Latest Union Budget Highlights 2021

The Union Budget 2021 was presented on 1st February 2021 by the Finance Minister, Nirmala Sitharaman. With this year’s budget, the Central Government aimed to announce a reform in taxation. A majority of the attention has also been banked with the healthcare sector wherein a massive amount of Rs.35,000 crore has been sanctioned for COVID-19 vaccine development. Before the announcement of the budget, the Finance Minister promised that this budget will be like no other.

The key highlights of the Union Budget 2021 are mentioned in the table below

Category Highlights
Taxes
  • The limit for tax audit is set to be increased for persons who resort to digital transactions for as much as 95% of the total transactions.
  • For senior citizens (aged 75 years and above), filing of Income Tax Returns (ITR) will be exempted, provided the only form of income applicable to them is pension and income from interest. In these cases, the paying back will be responsible for deducting the necessary taxes.
  • The dividend payment to REIT or InvIT will be exempted from TDS.
  • The pre-filing of returns will cover the likes of dividend income, capital gains from listed securities, and so on.
  • A proposal has been placed for extension of tax holiday for start-ups by another year.
  • An additional discount of Rs.1.5 lakh will be available for all loans availed for the purchase of houses under the affordable housing project up to 31 March 2022.
Indirect Taxes
  • Relief to be offered to metal recyclers.
  • Rationalisation of duties on the input of raw materials required for artificial textiles.
  • With the view to promote domestic production, the duty of solar lanterns and investors will be increased.
  • A small number of items will now be charged with Agriculture Infrastructure and Development Cess.
Government Reforms
  • Privatisation of Public Sector Enterprises.
  • The borrowing limits of state governments is to be increased.
MSMEs and Industries
  • MSMEs which have been affected by the sudden rise in prices of iron and steel to be supported.
  • Businesses will receive collateral free loans.
  • Fund of Funds will be set up for the MSMEs.
  • The definition of MSMEs has been changed.
  • MSMEs will be provided with subordinate debts.
  • The PM Garib Kalyan Yojana is to be rolled out under the Atma Nirbhar Bharat Abhiyan.
Migrant Workers
  • One Nation, One Card to be rolled out for migrant workers under the Atma Nirbhar Bharat Abhiyan in 32 states and union territories.
  • Migrant workers to receive free food grain supply.
  • Social security benefits to be extended to the platform and gig workers.
Energy
  • Discoms to receive liquidity support.
  • Cross-subsidy is to be reduced.
  • Regulatory assets to be eliminated.
  • Commercial coal mining.
Custom duty
  • Elimination of outdated exemptions through the rationalisation of customs duty structure.
  • Rationalisation of customs duty on precious metals like gold and silver.
Industry
  • An amount of about Rs.1.97 lakh crore has been committed for the PLI which has been launched to create manufacturing global champions in the upcoming 5 years across 13 sectors.
  • World class infrastructure to be created for global champions in the textile sector industry through the MITRA scheme for the creation of 7 textile parks over 3 years.
  • The NIP Project pipeline has been expanded to 7,400 projects.
Healthcare
  • The Supplementary Nutrition Programme and the Poshan Abhiyan are set to be merged together and to be launched as Mission Poshan 2.0.
  • Support to be sanctioned for the health and wellness centres.
  • An outlay of Rs.64,180 crore to be spread out over the upcoming 6 years.
  • Rs.35,000 crore sanctioned for COVID-19 vaccine in 2021-22.
  • NCDC will be strengthened and the integrated health information portal will be expanded.
  • Critical care hospital blocks to be established and integrated public health labs to be set up.
Infrastructure
  • Development of sufficient rail infrastructure by 2030 to cater to the projected traffic requirements up to 2050 under the National Rail Plan.
  • Broad gauge routes are to be covered with 100% electrification by 2023.
  • Hydrogen energy mission is being prepared to be launched.
  • Result linked power distribution sector scheme is to be launched with a set outlay amount of Rs.3,05,984 crore over 5 years.
Agriculture
  • Farmers to receive a concessional credit boost.
  • Farmers to be provided with emergency working capital.
  • Agri Infrastructure Fund to be sanctioned.
  • Development of animal husbandry infrastructure.
  • Marketing reforms in regard to agriculture
  • Essential Commodities Act is set to be amended.
  • The coverage of the SWAMITVA Scheme will be extended to all states and union territories.
  • An additional 1,000 mandis will be integrated with e-NAM.
  • Operation Green scheme will be expanded to include as many as 22 perishable products.
Urban Development
  • To tackle the problem of air pollution, Rs.2,217 crore will be allocated for 42 urban centres.
  • Public bus transport to be augmented with an innovative PPP model.
  • Voluntary Vehicle Scrapping policy to be introduced.
  • Jal Jeevan Mission (Urban) to be rolled out to ensure universal water supply in all ULBs.
  • Outlay of more than Rs.1.41 lakh crore over the upcoming 5 years for Urban Swachh Bharat Mission.
  • Tier 2 cities to get MetroLite and MetroNeo while tier 1 cities get peripherals.
Education
  • 100 new Sainik schools to be set up.
  • 750 new Eklavya schools to be set up in tribal areas.
  • With the aim to ensure the welfare of SCs, revamped post matric scholarship scheme to be introduced.

The key highlights of the Union Budget 2020 are mentioned in the table below

Category Highlights
Taxes
  • New set of income tax rates announced for individuals earning more as much as Rs.15 lakh per annum.
  • Income tax of 10% proposed for the income bracket of Rs.5 lakh to Rs.7.5 lakh instead of the existing 20%.
  • Income tax rates for income bracket of Rs.7.5 lakh to Rs.10 lakh and Rs.10 lakh to Rs.12.5 lakh have also been lowered to 15% and 20% respectively.
  • Income tax of 25% to be charged on the income range of Rs.12.5 lakh to Rs.15 lakh.
  • The new tax regime is optional, and individuals can choose from either the new system or the old one.
  • All the deductions will not be available under the new tax regime.
  • Dividend tax has been abolished for companies.
Manufacturing
  • New scheme to be focussing on the manufacturing of electronic equipment, mobile phones, and semiconductor packaging in India.
  • Private sectors to be encouraged to build Data Centre Parks across the country.
  • By 2025, the milk processing capacity will be doubled.
  • Rs.80 million to be spent for quantum technologies and applications over a span of 5 years.
Subsidy
  • Subsidy for fertiliser for the year 2020-21 is Rs.713.09 billion.
  • Subsidy for food for the year 2020-21 is Rs.1.15 trillion.
  • Subsidy for petroleum for the year 2020-21 is Rs.409.15 billion
Power sector
  • Rs.44 billion will be allocated for clean air incentives for the cities with a population of more than 1 million.
  • Rs.273 billion to be used for the promotion of industry and commerce.
  • Old thermal plants which do not meet the emission norms will be advised to shut down the units.
Highways and airports
  • By 2024, India will be working on the development of 100 more airports across the country.
  • By 2024, the country will monetise in 12 lots for more than 6,000 kms of highways.
  • At least one major port will be privatised.
Custom duty
  • The custom duty on walnuts raised from 30% to 100%.
  • The custom duty on auto parts and autos hiked by as much as 10%.
  • The custom duty on palladium and platinum reduced from 12.5% to 7.5% for specific use.
  • Health cess of 5% added on import of medical devices.
  • The custom duty on fans increased from 10% to 20%.
  • The custom duty on specific goods used in air conditioners and refrigerators increased from 10% to 12.5%.
Infra sector
  • Rs.100 lakh crore is streamlined to be invested on infrastructure over the next 5 years.
  • Across different sectors, more than 6,500 projects will be undertaken.
  • Projects worth Rs.103 lakh crore has been launched on 31 December 2019.
  • For the development of transport infrastructure in 2020-21, a budget of Rs.1.7 lakh crore has been proposed.
Excise Duty
  • Tax to be increased on cigarettes and tobacco products.
For senior citizens
  • Rs.9,000 crore allocated for the welfare of senior citizens.
For SC, ST, and other backward classes
  • Rs.53,700 crore allocated for the upliftment of Scheduled Tribes (STs).
  • Rs.85,000 crore allocated for the upliftment of Scheduled Castes (SCs) and other backward classes.
Healthcare
  • Rs.69,000 crore allocated for healthcare out of which Rs.6,400 crore will be sanctioned for Ayushman Bharat Yojana.
MSME Sector
  • Audit threshold increased to Rs.5 crore from Rs.1 crore for MSMEs.
Connection
  • Rs.6,000 crore allocated for BharatNet programme in India.
  • As many as 1 lakh gram panchayats are to be linked with the BharatNet programme.
Swachh Bharat Mission
  • A total of Rs.12,300 crore allocation has been proposed for Swachh Bharat Mission.
Railways
  • Re-development project to be undertaken for the betterment of 4 stations through the PPP models.
  • Development of solar capacity in Indian Railways.
  • Plans to be executed for the development of more projects like Tejas for connecting various tourist locations across the country.
  • Bengaluru Suburban Transportation project to be launched wherein the Government will be spending Rs.18,600 crore.
Agriculture
  • The credit target for fiscal year 2020-21 has been set at Rs.15 lakh crore for agriculture sector.
  • The expansion of the Nabard refinance scheme has been expanded.
  • Beneficiaries of PM KISAN programme will be covered under KCC if they are eligible for the same.
Education
  • ‘Study in India’ initiative will be promoted by the Government.
  • Apprenticeship diplomas will be offered by 150 higher education institutions by March 2021.
  • Rs.99,300 crore is to be allocated for the education sector in financial year 2021.

FAQ's On Union Budget

  1. What is the total capital expenditure of India for 2021-22 as per the Union Budget 2021?
  2. The total capital expenditure of India for 2021-22 as per the Union Budget 2021 is Rs.5,540 crore.

  3. What amount has been allocated for the Ministry of Defence in Budget 2021?
  4. A total amount of Rs.4,78,196 crore has been allocated for the Ministry of Defence in the Budget for FY 2021-22.

  5. What amount has been allocated for the Ministry of Railways in Budget 2021?
  6. A total amount of Rs.1,10,055 crore has been allocated for the Ministry of Railways in the Budget for FY 2021-22.

  7. What is the budget which has been allocated for the Ministry of Consumer Affairs, Food, and Public Distribution?
  8. A total amount of Rs.2,56,948 crore has been allocated for the Ministry of Consumer Affairs, Food, and Public Distribution in the Budget for FY 2021-22.

  9. What is the budget which has been allocated for the Ministry of Agriculture and Farmers’ Welfare?
  10. A total amount of Rs.1,31,531 crore has been allocated for the Ministry of Agriculture and Farmers’ Welfare in the Budget for FY 2021-22.

News About Union Budget 2021

  • Rs.46,038.70 crore sanctioned as states' share in central taxes and duties for May

    On 18 May, the Finance Ministry stated that Rs.46,038.70 crore has been sanctioned as the instalment of the devolution of the state’s share in central duties and taxes for May.

    According to the tweet, this release in funds is similar to the releases in April and has been calculated based on the tax receipts projected on the Budget 2020-2021 and not as per the actuals. The primary objective of the government of India has been to protect the revenues of the state and help them meet their liquidity requirements during the crisis of the COVID-19 pandemic.

    According to the budget, the projected share of the states in taxes was at Rs.7.84 lakh crore for the year 2020-2021 and the 15th Finance Commission had suggested the share of states at 41% of the divisible pool and 1% to the new Union Territories of Jammu and Kashmir, and Ladakh, with a total of 42%.

    The state-wise breakup of the funds are the highest to the state of Uttar Pradesh at Rs.8,255.19 crore, Rs.4,631.96 crore to Bihar, Rs.3,461.65 crore to West Bengal, Rs.1,892.64 crore to Andhra Pradesh, Rs.1,564.4 to the state of Gujarat, Rs.1,441.48 crore to Assam, and Rs.894.53 crore to Kerala.

    22 May 2020

  • Tax regimes can be switched every year

    The Union Budget 2020 unveiled two tax regimes: The old one offering higher interest rates while availing the existing deductions and exemptions and a new one offering lower interest rates but without the income tax deductions and exemptions. The government has now announced that these regimes can be switched every year. The exception for this would be for individuals who have a business of their own. In order to simplify the taxation process, the government is also considering income tax return forms that are prefilled. The Central Board of Direct Taxes is also considering the adoption of a taxpayer charter that will ensure that taxpayers are not harassed. In order to further simplify the tax structure, the government is planning to gradually phase out exemptions and deductions.

    12 February 2020

  • Budget 2020: Taxpayers’ charter to be institutionalised says Finance Minister

    Finance Minister Nirmala Sitharaman reassured taxpayers that several steps are being put into action in order to eliminate tax harassment during her Budget 2020 speech. She also said that taxpayers’ charter will be institutionalised.

    Taxpayers are expecting exemptions on various allowances amidst speculations that the finance minister might not propose any substantial cuts in the personal income tax rates.

    01 February 2020

  • 5 speculative changes to income tax in the Union Budget

    There are a number of speculations regarding income tax in the upcoming Union Budget. Some of these are: There might be some rationalisation in the income tax slabs in order to moderate it; withdrawal of dividend distribution tax and taxing it for shareholders at concessional rates; abolishment of Securities Transaction Tax (STT) on listed securities or exemption of Long Term Capital Gains Tax on the sale of listed securities; tax sops for home loans in order to boost the flailing real estate sector such as an annual Rs.1.5 lakh deduction on the principal repayment amount; increasing the income tax benefit for the National Pension Scheme (NPS) to Rs.1 lakh, and extending the 14% tax-free contribution to all subscribers of NPS categories.

    29 January 2020

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