Budget 2021 sets India on path to high level development
- IBEF
- February 3, 2021
The 2021 Budget is growth-oriented and proposes to realign India's history of high development.
The budget focuses on six major growth drivers: health & well-being, physical & financial capital & infrastructure, aspirational India inclusive growth, reinvigorating human capital, innovation & research & development, minimum government and maximum governance.
For health and welfare, the budget allocation of Rs. 2,23,846 crore (US$ 30.65 billion), a 137% increase from the previous year, focuses on preventive, curative and holistic healthcare.
Bank recapitalization, R&D investments and the extension of FDI in insurance are commendable initiatives.
In the insurance sector, the finance minister proposed increasing the Foreign Direct Investment (FDI) cap to 74% from 49% .
The Minister of Finance said that the manufacturing sector would expand in double digits on a sustainable manner for a US$ 5 trillion economy. In order to achieve this, development schemes have been announced for 13 sectors to establish global manufacturing pioneers for the Aatmanirbhar Bharat (self-reliant India).
For this, in the next 5 years beginning FY 22, the government has allocated Rs. 1.97 lakh crore (US$ 26.97 billion).
The FY22 disinvestment goal is set at Rs. 1.75 lakh crore (US$ 23.96 billion). This will involve the elimination of the Centre's interest in 2 state-owned banks and a general insurance company, as well as the selling of large-scale assets. The proposed initial public offering (IPO) of Life Insurance Corporation of India (LIC) and the privatisation of Air India, Bharat Petroleum Corporation Ltd (BPCL), Container Corporation of India Ltd, or CONCOR, Pawan Hans, NINL and Shipping Corporation of India would also be included in the divestment programme (SCI).
Adequate support for agriculture, manufacturing, infrastructure, skills and policies for better governance and greater financial inclusion have been indicated. Fertilizers and food subsidies, funds from the Social Assistance Scheme have been decreased while priority has been provided to the clean water system, health, education.
The following are the tax reforms:
Relief for senior citizens: The budget proposes an exemption from income tax for senior citizens with only income from pensions and interest.
Reassessment: Section 148 of the Income Tax, where the time period for reassessment has been shortened from six years to three years. Extreme tax evasion is discussed in the plan, where evasion proof is Rs. 50 lakh (US$ 68.45 thousand) or more can be reopened within 10 years.
Dispute settlement committee: A faceless committee - This can be approached by someone with a total income of less than Rs. 50 lakh (US$ 68.45 thousand) and a disputed income of less than Rs. 10 lakh (US$ 13.69 thousand).
No tax audit for companies with up to Rs. 10 crore (US$ 1.37 million) in turnover.
Advance dividend tax liability may occur only after the dividend has been declared.
The deduction of affordable housing 1.5 lakh will also be available for loans taken until 31.3.2022.
The budget also extended the 80IBA bonus until 31.3.2022.
The tax incentive was extended until 2022 for an affordable rental housing initiative.
Pre-filled income tax returns would have pre-filled dividend details, interest income from the post office, salary etc.
Thus, the 2021 budget is a redesign of the old hits and the 6 development pillars. The budget is focusing on the strong support for the overall economic development.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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