For the first time in India, Finance Minister Nirmala Sitharaman had announced the paperless union budget 2021-2022 digitally through made in India tablet and stated “India as the dawn of a new era where India is well poised to truly be the land of promise and hope.” As stated in the budget speech, that budget of the year 2021-2022 is based on the 6 pillars namely:

1. Health and Wellbeing

2. Physical & Financial Capital and Infrastructure

3. Inclusive development for Aspirational India

4. Reinvigorating Human capital

5. Innovation and R & D

6. Minimum Government and Maximum Governance

Let’s summarise the key highlights stated in the Budget 2021-2022:

1. Health and Wellbeing

  • Rs. 2,23,846 crore outlay for Health and Wellbeing in 2021-22 as against Rs. 94,452 crore in 2020-21  which shows an increase of 137%
  • Focus on strengthening three areas: Preventive, Curative, and Wellbeing
  • Steps for improving health and wellbeing
  • Rs. 35,000 crore for COVID-19 vaccine 
  • The Made-in-India Pneumococcal Vaccine to be rolled out across the country, from present 5 states – to avert 50,000 child deaths annually
  • New centered sponsored scheme to be launched namely PM Aatma Nirbhar Swasth Bharat Yojana with outlay of Rs. 64,180
  • National Institution for One Health and 4 regional National Institutes for Virology
  • Strengthening of National Centre for Disease Control (NCDC)
  • Mission Poshan 2.0 to be launched to strengthen nutritional content, delivery, outreach and outcome
  • Universal coverage of water Supply with Jal Jeevan Mission (Urban) to be launched for providing tap connections and handling liquid waste management
  • Urban Swachh Bharat Mission 2.0
  • Voluntary vehicle scrapping policy to phase out old and unfit vehicles, after 20 years for personal vehicles and after 15 years for commercial vehicles

2. Physical & Financial Capital and Infrastructure

Physical Infrastructure

  • Production linked Incentives schemes in 13 sectors to create and nurture manufacturing global champions and to bring scale and size in key sectors
  • Mega Investment Textiles Parks (MITRA) scheme, 7 textile parks to be established over 3 years to boost employment generation and exports
  • National Infrastructure Pipeline (NIP) expanded to 7400 projects for creating institutional structures, big thrust on monetizing assets, and to enhance the share of capital expenditure
  • Infrastructure financing and to set up a Development Financial Institution (DFI) to act as a provider
  • Amendment in InvITs and REITs legislation for debt financing
  • National Monetization Pipeline to be launched
  • Rs. 5.54 lakh crore for capital expenditure  
  • Rs. 2 lakh crore to States and Autonomous Bodies for their Capital Expenditure
  • Rs. 1,18,101 lakh core for Roads and highways infrastructure
  • Flagship expressways: Delhi- Mumbai, Bengaluru Chennai Expressway, Kanpur-Lucknow, Delhi- Dehradun, Raipur- Visakhapatnam, Chennai Salem corridor, Amritsar- Jamnagar, Delhi- Katra
  • Advanced traffic management system
  • Rs. 1,10,055 crore for Railways of which Rs. 1,07,100 crore is for capital expenditure
  • MetroLite and MetroNeo technologies to provide metro rail systems at a much lesser cost
  • Extention of Ujjwala Scheme to cover 1 crore more beneficiaries
  • A new gas pipeline project in Jammu & Kashmir

Financial Capital

  • A new single Securities Markets Code to be evolved
  • Development of a world class Fin tech hub at the GIFT-IFSC
  • Development of bond market by purchasing investment grade debt securities both in stressed and normal times
  • Regulated Gold Exchanges
  • Development of an investor charter as a right of all financial investors
  • Capital infusion of Rs. 1,000 crore to solar energy corporation of India and Rs. 1500 crore to Indian Renewable Energy Development Agency
  • Increment in FDI limit from 49% to 74% and allow foreign ownership and control with safeguards
  • To setup Asset Reconstruction Company Limited and Asset Management Company
  • Recapitalization of Public Sector Banks
  • Loan eligibility under SARFAESI Act, 2002 proposed to be reduced from Rs. 50 lakh to Rs. 20 lakh for NBFCs with minimum asset size of Rs. 100 crore

Company Matters

  • Decriminalization of LLP Act, 2008
  • Revision of definition under Companies Act, 2013 by increasing their thresholds for Paid up capital from “not exceeding Rs. 50 Lakh” to “not exceeding Rs. 2 Crore” and turnover from “not exceeding Rs. 2 Crore” to “not exceeding Rs. 20 Cr” for easing compliance requirement
  • Promoting startups and innovators for the incorporation of One Person Company
  • Allowing growth and conversion into any other form
  • Reduction from 182 days to 120 days to setup an OPC for an Indian citizen
  • Allowing NRIs to incorporate OPC in India
  • Faster resolution of cases by strengthening NCLT framework, implementation of e-courts system, alternate method of debt resolution and special framework for MSMEs
  • Launch of MCA 21 Version 3.0 in 2021-22

Disinvestment and Strategic Sale

  • Estimated receipts of Rs. 1,75,000 crore from disinvestment
  • Strategic disinvestment of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited, etc. to be completed in 2021-22.
  • Two public sector banks and one general insurance company to be privatized
  • Special purpose vehicle in the form of a company to monetize idle land
  • A revised mechanism for ensuring timely closure of sick or loss-making CPSEs
  • Treasury Single Account System for autonomous bodies
  • Separate Administrative structure to streamline the Ease of Doing Business for cooperatives

3. Inclusive development for Aspirational India

  • Ensured MSP at minimum 1.5 times the cost of production across all commodities
  • Increment in the payment to farmers
  • Extension of SWAMTIVA Scheme to all states /UTs
  • Rural Infrastructure Development Fund to be enhanced to Rs. 40,000 crore
  • To double the Micro-irrigation Fund to Rs. 10,000 crore
  • Operation Green Scheme to be extended to 22 perishable products
  • 1,000 more mandis to be integrated with e-NAM to bring transparency and competitiveness
  • APMCs to get access to the Agriculture Infrastructure Funds for augmenting infrastructure facilities
  • Development of modern fishing harbours
  • Multipurpose Seaweed Park in Tamil Nadu to promote seaweed cultivation

Migrant Workers and labourers

  • One Nation One Ration Scheme to claim rations anywhere in the country
  • Portal for collecting information of unorganized labour force, migrant workers
  • Implementation of 4 labour codes underway
  • Social security benefits and platform for workers
  • Minimum wages coverage under the ESIC applicable for all categories of workers
  • Women workers to be allowed in all categories including night shifts with adequate protection
  • Single registration and licensing and online returns to ease compliance burden
  • Stand up India scheme for SCs, Ss, and women
  • Rs. 15,700 crore budget allocation to MSME Sector

4. Reinvigorating Human Capital

  • 15,000 schools to be strengthened by implementing NEP components and 100 new Sainik Schools to be set up in partnership with NOs/private schools/states
  • Introduction of legislation to set up Higher Education Commission of India
  • Creation of a formal umbrella structure to cover all government colleges, universities, research institutions in a city for greater synergy
  • Central University to come up in Leh for accessibility of higher education in Ladakh
  • 750 Eklavya model residential schools in tribal areas
  • Focus on the creation of robust infrastructure facilities for tribal students
  • A proposed amendment to Apprenticeship Act to enhance opportunities for youth
  • Rs. 3000 crores for realignment of existing National Apprenticeship Training Scheme (NATS) towards a post-education apprenticeship, training of graduates and diploma holders in Engineering
  • With UAE to benchmark skill qualifications, assessment, certification, and deployment of certified workforce

5. Innovation and R &D

  • Modalities of National Research Foundation announced in July 2019
  • Strengthen overall research ecosystem with a focus
  • To promote digital modes of payment
  • 4 Indian astronauts being trained on generic Space Flight aspects in Russia
  • First unmanned launch in slated for December 2021

6. Minimum Government, maximum Governance

  • To bring reforms in tribunals to ensure speedy justice
  • Introduction of National Commission for Allied Healthcare Professionals and the National Nursing and Midwifery Commission Bill
  • Conciliation mechanism with a mandate for fast resolution of contractual disputes with CPSEs
  • Rs. 300 crore grant to the government of Goa for the diamond jubilee celebrations of the state’s liberation from Portuguese
  • Revised Estimate for Expenditure is Rs.34.50 lakh crore as against original Budget estimate expenditure of Rs. 30.42 lakh crore
  • Deviation Statement under Sections 4(5) and 7(3) (b) of the FRBM Act tabled necessitated by this year’s unforeseen and unprecedented circumstances
  • The Contingency Fund of India is to be augmented from Rs.500 crore to Rs. 30,000 crore through Finance Bill
  • On the Commission’s recommendation, Rs. 1,18,452 crore have been provided as Revenue Deficit Grant to 17 states in 2021-22, as against  Rs. 74,340 crore to 14 states in 2020-21

Tax proposals

  • By increasing rebates burden of taxation on small taxpayers is eased
  • Faceless assessment and faceless Appeal introduced
  • Relief to senior citizens over 75 years from filing tax returns and having only pension and interest income, tax to be deducted by paying bank
  • Time limit for re-opening cases reduced to 3 years
  • Serious tax evasion cases to be reopened only upto 10 years with approval of the Principal Chief Commissioner
  • Dispute Resolution Committee to be setup for taxpayers
  • National faceless Income Tax appellate tribunal centre to be established
  • Relaxation to NRIs regarding their foreign retirement accounts
  • Limit of turnover for tax audit increased to Rs. 10 crore from Rs. 5 crore for entities carrying out 95% transactions digitally
  • Dividend payment to REIT/InvIT exempt from TDS
  • Deduction of tax on dividend income at lower treaty rate for Foreign Portfolio Investors
  • Infrastructure Debt Funds made eligible to raise funds by issuing Zero Coupon bonds
  • Relaxation for conditions relating to prohibition on private funding restriction on commercial activities and direct investment
  • Additional deduction of interest upto Rs. 1.5 lakh, for loan taken to buy an affordable house for loans taken till March 2022
  • Tax exemption allowed for notified Affordable Rental Housing Projects
  • Tax holidays for capital gains from incomes of aircraft leasing companies
  • Tax exemptions of aircraft lease rentals paid to foreign lessors
  • Tax incentive for relocating foreign funds in the IFSC
  • Pre filled in returns – capital gains from listed securities, dividend income, interest from banks etc
  • Exemption limit of annual receipt revised from ₹1 crore to ₹5 crore for small  charitable trusts running schools and hospitals
  • Late deposit of employee’s contribution by the employer not to be allowed as deduction to the employer
  • Capital gain exemption for investment in start-ups extended till 31st March 2022

Indirect Taxes

  • Nil returns through SMS
  • Quarterly return and monthly  payment for small taxpayers
  • Input tax credit can be availed only when invoice/debit note has been reported by supplier in its GSTR 1 return and such invoice/debit note has been communicated to the recipient
  • Option for zero rated supply with payment of IGST would be restricted for the notified tax payers or notified goods/services only
  • Refund of export of goods would be linked with remittance of foreign exchange in India
  • Respective changes have been made in law to give retrospective effect w.e.f.01 July 2017 for changes  
  • Promotion of domestic manufacturing and helping India get onto global value chain and export better
  • 80 outdated exemptions already eliminated
  • Revised, distortion free custom duty structure to be introduced from 1st October 2021
  • New custom Duty exemptions to have validity upto 31st march following two years from its issue date
  • Duty on some parts of mobiles revised to 2.5% from nil rate
  • Custom duty  on gold and silver to be rationalized
  • Turant Customs initiative, a faceless, paperless and contactless customs measures

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