Union Budget 2021: India’s first paperless budget

Budget 2021 Highlights

Finance Minister (FM) Nirmala Sitharaman has presented the Union Budget 2021 of India on the 1st of February, 2021. Here are the key Highlights from Budget 2021:

The FM said the Union Budget 2021-2022 proposals are based on six key pillars —

  • Health and wellbeing
  • Infrastructure
  • Inclusive development
  • Development of human capital
  • R&D
  • Minimum government maximum governance

Finance Minister Nirmala Sitharaman presented the budget from a ‘Made in India’ tablet wrapped in a velvety red cloth in tow — a contrast to the traditional ‘bahi khata’ (ledger wrapped in a red cloth) that she’d been carrying in the past two years.

“Faith is the bird that feels the light and sings when the dawn is still dark.” Quoting poet and philosopher Rabindranath Tagore, Union Finance Minister Nirmala Sitharaman on Monday presented India’s first-ever paperless Budget 2021.

Finance Minister Nirmala Sitharaman on Monday provided Rs 35,000 crore towards COVID-19 vaccination in 2021-22 fiscal.

“I have provided Rs 35,000 crore for COVID-19 vaccine in this year 2021-22. I’m committed to provide further funds if required. The Budget outlay for health and well being is Rs 2.23 lakh crore in 2021-22 as against BE of Rs 94,452 crore and marks an increase of 137 percent,” she said while presenting 2021-22 Budget in the Lok Sabha.

Finance Minister Nirmala Sitharaman proposed the incorporation of one-person companies, with no restriction in paid-up capital and turnover, as well as an update to the definition of small companies under Companies Act, 2013. The FM proposed revising the definition of small companies by raising the capital base to Rs 2 crore from the current limit of Rs 50 lakh.

Budget 2021 also focussed on decriminalisation of limited liability partnerships, with the flexibility to convert a company to any form or LLP to benefit more than two lakh companies in easing the compliance requirement.

With 2020 being one of the most challenging years for the country due to the COVID-19 outbreak, Finance Minister Nirmala Sitharaman announced that health and wellbeing is one of the six pillars for Budget 2021.

While presenting the Union Budget 2021 on Monday, Nirmala Sitharaman announced the launch of Aatmanirbhar Swastha Bharat Yojana, with an outlay of Rs 64,180 crore.

She said these funds will be used for developing primary, secondary, and tertiary healthcare over a period of six years. The finance minister clarified that this initiative will be an addition to the National Health Mission.

The Union Budget for 2021-22 has further boosted the Indian startup ecosystem by announcing tax incentives for startups and an extension in capital gains exemption by one year.

Union Finance Minister Nirmala Sitharaman said the government has proposed to extend the eligibility of tax holiday for startups by another year. Further, the capital gains exemption for startups has also been extended by another year.

Finance Minister Nirmala Sitharaman on Monday said the government’s Aatmanirbhar packages, totalling Rs 27.1 lakh crore to deal with the COVID-19 pandemic, accelerated the pace of structural reforms.

Furthermore, the FM highlighted “our manufacturing sector has to grow in double digits on a sustained basis” to achieve the vision of becoming a $5 trillion economy by 2025. She also announced the government’s commitment of Rs 1.97 lakh crore under the production-linked incentive (PLI) scheme.

Under the third pillar of Inclusive Development for Aspirational India, the finance minister announced the launch of the “One Nation One Ration Card scheme through which beneficiaries can claim their rations anywhere in the country.”

She said that migrant workers may benefit the most from this scheme since those staying away from their families can partially claim their ration where they are stationed, while their family, in their native places, can claim the rest.

Presenting one of the most-awaited Budgets in Indian history, Finance Minister Nirmala Sitharaman on Monday announced a slew of changes in customs duties in a bid to boost local manufacturing. She explained that since last year, the government is overhauling the structure of customs duties and has eliminated 80 outdated exemptions.

Proposing to review more than 400 old exemptions this year, Sitharaman promised to put in place a revised customs duty structure, which is free of distortions. MSMEs, which were severely hit by a sharp rise in iron and steel prices, will see customs duty reduced uniformly to 7.5 percent on semis, flat, and long products of non-alloy, alloy, and stainless steels.

For the first time, the government is tasked with bolstering the economy when demand for goods and services remains sluggish and tax collections remain a challenge, amidst a slew of other hurdles. 

India Inc and Indian startups are hoping for some bold reforms across sectors from the Narendra Modi government to pave the way for an economic recovery. The Indian economy, badly bruised by the coronavirus crisis, slipped into recession last year.

FM pegged FY21 fiscal deficit at 9.5% of GDP, with FY22 fiscal deficit target at 6.8% of GDP. Hope to get to back to fiscal consolidation path by FY26. Fiscal deficit will reach below 4.5% by FY26. FY22 gross expenditure seen at Rs 34.83 lakh crore.

FY22 capital expenditure provided is up 34.5% (vs FY21 BE) at Rs 5.54 lakh crore, said the Finance Minister. Rs 44,000 crore under capital expenditure will be given to Department of Economic Affairs in FY22, she added. FY21 capital expenditure is seen at Rs 4.39 lakh crore.

The government has left direct taxes unchanged, but took steps in direct tax incentives to ease compliance for taxpayers. The FM proposed making it so that advance tax liability on dividend income shall arise only after payment of dividend. The Budget also looked at pre-filled tax forms with respect to details like salary income, tax payment and TDS.

Agri Infrastructure and Development Cess on a number of items including fuel and liquor was announced today but the finance minister also said there would be no additional burden on the consumer overall. Budget imposed a Rs 2.5 per litre agri infra cess on petrol, Rs 4 on diesel, and of 100% on alcoholic beverages.

By announcing 1000 more agriculture product marketing committees (APMCs) or mandis will be linked to e-national agriculture market (e-NAM), Nirmala Sitharaman subtly sent a message to farming groups that the government has no intention of dismantling an established APMC system.

The Govt plans to allot Rs 20,000 crore for bank recapitalisation of PSBs. The FM also proposed to revise definition under Companies Act, 2013 for small companies by increasing their threshold for capitalisation.

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