will now be even available for loan taken till 31.3.2022
Direct tax proposals highlights
1. Relief to senior citizen: for 75 years and above: Having only pension and interest income: exemption from filing ITR: Paying banks will do TDS
2. Reassessment: from 6 years to 3 years
Serious tax evasion cases: where evasion evidence is Rs.50lac or more then reopening within 10 years-
3. Dispute resolution committee: it will be faceless: anyone with total income less than 50 lacs and disputed income less than 10 Lacs can approach this committee
4. Faceless ITAT: faceless ITAT centre will be set where personal hearings will be conducted through VC
5. Tax Audits: digital transactions from 5 cr to 10 cr
6. Advance tax liability on dividend will arise only after declaration of dividend
7. Affordable housing 1.5 lac deduction will now be even available for loan taken till 31.3.2022
8. 80IBA: extended 31.3.2022
9. Tax incentive of affordable renting housing project
10. Pre filled income tax return will have pre filled data regarding Dividend, post office interest income, salary etc.
11. Trusts: educational and hospitals: limit increased from Rs.1 Cr to Rs. 5 crore (10(23C)
12. Late deposit of employee contribution of PF will now be not allowed as deduction.
*All above proposals could be properly analyzed once budget documents are released.
Top 100 Highlights of Historic Budget 2021 by FM
1. No tax returns for Senior Citizens, age 75 years and above who have pension and interest income 2. Income Tax returns will have prefilled data from capital gains etc. To ease compliance for taxpayers, details of salary income, tax payment and TDS are prefilled currently 3. Faceless Income tax Appellate Tribunals National faceless ITAT centre to be set up 4. Reduce time limit for reopening of tax assessments to 3 years. Reduction in Time for Income Tax Proceedings – Presently an assessment can be opened in 6 years, and in serious tax fraud cases for up to 10 years. FM proposes to revise this limit for reopening of assessments to 3 years from the present 6 years 5. Tax Audit threshold of turnover further increased for digital transactions to 10 crores 6. Dispute Resolution Panel for small taxpayers 7. Advance tax on dividend to accrue only after it is declared. 8. Affordable housing is a priority area Rs1.5 lakh for loans to purchase affordable house is now extended by one more year 9. To further extend efforts towards unorganised labour force, I propose to launch a portal to collect relevant information on workers, building/construction workers among others 10. To enable deduction of tax on dividend income at lower treaty rates for FPIs 11. India FY21 budget deficit is said to be 9.5% of GDP. FY’21 fiscal deficit (Revised Estimate) pegged at 9.5% of GDP; fiscal deficit seen at 6.8% for FY22 12. India is said to estimate FY22 expenditure at about Rs 35 lakh crore. 13. 11,000 kms of national Highway to be Completed 14. Divestment target for FY22 at Rs 1.75 lakh cr. Asking Niti Aayog to work on the next list of PSU cos that could be taken up for divestment. Other than IDBI Bank, two other PSBs and one general insurance company to be divested in FY22 15. Introduce Investor Charter as a right of all investors across financial instruments. 16. 100% Electrification of Rail Routes by DEC 2023. 17. Decriminalisation under LLP Act Small Company definition changed, One Person Company revamped will be Big Boost to Startups 18. NRIs to be allowed to set up One Person Companies 19. The total estimate of all relief measures announced by govt & RBI so far is Rs 27.1 lakh cr (13% of GDP) in Covd19 20. Forthcoming census will be a digital census, allocating Rs 3768 crores for the exercise 21. The National Statistical Office has projected a 7.7% contraction in GDP in 2020-21. 22. Through the past year, the Finance Minister announced a Rs 30-lakh-crore plan, in ‘mini-budgets’ to beat Covid 23. Aim to double farmers income. The total financial impact of all AatmaNirbhar packages including measures taken by RBI was estimated to be about Rs 27.1 lakh crores 24. A portion of the agricultural fund will be allocated to APMC for furthering their infrastructure 25. New scheme called PM Aatmanirbhar Swastha Bharat to be launched, outlay of `64,180cr over 6 yrs
26. Announcing a voluntary scrapping policy to phase out polluting vehicles. Vehicles to undergo fitness tests after 20 years for personal vehicles and 15 years for CVs 27. Jal Jeevan Mission Urban to be launched at outlay of Rs 2.87 lakh crore. 28. 17,000 rural and 11,000 urban health and wellness centres to be set up. 29. India has two COVID-19 vaccines available and we expect two more vaccines soon 30. A vision for Atmanirbhar Bharat in part of Sitharaman’s first part. 31. FY22 budget proposals based on six pillars namely Health & Well-being, Inclusive Development Human Capital, Innovation and R&D, Physical & Financial capital and infrastructure, Minimum government, maximum governance 32. FY22 outlay (budget estimate) for health & well-being up 138%, is Rs 2,23,846 cr. 33. Scheme of mega invt textile park will be launched in addition to PLI scheme, 7 textiles parks to be unveiled over 3 years. Rs5 lakh cr will be lent by DFI in 3 years time 34. Professionally managed development financial institution (DFI) will be introduced with an allocation of 20,000cr 35. Asset monetisation dashboard will be created to provide clarity to investor Monetization of gas pipeline of GAIL, HPCL planned 36. A scheme of Mega Investments Textile Park will be launched in addition to PLI Scheme which will create world class infrastructure with plug & play facilities to enable global champions in exports 37. To tackle the problem of air pollution, propose, Rs 2200 crore for 42 urban centres; also announcing a vehicle scrapping policy towards reducing vehicular pollution 38. Rs. 2.86 Cr. Household tap connection to be established. 39. For 2021-22; capital expenditure seen at Rs 5.54 lakh cr, +34.5% increase YOY 40. 3500 km of national highway work being planned in Tamil Nadu at an investment of Rs 1.3 lakh cr 41. FY21 capital expenditure seen at Rs 4.39 lakh crore 42. Rs 44,000 crore under capital expenditure to be given to Department of Economic Affairs in FY22 43. Over and above this, Rs 2 lakh crore will be provided to states and autonomous bodies to nudge their expenditure. 44. Rs 1.03 lakh for highway project for Tamil Nadu 45. FY 22 allocation for Railways at Rs 1,10,055cr 46. Highway works proposed: 3500kms corridor in TN 1,100km in Kerala at investment of Rs 65,000 cr 675km in West Bengal at cost of Rs 95,000 cr 1300 kms in Assam in coming 3 years 47. Over 13,000 km length of roads at a cost of Rs 3.3 lakh cr has already been awarded under Rs 5.35 lakh cr Bharatmala project of which 3,800 kms have been constructed 48. Main interventions under PM Aatmanirbhar Swasth BharatYojana include Support for Health and Wellness Centres, Setting up Integrated Public Health labs in all districts, Critical care hospital blocks, Strengthening of NCDC 49. National Monetisation Pipeline of potential brownfield infra projects to be launched. Details a few road and power assets to be transferred to NHAI, PGCIL InvITs. 50. Scheme to assist Discoms will be launched with an outlay of over Rs 3 lakh cr
51. Railway to monetise dedicated freight corridors, 52. Four Acts converged into Securities Market Code, Investor Charter Introduced to Protect Investors, Insurance Act Amended to introduce FDI and AMC to be set up to take over stressed debts of Banks 53. Propose to amend the Insurance Act, propose to hike FDI limit to 74 percent from 49 percent. Also to allow foreign ownership & control with safeguards 54. Proposes to consolidate provisions of SEBI Act, Depositories Act, Securities Contracts Regulation Act, Government Securities Act 55. Decriminalisation under LLP Act Small Company definition changed, One Person Company revamped will be Big Boost to Startups 56. Proposes to change the definition of a small company under the Companies Act 2013 by increasing their threshold for paid-up capital, from not exceeding Rs 50 lakhs, to not exceeding Rs 2 crores and Turnover from not exceeding Rs 2 crores to not exceeding 20 crores 57. Scheme for promoting flagging of merchant ships in India will be launched by providing subsidy support 58. Privatisation of one General Insurance PSU and IPO of LIC proposed 59. PM Swastha Bharat Yojana with an outlay of over Rs64000 cr 60. Govt to announce a policy for the privatisation of state-run cos & to create new list of companies for Divestment 61. Ujjwala Scheme to Cover 1 Crore more Beneficiaries 62. 100 more Dist. to be added under city Gas Expansion 63. In case of wheat, the amount paid to farmers in 2019-2020 was ₹62,802 crore and in 2020-2021 it was further increased to ₹75,060 crore 64. To provide Rs 20,000 crore in FY22 for recapitalisation of public sector banks. 65. 1.54 crore farmers benefited from MSP in paddy and what in FY21 vs 1.24 crore YoY 66. Asset reconstruction and management company to be set up for stressed assets of banks: 67. Ujjwala scheme will be expanded to over 1 crore more beneficiaries. We will add 100 more districts in the next three years to the city gas distribution network. A gas pipeline project will be taken up in Jammu and Kashmir 68. The MSP regime has undergone a change to assure price that is at least 1.5 times the cost of production across all commodities: 69. National Infrastructure Pipeline was launched with 6835 projects 70. Propose PSU Bank RECAP worth Rs. 20,000 Cr. FY 22. 71. Government sets agriculture credit target of Rs 16.5 lakh crore for FY22. 72. One-nation, one-ration plan under implementation by 32 states and union territories 73. Five major fishing harbours to be developed as hubs for economic activity 74. Micro irrigation corpus doubled to Rs 10,000 cr. Agriculture infra fund will be made available to APMCs 75. 100 new sainik schools will be set up in partnership with NGOs. There are other ‘umbrella’ structures to be created for higher education
76. For further setting up of Higher Education in Ladakh under NEP 2020, I propose to set up a central university in place 77. Provided Rs. 15,700 crore to MSME sector. MSME allocation to be doubled. Government to set aside Rs 15,700 crore in FY22. Government also proposes to reduce margin money requirement from 25% to 15% for startups. 78. Propose Rs 40000 Crore outlay for FY22 Rural Infra Fund 79. After achieving target of 8 crore LPG connections, Pradhan Mantri Ujjwala Yojana to cover another additional 1 crore beneficiaries. 80. Green scheme to be expanded to 22 perishable vegetable products 81. More than 15,000 schools in the country will be qualitatively strengthened to include all components of the National Education Policy: 82. On the recommendations of the 15th Finance Commission, a detailed exercise has been undertaken to rationalize and bring down the number of Centrally Sponsored Schemes. This will enable consolidation of outlays, for better impact 83. Enhanced outlay of ₹ 1,18,101 crore for Roads 84. 1,000 more mandis will be integrated with electronic national market 85. A scheme for tea farmers will be introduced for the welfare of women and Children in Assam 86. Proposing substantial investments in the development of modern fishing harbours & fish landing centres. 5 major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip and Petuaghat will be developed as hubs for economic activities: 87. Record sum of ₹ 1,10,055 crore to be provided for Indian Railways, out of which ₹ 1,07,100 is for capital expenditure only 88. New scheme at a cost of ₹ 18,000 crore for augmentation of public bus transport services 89. Will facilitate deployment of innovative PPP models enabling private players to finance, acquire, operate and maintain over 20,000 buses 90. Y’22 Gross borrowing target at Rs 12 lakh crore; Need another Rs 80,000cr in next 2 months, will approach market to raise it 91. Govt proposes portal to collect info on gig-workers, building and construction workers, among others 92. Govt proposes to amend apprenticeship law to enhance opportunities for youth 93. Contingency Fund of India corpus to be raised to Rs 30,000 crore. 94. Normal ceiling for net borrowing for states at 4% of GSDP as per Finance Commission recommendations 95. Rs 1,500 cr earmarked for scheme to incentivise digital payments: 96. FM says government committed to bringing down fiscal deficit below 4.5 pc of GDP by 2025-26 97. Big boost for startups. Incorporation of one person companies to incentivize innovation in startups. Reducing residency limit for Indian citizen to set up 1 person company from 182 to 120 days 98. Govt proposes national language translation initiative 99. States to get 41 pc share of taxes as per 15th Finance Commission recommendation; govt has accepted the recommendation 100. proposes to review 400 old exemptions in Customs duties in FY22.
With reference to the union budget 2021, I, would like to inform that the budget documents are to be read carefully as there are few points which need to be understood clearly by its readers, few of which are enunciated as follows:
1. Reopening of income tax case assessments have been relaxed to 3 years from earlier 6 years, this will not be applicable in case of serious cases as per defined criteria. Further it is to be mentioned here that reopening shall be made only in cases flagged by system on the basis of data analytics, objection of C&AG and in search/survey cases. It is needless to mention that income tax assessees may be covered under these defined criteria.
2. With reference to pre-filled ITR, the Hon’ble Finance Minister has mentioned that interest from Post Office would also cover under pre-filled ITR, in my view, the post office has not been deducting TDS on the deposits accepted by post office, it has to be checked at the time of filing income tax returns (ITR) that interest from post office has been included in pre filled ITR or not?
3. Dispute Resolution Committee would be flooded with a number of online disputes in coming time as the government has been trying to ease the process to ensure efficiency, transparency and accountability.
4. Faceless ITAT hearings would still be a challenge for the income tax payers who are not having adequate infrastructure.
5. Few readers have assumed that TDS on Dividend is not required to be deducted, whereas exemptions from provisions of TDS have been provided only to Real Estate Investment Trusts (REIT) / Infrastructure Investment Trusts (InvIT). Further payment of advance tax on dividend has also been correlated with its declaration / payments only.
6. Few incentives, which have been mentioned in union budget 2021, are for recognized Startups. Startups are those which have been governed by DPIIT Notification. Every starting organization should not expect to claim the incentives proposed by Finance Minister in her budget speech.
7. Income tax assesses should give up the habits of late payments of statutory dues. Forget about non payment, now the assesses have to be more accurate in making timely payments of the statutory dues. This could be detrimental to the business owned by the assesses. Now, late deposits of Employees’ portion of Provident Funds are not allowed as a deduction under section 36(1)(va), it will be treated as an income under section 2(24)(x) of Income Tax Act, 1961 with no deductions.
8. Relief to senior citizens, having age of 75 years or more, has been presumed as it is not required to file income tax returns by senior citizens, whereas the same is applicable in case of incomes which have been earned by way of pension and interest only. If there are other incomes like income from House Property, Income from Business and Professions etc, the income tax returns are required to be filed.
9. Exemption from tax audit has been increased from Rs 5 Cr to Rs 10 Cr to the income tax assesses who would make digital transactions up to 95%. Further this is to inform that limit of 95% has to be applied in respect of all receipts and all payments, most of the entities make cash transactions and such entities are not covered under this exemption.
Hope the above would be useful. I request all of you to read and avoid hallucinations by enhancing the knowledge with respect to Union Budget 2021.