Union Budget - Receipts Budget Highlights

The Finance Minister of India Presented Union Budget 2021-22 on February 01, 2021, amidst the COVID-19 pandemic. 2020-21 was a non-standard year with respect to the performance of the economy and government finances.

Union budget 2021 - Receipts

In the Year of 2021-22 the expected receipts to be Rs 19,76,424 crore which is 23% higher than 2020-21 of revised estimates. The Revised estimates for receipts were 29% lower than budget estimates in 2020-21.

Union Budget 2020 - Receipts budget increased due to higher revenues

Revenue estimate was boosted significantly in Union Budget 2020 owing to higher estimates in tax revenues and non-tax revenues. In his budget speech, finance minister Arun Jaitley also announced a string of tax proposals to ensure better economic growth for the country. Among the key revisions incorporated in the budget, the turnover limit for corporate tax has been increased to benefit micro, small, and medium business corporations in the country.

Revenue receipts

Gross tax revenue for the 2020-21 period has been reported to the tune of Rs.22.7 lakh crore. Among the significant increase in this year’s budget estimates, corporate taxes are estimated to be around Rs.6.21 lakh crore compared to Rs.5.39 lakh crore in the previous year estimate. The Goods and Services Tax (GST), which was non-existent in the Union Budget 2020, is expected to the tune of Rs.7.44 lakh crore for the current year. Overall tax revenue estimate for the current budget stood at Rs.14.8 lakh crore and non-tax revenue was estimated to be around Rs.2.45 lakh crore. Capital receipts for the 2020-21 period was estimated to be around Rs.6.73 lakh crore.

Corporate tax

When the NDA government came to power, it promised to bring down the corporate tax in order to boost employment and growth in the country. In the Union Budget, corporate tax was reduced from 30% to 25% for companies with yearly turnover less than Rs.50 crore. According to the finance minister, this benefited more than 96% of companies operating in the country. In this year’s budget, the tax relief has been extended to companies with turnover less an Rs.250 crore. The finance minister revealed that this move would benefit 99% of the companies filing for tax returns. Moreover, this would leave companies with higher investible surplus which is crucial when it comes to creating jobs.

Income tax

There was not any major changes when it comes to income tax for salaried individuals. The tax slab for salaried individuals remains the same. Though there is no change in the tax slab, a standard deduction of Rs.40,000 has been proposed by the finance minister to provide allowance for transportation and miscellaneous medical expenses.

Key highlights from receipts budget

Some of the key highlights from receipts budget can be listed as follows:

  • Last year ended with 12.6% growth in direct taxes
  • Growth in indirect taxes reported to be 18.7%
  • A significant increase in the number of taxpayers reported
  • Exemption of interest income from bank deposits and post office deposits increased to Rs.50,000 from Rs.10,000 for senior citizens

Union finance Nirmala Sitharaman will present the final full year budget of the reigning government on February 1, 2020. This has raised huge expectations from the industry and common taxpayers alike. While various factors play a major role in Union Budget 2020, receipts budget will be the prime focus as always mainly because it highlights all the information about the government’s revenue. Most importantly, receipts budget provides information about the potential taxes or tax-cuts that the government may implement in the near future.

The implementation of the Goods and Services Tax (GST) in 2019 is one of the major differing factors compared to last year’s budget. By implementing GST, India was able to rank better in terms of the ‘ease of doing business’ index. However, this has put some additional pressure when it comes to revenue collection. The economy is still recovering from the aftermath of GST implementation and demonetisation. Under these circumstances, receipts budget remains one of the most expected factors in this year’s budget.

What is receipts budget?

Receipts budget provides information about the tax revenue received by the government. A detailed understanding of the receipts budget provides insights into the government’s capital receipts, tax revenues, and non-tax revenues. With an understanding of the revenue, we can also track the expenditure of the government and its debt position. Moreover, this also provides information about the state-wise contribution of tax revenues and non-tax revenues to the union budget.

Receipts budget for previous years

A glimpse into the previous receipts budget data can be helpful in predicting the revenue for the current year. The government posted total receipts to the tune of Rs.21.2 lakh crore in Union Budget 2017. This is a significantly higher amount from the Rs.19.3 lakh crore posted in Union Budget. Gross tax revenues for last year stood at Rs.19.1 lakh crore. A large contribution to tax revenue was made by corporation tax which stood at Rs.5.38 lakh crore. Non tax revenue for last year was Rs.2.88 lakh crore and total capital receipts was Rs.6.2 lakh crore. The implementation of GST was seen as a game changer in this year’s budget, and these values may vary a lot in Union Budget.

Will there be any tax cut?

One of the biggest questions for this year’s budget will be about the reduction in corporation taxes promised by the Prime Minister as soon as he came to power. Corporates have been pushing for a tax cut from 30% to 25% for a long time. This is a crucial thing when it comes to attracting investments from other countries. For instance, China has promised tax cuts for companies that reinvest their proceeds in government-backed projects. Japan has also started with the phased reduction of corporate taxes.

Though lowering corporate taxes has been in the government’s agenda for a long time, this year’s budget announcement may not see any major tax cuts for two main reasons. First, the government is currently under pressure with regard to revenue collection. Any major tax cuts may increase the risk of widening the fiscal deficit. Second, the central government has given up its exclusive taxation power in favour of GST implementation. Any major tax cuts will have to be approved by the GST council.

What to expect in this budget?

Similar to Union Budget 2019, this year’s budget will also have an estimation for indirect tax collection. When it come to direct taxes, the government has to rely on GST collections for the current year. Since the implementation of GST, the government has provided consistent data regarding the GST amount collected every month. The finance ministry and the GST council must work together when it comes to achieving revenue target set for Union Budget 2020.

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