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AKGVG Budget Highlights

Preface

The Union Finance Minister Nirmala Sitharaman presented 1st paperless budget and began the budget speech stating that the Atmanirbhar packages introduced by the government were like 5 mini budgets which included:

  • Performance-linked incentives.
  • Boost for domestic manufacturing.
  • Improved credit access for enterprises.
  • Moratorium on interest payments.
  • Thrust on affordable housing.
  • Booster shots for MNREGA.

The total estimate of all relief measures announced by govt & RBI so far is Rs 27.1 lakh cr (13% of GDP), the FINMIN stated.

On quantitative front:
  • For 2022, FINMIN proposed sharp increase in capital expenditure at 5.54 lakh crore, from Rs 4.39 lakh crore in 2021.
  • Divestment target for FY22 at Rs 1.75 lakh cr.
  • FY21 gross expenditure seen at Rs 34.5 lakh crore.
  • FY21 capital expenditure seen at Rs 4.39 lakh crore.
  • FY21 fiscal deficit pegged at 9.5% of GDP.
  • FY22 fiscal deficit target at 6.8% of GDP.
  • FY22 gross expenditure seen at Rs 34.83 lakh crore.
  • FY22 capital expenditure seen at 5.54 lakh crore.
  • Market borrowing in FY22 seen at 12 lakh crore.
  • Govt aims to bring fiscal deficit below 5% of the GDP by 2025-26.
6 pillars of Budget 2021-22:
  • 1. Health and wellbeing.
  • 2. Physical & Financial infrastructure.
  • 3. Inclusive development
  • 4. Development of human capital.
  • 5. Innovation.
  • 6. Minimum government, maximum governance.

Sectorial Highlights

Agriculture and farmers welfare

Corporate Governance:

  • Revised definition proposed for small companies under Companies Act, 2013 thereby increasing their threshold for capitalization to not exceeding Rs 50 lakh to not exceeding Rs 2 crore and turnover not exceeding Rs 2 crore to not exceeding Rs 20 crore.
  • Allowances for One Person Companies:
    • No restriction on paid-up capital and turnover for incentivizing incorporation of one-person companies.
    • Conversion of one-person company to any other kind, residency limit reduced from 182 days to 120 days.
    • Non-resident Indians can also incorporate one-person companies in India.
  • Government announced multi-state co-operative for ease of doing business.
Agriculture and farmers welfare

Healthcare:

  • Total budget outlay for healthcare is 2.23 lakh crore which is an increase of 137% from last year.
  • Rs 64,180 crore will be invested over 6 years to improve primary, secondary and tertiary healthcare.
  • Rs 35,000 crore for Covid-19 vaccines.
  • 17,000 rural and 11,000 urban health and wellness centres to be set up.
  • Integrated public health labs to be set up in each district.
Agriculture and farmers welfare

Agriculture and farmers’ welfare

  • Over Rs 75,000 crore paid to wheat farmers & Rs 1.72 lakh crore to paddy farmers in 2020-21.
  • MSP procurement to continue at a steady pace.
  • Increase in agriculture credit target to Rs 16.5 lakh crore.
  • 1,000 more mandis to be integrated with electronic national market.
Rural sector

Social sector

  • Social security benefits to be extended to gig and platform workers. for the first time.
  • 69 crore beneficiaries or 86% covered under one-nation, one-ration scheme.
  • Special scheme for welfare of women and children in Assam and West Bengal announced.
  • Rs 1,000 crore for tea workers in Assam and Bengal.
  • Minimum wages to now apply to all categories of workers.
  • Women to be allowed to work in all categories with adequate protection.
Social sector

Education

  • Over 15,000 schools to be qualitatively strengthened under National Education Policy.
  • Central university to be established in Leh.
Infrastructure

Infrastructure

  • Outlay of Rs 2.87 lakh crore for Jal Jeevan Mission.
  • Rs 2,217 crore outlay for 42 urban centers to tackle air pollution.
  • Urban Swachh Bharat 2.0 Mission to be launched at outlay of Rs 1.41 lakh crore over 5 years.
  • Seven textile parks to come up over three years.
  • 11,000km of national highway infrastructure to be built this year.
  • National Monetisation Pipeline for brownfield projects to be launched.
  • Next lot of airports to be privatized in tier 2 and 3 towns and cities.
  • Rs 18,000 crore for public buses.
  • Hydrogen energy mission for generating hydrogen out of green-powered sources announced.
  • Seven projects worth Rs 2,000 crore in PPP mode for ports.
  • Rs 3.05 lakh crore outlay for power sector.
  • 5 major fishing harbors to be developed.
Railways

Railways

  • Rs 1.15 lk cr for Railways, privatizing airports. Out of the Rs 1.15 lk cr for Railways, Rs 1.07 lk cr is towards CAPEX.
  • Indian Railways developed a National Rail Plan for 2030.
Miscellaneous

Miscellaneous

  • Government to set-up a Development Finance Institution (DFI), capitalised with Rs 20,000 crore. New DFI aims to have lending portfolio of Rs 5 lakh crore in 3 years.
  • India will introduce bill to set up new Development Financial Institution.
  • Govt to facilitate a world-class fintech hub at Gift city.
  • FDI in insurance hiked to 74% from 49%.
  • Government approved policy for disinvestment in all non-strategic and strategic sectors.
  • Further infusion of Rs 20,000 crore for public sector banks.
  • Proposal to consolidate provisions of SEBI Act, Depositories Act, Securities Contracts Regulation Act, Government Securities Act.
  • IPO of LIC in FY22.
  • MSME allocation to be doubled, Rs 15,700 crore in FY22.
  • New scrappage policy - 20 years in case of personal vehicles and 15 years in case of commercial vehicles.

Direct Taxation Highlights

  • Pensioners over 75 years of age with only interest and pension income to be exempted from filing income tax returns.
  • Time limit for reopening of cases reduced to 3 years from 6 year. However, if the concealed income concealed exceeds Rs 50 lacs, time limit increased to 10 years.
  • Faceless dispute resolution committee announced for settlement of cases for assessees with total income upto 50 lacs and disputed income upto 10 lacs.
  • Faceless ITAT scheme to be notified in-line with other faceless proceedings. Personal hearing if required will be conducted via video-conferencing only.
  • Rules to be notified to eliminate double tax for NRIs on foreign retirement funds.
  • Tax audit limit increased from Rs 5 crore to Rs 10 crore for users of digital platforms.
  • REITs (Real estate investment trusts) and Invit's (Infrastructure investment trusts) are not required to deduct TDS on dividends.
  • Advance tax liability on dividend income shall arrive only after declaration of dividends.
  • Tax efficient zero-coupon bonds to be introduced.
  • Affordable housing projects can avail tax holiday under section 80-IBA for another year till March 31, 2022. Rental housing schemes also incorporated under section 80-IBA. Exemption to individual tax-payers also extended to March 31, 2022
  • For providing ease in filing IT returns, details of capital gains, dividends and interest from banks, post offices, etc will be pre-filled just like Salary and TDS in ITR forms.
  • Tax exemption for aircraft leasing companies.
  • Tax exemption for relocating funds to IFSC.
  • Extension of tax holiday for start-ups by one more year.
  • Small trusts limit increased from 1 cr to 5 cr.
  • Late deposit of Employee’s contribution to PF and ESI emphasized to be non-allowed as a deduction to the employers

Indirect Taxation Highlights

  • ADD and CVD on certain steel products revoked.
  • Duties on copper scrap from 5% to 2.5% reduced.
  • Some parts of mobiles to move from NIL to 2.5% rate.
  • Cutting duty on copper scrapped to 2.5% from 5%.
  • Duty exempted on steel scrap for a specified period.
  • Rationalisation of customs duty structure by eliminating outdated exemptions.
  • Agriculture Infrastructure and Development Cess on small number of items.
We trust you will find this journal informative as well as useful.
For any queries, you can write to us at "info@akgvg.com".

Disclaimer: The entire contents of this journal have been prepared on the basis of relevant provisions and information existing at the time of preparation. The observations of the author are personal view and the author does not take any responsibility of the same and this cannot be quoted without the written consent of the author.

Best Regards!
Knowledge Updates Team
AKGVG & Associates
(Chartered Accountants)

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