Indian Union Budget 2021.

Complete Analysis of Indian Union Budget 2021.

Finance Minister Nirmala Sitharaman has arranged Union Budget 2021 speech. She has introduced various benefits for the investors, depositors, and taxpayers. While keeping the Income Tax part rates fixed, FM Sitharaman has provided support for senior citizens above 75 and NRIs by introducing few changes.

Senior citizens who are earning pension and income from deposits are excused from filing Income Tax Return. Annual premium up to Rs 2.5 lakh on the development of ULIP will also be exempted from Tax. However, EPF interest income above Rs 2.5 lakh will be taxable.

The Government will also take all the essential steps to provide GST relief by reducing inverted GST structures. As the FM first had promised that the post-COVID Budget 2021 will be like no other, the common man was assuming that the government would increase some tax benefits through the budget. Many experts and skillful bodies like ICAI had also supported the government to increase the judgment limit under Section 80C of the Income Tax Act.

 Expect More precious Phones as Govt backpacks customs duty on parts

The Budget 2021 is based on the six columns- as physical, financial capital, and infrastructure, health and well-being, including development for aspirational India, reinvigorating human capital, innovation, and R&D, and minimum government and maximum governance.

Describing the current Budget as an active and not a reactive budget, the FM stated that India is moving from Covid-related improvements to Atmanirbhar resolve. All eyes were set on the Union Budget 2021 and besides the parliamentarians, it was seen by both domestic and foreign investors, middle class, and corporates, along with different interest groups like farmers.

The 2.5 % duty is also appropriate on parts of manufacture of PCBA (Printed Circular Board Assembly)of cellular mobile phones, camera modules, and manufacture of connectors and raw materials.

In a bid to develop the manufacturing sector in India, the government has developed the customs duty for up to 10% on mobile chargers, sub-parts of phones. This step could lead to a rise in the cost of mobile phones by 3-4% from February 2, 2021.

Government focuses on Fiscal Deficit & Tax Exemption for Senior Citizens

Finance Minister has announced some important changes to the taxation rule that includes the elimination of income tax for senior citizens under special requirements, new rules for the scrapping of double taxation for NRIs, and a decrease in the period of tax charges. She has also published that the advance tax burden on interest income will arise after the statement of payment of interests.

In her speech, Nirmala Sitharaman also said that India`s fiscal deficit is expected to jump to 9.5 percent of GDP in 2020-21 as per Updated Estimates. The rise in fiscal deficit is estimated on the account of the increase in investment

While exposing the Union Budget 2021-22 in the Lok Sabha, Sitharaman said that the government is expecting to bring down the fiscal deficit below 4.5 percent, which has risen to a high of 4.6 percent in 2019-20. The fiscal deficit is expected to go down below 4.5 percent of GDP by 2025-26

What is a Fiscal Deficit?

Fiscal Deficit is the difference between the expenditure of the government and the income generated in a financial year. It is calculated both in simple terms and as a percentage of the country`s GDP.

According to the Finance Minister, the government is planning to borrow Rs. 80,000 crores during the remaining two months of the current fiscal year.

 Healthcare expenditure increases up in the budget.

The government focuses on the healthcare sector in the wake of the pandemic. The focus of the entire world has been majorly centered on the healthcare industry. Keeping with the trend, the post-COVID budget provides a major advance to healthcare and infrastructure.

In healthcare spending, Sitharaman announced a total spend of around Rs 2.23 Lakh crore on healthcare, which is a 137% increase from last year under The Atmanirbhar Swasth Bharat Yojana. The government also suggests a budget of Rs 35,000 crore on COVID 19 vaccine development and medicine. This will assure continuous healthcare services for more people.

Along with the National Health Mission, the investment of Rs 64,180 crores over the next 6 years are supposed to improve primary, secondary, and tertiary healthcare. The government has also introduced the establishment of critical care units and hospital sections in the country`s national market growth and place India as an important player in the global markets.

First Paperless Budget Has  Acquired for Business Start-Ups.

The start-up sector also gained a good share of the considered public expenditure for the fiscal year set to begin from April 1, this year. To help young start-up owners and aspiring business people, various steps have been introduced by the Finance Minister in the Union Budget that was exposed in the Lok Sabha yesterday. The allocation for Startup India leadership has been raised marginally to Rs 20.83 crore for fiscal 2021-22 from Rs 20 crore in 2020-21.

Most important, Sitharaman introduced to increase in tax holiday to start-up owners for one additional year up to March 31, 2022. Along with this, the eligibility period of maintaining capital gains freedom for the investment made in the startups has also been extended till March 31, 2022

In the Union Budget 2021-22, Nirmala Sithraman has also proposed to set up a 'world-class' Fintech (Finance-Technology Firms) park at Gujarat International Finance Tec-City, near the state's capital Gandhinagar. It has also been introduced to apportion a sum of Rs 15,000 to improve the perception of digital payments as well as other measures to boost financial inclusion.

For making legal agreements and regulations easier, the finance minister has advised using data analytics, artificial intelligence, machine learning to make regulatory filings more frictionless for businesses and startups in a revise of the ministry of corporate affairs (MCA) portal. The Centre had said that the ministry would look to introduce AI-based features in MCA-21 when version 3.0 of the portal is rolled out

MCA-21 shares important information about firms to various stakeholders such as the regulators, investors, creditors, and companies. The MCA-21 3.0 will reportedly have various processes to reduce the regulatory process. It is required to have a single source of truth, ease of doing business, re-adjudication, online compliance monitoring, among others, through making the authenticity and comprehensiveness of corporate affairs even better.

It includes a healthcare door for the entire country for digital health management, as well as a Mission Poshan 2.0 for nutrition and diet programs in rural districts.

First Paperless Budget Has Acquired for the MSME Sector.

Nirmala Sitharaman has allocated a fund of over Rs 15,000 Crore to the Micro, Small, and Medium Enterprises, which stands at twice the amount distributed to the sector last fiscal. We have taken many steps to support the MSME sector in this budget. I have contributed Rs 15,700 crore more than twice the previous year," said the Finance Minister. 

The budgets meet the custom duty rates on several commodities to support the MSMEs affected by the COVID-19 caused an economic slowdown. Customs duty on flat, and long products of non-alloy, alloy, and stainless steels has been decreased to 7.5 percent regularly as per the Union Budget for 2021-22.  To provide relief to metal recyclers, mostly MSMEs, I am releasing duty on steel pieces for a period up to March 31, 2022. Further, I am also removing ADD and CVD on certain steel products," said Nirmala Sitharaman.

The customs duties on steel pins and plastic builder wares have been increased from 10 percent to 15 percent while on prawn supplies it has increased to 15 percent from the existing 5 percent. Meanwhile, the duty on cooper piece has been divided from 5 percent to 2.5 percent. For MSMEs selling in the textile industry,  nylon chain has been made on par with polyester and other artificial fabrics as part of raising duty on raw materials and inputs

To provide budgetary reasons to the promoters and exporters of garments, leather, and handicraft products that are in the MSME sector, Nirmala Sitharaman declared the removal of freedoms on imports of some types of leathers as they are built domestically in quality and quantity.

Apart from the above measures, the finance minister has announced the founding of a special framework for MSMEs for debt analysis. To determine the case faster, the NCLT framework will also b established including the implementation of the e-Courts system from the businesses in the sector. An additional year of tax holiday has also been given to the affordable housing business.