- India's 2021 Union Budget Announced Today by Finance Minister "Nirmala Sitharaman"
Smt Nirmala Sitharaman, Union Minister for Finance & Corporate Affairs, on 1st February 2021 introduced to Parliament the Union Budget 2021-22, which is the first budget of this new decade and also a digital one in the light of an ongoing COVID-19 crisis. She said that this is an expression of 130 crore Indians who have complete trust in their skills and abilities, laying a vision for AatmaNirbhar Bharat. She said budget proposals would further reinforce Nation First’s Sankalp, Doubling Farmer’s Income, Strong Infrastructure, Stable India, Good Governance, Youth Opportunities, Education for All, Women’s Empowerment, and Inclusive Growth, among others. In addition, the 13 commitments of the Budget 2015-16, which were to materialize during the Amrut Mahotsav of 2022, the 75th year of our Independence, are also on the road to rapid execution. They too resonate, she said, with this vision of AatmaNirbharta.
The Budget proposals for 2021-22 rest on 6 pillars
- Health and Wellbeing
- Physical & Financial Capital, and Infrastructure
- Inclusive Development for Aspirational India
- Reinvigorating Human Capital
- Innovation and R&D
- Minimum Government and Maximum Governance
Health and Wellbeing
Investment in health facilities has risen significantly and the expenditure outlay for health and wellness is Rs 2,23,846 crore in BE 2021-22 compared to this year’s BE of Rs 94,452 crore, an increase of 137 percent.
A new centrally funded scheme, PM AatmaNirbhar Swasth Bharat Yojana, will be introduced with an outlay of about Rs 64, 180 crores over 6 years, the Finance Minister declared. The capacity of primary, secondary, and tertiary health care systems will be established, existing national institutions strengthened, and new institutions formed to address the diagnosis and treatment of new and emerging diseases. This would be in addition to the National Mission for Wellness.
The main interventions under the scheme are:
- Funding for 17,788 health and wellness centers in rural and 11,024 urban regions
- Establishment of integrated public health laboratories in all districts and 3382 public health block units in 11 states;
- Establishment of hospital blocks of critical care in 602 districts and 12 core institutions;
- Strengthening the National Centre for Disease Control (NCDC), its 5 regional divisions and 20 health monitoring units in the metropolitan area;
- Expansion to all States/UTs of the Integrated Health Information Platform to connect all public health labs;
- Operationalization of 17 new Public Health Units and reinforcement of 33 existing Points of Entry Public Health Units at 32 airports, 11 seaports, and seven land crossings;
- Establishment of 15 Centers for Health Emergency Operations and 2 mobile hospitals; and
- Establishment of the One Health National Agency, the WHO Southeast Asia Region Regional Research Platform, 9 Level III bio-safety laboratories, and 4 National Virology Regional Institutes.
Provision of Rs 35,000 crore for the BE 2021-22 Covid-19 vaccine. A Manufactured in India product, currently limited to only 5 states, the Pneumococcal Vaccine, will be rolled out across the country to prevent 50,000 child deaths annually.
The Government will combine the Supplementary Nutrition Programme and the PoshanAbhiyan and launch the Poshan 2.0.0. mission to improve nutritional quality, distribution, outreach, and outcomes. An accelerated campaign to enhance nutritional results across 112 Aspirational Districts will be implemented by the government.
Universal Coverage of Water Supply and Swachch Bharat Mission
The Finance Minister declared that the JalJeevan (Urban) Mission would be launched in all 4,378 urban local authorities with 2.86 crore household tap connections as well as liquid waste management in 500 AMRUT cities for universal water supply. It will be introduced with an outlay of Rs. 2,87,000 crore over 5 years. In addition, with a cumulative financial allocation of Rs 1,41,678 crore over a period of 5 years from 2021-2026, the Urban Swachh Bharat Mission will be implemented. The government also suggested providing a sum of Rs. 2,217 crore for 42 urban centers with a million-plus population in this budget to resolve the burgeoning issue of air pollution. Also reported was a voluntary vehicle scrapping program to phase out old and unfit vehicles. Fitness assessments have been proposed in automated fitness centers in the case of private vehicles after 20 years and in the case of commercial vehicles after 15 years.
Physical and Financial Capital and Infrastructure
AatmaNirbhar Bharat-Production Linked Incentive Scheme
The Finance Minister said that our manufacturing sector has to expand in double digits on a sustained basis for a USD 5 trillion economy. To become an integral part of global supply chains, our manufacturing companies need to have core expertise and cutting-edge technology. To accomplish all of the above, PLI schemes have been announced for 13 sectors to establish global production champions for the Atma Nirbhar Bharat. For this, in the next 5 years beginning FY 2021-22, the government has dedicated almost Rs.1.97 lakh crore. This initiative will help bring scale and size to key industries, develop and nurture global champions, and provide our youth with jobs.
Likewise, in addition to the PLI scheme, a Mega Investment Textiles Parks (MITRA) scheme will be launched to enable the textile industry to become globally competitive, attract major investments, and boost job generation. This will build world-class infrastructure with plug-and-play facilities to enable global export champions to be developed. 7 Over 3 years, Textile Parks will be created.
The National Infrastructure Pipeline (NIP), which was announced by the Finance Minister in December 2019, is the first all-government exercise ever undertaken. With 6835 projects, the NIP was initiated; the project pipeline has now grown to 7,400 projects. Around 217 projects worth Rs 1.10 lakh crore have been completed under some main infrastructure ministries.
Infrastructure financing – Development Financial Institution (DFI)
Smt Sitharaman, with an emphasis on the infrastructure market, said that infrastructure requires long-term debt financing. To function as a supplier, enabler, and catalyst for infrastructure funding, a professionally run Construction Financial Institution is required. A Bill to set up a DFI would then be implemented. To leverage on this institution, the government has given a total of Rs 20,000 crore and the goal is to have a loan portfolio of at least Rs 5 lakh crore for this DFI in three years.
A very significant funding choice for new infrastructure construction is the monetization of operating public infrastructure properties. It will initiate a “National Monetization Pipeline” of future Brownfield infrastructure properties. To track progress and to provide investors with visibility, an Asset Monetization dashboard will also be developed. In the direction of monetization, some essential steps are:
The Indian National Highway Authority and PGCIL have each funded one InvIT to draw foreign and national institutional investors. The NHAIInvIT is being moved to five operating roads with an approximate enterprise value of Rs 5,000 crore. Likewise, transmission assets amounting to Rs 7,000 crore will be transferred to the PGCIL InvIT.
Railways will, after commissioning, monetize Dedicated Freight Corridor assets for operations and maintenance.
Operations and management concessions will be monetized for the next batch of airports.
Other primary infrastructure assets to be deployed under the Asset Monetization Program are I NHAI Operational Toll Roads; (ii) PGCIL Transmission Assets; (iii) GAIL, IOCL, and HPCL Oil and Gas Pipelines; (iv) AAI Airports in Tier II and III cities; (v) Other Railway Infrastructure Assets; (vi) CPSE Warehousing Assets, such as the Central Warehousing Company and NAFED, among others;
Roads and Highways Infrastructure
Minister of Finance announced that under the Rs. 5.35 lakh crore Bharatmala Pariyojana project of which 3,800 km have been built, more than 13,000 km length of roads have already been awarded at a cost of Rs 3.3 lakh crore. The Government will grant an additional 8,500 km and complete an additional 11,000 km of national highway corridors by March 2022. More economic corridors are also being planned to further augment road infrastructure. She also provided the Ministry of Road Transport and Highways with an increased outlay of Rs. 1,18,101 lakh crore, of which Rs. 1,08,230 crore is the highest ever for the capital.
A National Rail Plan for India-2030 has been prepared by Indian Railways. By 2030, the aim is to build a ‘future-ready’ railway system. At the center of our strategy to allow ‘Make in India’ is to bring down the logistical costs for our industry. The Western Dedicated Freight Corridor (DFC) and Eastern DFC are anticipated to be commissioned by June 2022.
The following measurements are suggested for passenger comfort and safety:
Introduction of the aesthetically engineered Vista Dome LHB coach on tourist routes to provide passengers with a better travel experience.
The protection measures undertaken over the past few years have produced results. To further enhance this initiative, Indian railways’ high-density network and widely used network routes will be equipped with an automatically built automatic train protection system that removes train accidents due to human error.
For Railways, of which Rs. 1,07,100 crore is for capital expenditure, the budget has given a record amount of Rs. 1,10,055 crore.
By extending the metro rail network and increasing the city bus service, the government will work towards raising the share of public transport in urban areas. At a cost of Rs. 18,000 crore, a new program will be introduced to sustain the rise in public bus transport services.
A total of 702 km of the traditional metro are in service and an additional 1,016 km of metro and RRTS are being installed in 27 cities. Two new technologies, i.e. ‘MetroLite’ and ‘MetroNeo’ will be implemented in Tier-2 cities and peripheral areas of Tier-1 cities to provide metro rail systems at a much lower cost with the same experience, comfort, and security.
In the past six years, with the addition of 139 Giga Watts of installed capacity, linking an additional 2.8 crore households and the addition of 1.41 lakh circuit km of transmission lines, a host of reforms and achievements in the power sector have been seen.
The Finance Minister, expressing serious concern about the profitability of distribution companies, proposed to introduce a revamped result-linked power distribution sector scheme focused on reforms with an outlay of Rs. 3,05,984 crore over 5 years. The scheme would provide DISCOMS funding for the development of infrastructure, including pre-paid smart metering and feeder separation, system upgrades, etc., linked to financial improvements.
Ports, Shipping, Waterways
Major ports will move from operating their operational facilities on their own to a model that will be operated for them by a private partner. The budget proposes to give more than Rs. 2,000 crore for the purpose of the Public-Private Partnership mode by Major Ports in FY21-22.
Through the provision of subsidy support to Indian shipping companies in global tenders floated by ministries and CPSEs, a program to facilitate the flagging of merchant ships in India will be introduced. Over 5 years, a sum of Rs. 1624 crore will be provided. In addition to enhancing Indian companies’ share of global shipping, this initiative will allow greater training and employment opportunities for Indian seafarers.
Petroleum & Natural Gas
Smt Sitharaman said during the COVID-19 lockdown period, the government maintained fuel supplies running throughout the country without interruption. The following main measures are being announced, taking notice of the critical importance of this sector in the lives of people:
To cover 1 crore more beneficiaries, the Ujjwala Scheme that has benefited 8 crore households will be extended.
The government will add 100 more districts to the City Gas Distribution Network in the next 3 years.
A gas pipeline project will take place in the Jammu & Kashmir Union Territory.
For the facilitation and coordination of the reservation of common carrier capacity in all-natural gas pipelines on a non-discriminatory open access basis, an independent Gas Transport System Operator will be created.
The Finance Minister suggested consolidating into a rationalized single Securities Markets Code the provisions of the SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956, and the Government Securities Act, 2007. The government will support the construction of a GIFT-IFSC world-class Fin-Tech center.
Increasing FDI in Insurance Sector
In order to raise the allowable FDI cap from 49 percent to 74 percent and to allow foreign ownership and control with protections, she also proposed to amend the Insurance Act of 1938. Under the new system, resident Indians will be the majority of board members and key administrators, with at least 50 percent of board directors being independent directors, and a defined percentage of income being retained as a general reserve.
Disinvestment and Strategic Sale
The government has continued to work towards strategic disinvestment, in view of COVID-19. The Finance Minister claimed that a number of transactions would be completed in 2021-22, including BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, NeelachalIspat Nigam limited, among others. Other than IDBI Bank, the government proposes that two public sector banks and one general insurance company should be privatized in the years 2021-22.
The government will also introduce the IPO of LIC in 2021-22, for which the necessary amendments would be made in this session alone.
In a very significant announcement, the Minister of Finance claimed that she had declared in the AtmaNirbhar package that she would follow a policy of strategic disinvestment of public sector undertakings and that the policy had been approved by the government. In both non-strategic and strategic sectors, the strategy offers a straightforward roadmap for disinvestment. The government has maintained four strategic areas where bare minimum CPSEs will be maintained and privatized to remain. CPSEs will be privatized in the non-strategic sectors, or they will be closed. She said that NITI Aayog will work out the next list of central public sector companies that would be taken up for strategic disinvestment in order to rapidly advance the disinvestment program. In BE 2020-21, the government has projected Rs. 1,75,000 crore as receipts from disinvestment.
Inclusive Development for Aspirational India
Under the Inclusive Growth Pillar for Aspirational India, the Minister of Finance declared that it will cover the agricultural and allied industries, the welfare of farmers and rural India, migrant workers and labor, and financial inclusion.
She said that the government is committed to the welfare of farmers, with an emphasis on agriculture. To ensure a price that is at least 1.5 times the cost of production across all goods, the MSP regime has undergone a sea shift. Procurement has also continued to grow at a steady rate. This has contributed to a significant increase in farmers’ payments.
In the case of wheat, Rs. 33,874 crore was the total sum paid to farmers in 2013-2014. It was Rs. 62,802 crores in 2019-2020, and even better, that number, paid to farmers, was Rs. 75,060 crores in 2020-2021. The number of benefiting wheat growers increased to 43.36 lakhs in 2020-21, compared to 35.57 lakhs in 2019-20.
The sum paid in 2013-14 for the paddy was Rs. 63,928 crore. This rose to Rs.1,41,930 crore in the 2019-2020 period. Even better, in 2020-2021, this is further expected to increase to Rs. 172,752 crore. The profit for farmers grew from 1.24 crore in 2019-20 to 1.54 crore in 2020-21.
In the same vein, the sum paid in 2013-2014 was ‘236 crore, in the case of pulses. It progressed to Rs. 8,285 crore in 2019-20. Now, it is at Rs.10,530 crore in 2020-2021, a rise of more than 40 times from 2013-14.
The receipts to cotton farmers have seen a stupendous rise from Rs. 90 crore in 2013-14 to Rs. 25,974 crore (as of 27th January 2021).
The Honourable Prime Minister launched the SWAMITVA Scheme at the beginning of this year. Under this, a record of rights in villages is granted to property owners. Up to now, cards have been issued to around 1.80 lakh property owners in 1,241 villages, and during FY21-22, the Finance Minister suggested expanding this to include all states/UTs.
The government has increased the agricultural credit target to Rs. 16.5 lakh crore in FY22 in order to provide our farmers with sufficient credit. Likewise, the Rural Infrastructure Development Fund allocation grew from Rs. 30,000 crore to Rs. 40,000 crore. The Micro Irrigation Fund will be doubled with a corpus generated under NABARD of Rs.5,000 crore.
The scope of the ‘Operation Green Scheme’ currently applicable to tomatoes, onions, and potatoes will be broadened to include 22 perishable goods in a significant announcement to improve value-added in agriculture and allied products and their exports.
Around 1.68 crore farmers are registered and Rs. 1.14 lakh crore of trade value has been carried out through e-NAMs. Taking into account the clarity and competition brought to the agricultural sector by e-NAM, 1,000 more mandis will be integrated with e-NAM. APMCs will be made available with the Agriculture Infrastructure Funds to increase their infrastructure facilities.
Substantial investments in the construction of new fishing ports and fish landing centers have been suggested by the Finance Minister. As hubs of economic activity, five major fishing harbors, Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat, will be built, begin with.
Migrant Workers and Labourers
The government has implemented the One Nation One Ration Card system, from which recipients can demand their rations anywhere in the nation. 32 states and UTs are introducing the One Nation One Ration Card scheme, touching around 69 crore beneficiaries, which is a total of 86 percent of the beneficiaries protected. In the next few months, the remaining 4 states and UTs will be incorporated.
The Government proposes to conclude a procedure with the adoption of the 4 Labor Codes that started 20 years ago. Social security coverage can apply to gig and platform staff for the first time worldwide. Both types of jobs will be covered by minimum salaries and all of them will be covered by the Employees State Insurance Corporation. Women would be permitted to operate with sufficient protection in all categories and even in the night shifts. At the same time, with single registration and licensing, and online returns, the enforcement burden on employers will be minimized.
In order to further promote credit flow for SCs, STs, and women under the Stand-Up India scheme, the Finance Minister suggested reducing the margin cash requirement from 25 percent to 15 percent, as well as providing loans for agriculture-related activities. In addition, a number of measures have been taken to help the MSME sector and the government has given Rs. 15,700 crore to this sector in this budget, more than double the BE of this year.
Reinvigorating Human Capital
The Minister for Finance said that the recently announced National Education Policy (NEP) has been well-received, adding that more than 15,000 schools will be qualitatively improved to incorporate all components of the National Education Policy. In partnership with NGOs/private schools/states, she also announced that 100 new Sainik Schools will be created. She also suggested the creation of an Indian Higher Education Commission as an umbrella body with four different standard-setting, accreditation, regulatory, and funding vehicles. The government has proposed the establishment of a Central University in Leh for affordable higher education in Ladakh.
Scheduled Castes and Scheduled Tribes Welfare
With an increase in the unit cost of each such school from Rs. 20 crore to Rs. 38 crore, and for hilly and difficult areas, to Rs. 48 crore, the government has set a target of establishing 750 Eklavya model residential schools in tribal regions. Similarly, the Central Assistance was enhanced and allocated Rs. 35,219 crore for 6 years until 2025-2026, to support 4 crore SC students, under the renovated Post Matric Scholarship Scheme for the welfare of Scheduled Castes.
In cooperation with the United Arab Emirates (UAE), an effort is underway to benchmark capability qualifications, evaluation, and certification, followed by the deployment of trained employees. In order to promote the transfer of Japanese industrial and vocational skills, techniques, and expertise, India and Japan also have a Joint Training Inter Training Programme (TITP) between India and Japan, and many more countries will do the same.
Innovation and R&D
The Minister of Finance said she had announced the National Research Foundation in her July 2019 Budget Speech and added that over 5 years, the NRF outlay would be Rs. 50,000 crore. It will ensure that the country’s overall research environment is reinforced with a focus on the national priority areas listed.
A new National Language Translation Mission program will be launched by the government (NTLM). This will allow the wealth of Internet-related governance-and-policy information to be made available in major Indian languages.
The launch of the PSLV-CS51 will be carried out by the New Space India Limited (NSIL), a PSU under the Department of Space, carrying the Amazonia Satellite from Brazil along with a few smaller Indian satellites.
As part of the Gaganyaan mission operations, four Indian astronauts are being educated in Russia on the aspects of Generic Space Travel. The first unmanned launch is expected to take place in December 2021.
Minimum Government, Maximum Governance
Holding on to the last of the six pillars of the budget, the Minister of Finance has proposed to take a range of steps over the last few years to bring about changes in the Tribunals for the timely delivery of justice and proposes to take more steps to streamline the working of the Tribunals. In order to ensure transparent and efficient oversight of the 56 allied healthcare professions, the government has introduced the National Commission for Allied Healthcare Professionals Bill in Parliament. She also declared that the forthcoming Census will be the first digital census in India’s history and allocated Rs. 3,768 crore in the year 2021-2022 for this monumental and milestone-marking mission.
On the fiscal situation, she stressed that the economic effect of the pandemic resulted in a poor inflow of revenue. Government spending was raised to revive domestic demand once the health situation improved and the lockdown was slowly lifted. As a result, RE projections are Rs. 34.50 lakh crore against an original BE expenditure of Rs. 30.42 lakh crore for 2020-2021 and the standard of expenditure has been preserved. In RE, the projected capital expenditure is Rs. 4.39 lakh crore in 2020-2021 as opposed to Rs. 4.12 lakh crore in BE 2020-21.
The Minister of Finance stated that the RE 2020-21 fiscal deficit is pegged at 9.5% of GDP and has been financed by government borrowing, multilateral borrowing, small savings funds, and short-term borrowing. She added that in those 2 months, the government would need another Rs 80,000 crore for which it would approach the markets. The fiscal deficit in the BE 2021-2022 area is forecast at 6.8% of GDP. The total borrowing from the market for the next year will be about 12 lakh crore.
Smt Sitharaman declared that the government is preparing to continue the path of fiscal consolidation and that it plans to achieve a fiscal deficit below 4.5% of GDP by 2025-2026, with a reasonably steady decline over the period. “We hope to achieve consolidation by, firstly, increasing tax revenue buoyancy by improving compliance and, secondly, by increasing revenue receipts from asset monetization, including public sector enterprises and land,” she said.
In line with the views of the 15th Finance Commission, the Government is allowing 4% of GSDP for the year 2021-2022 for a standard ceiling of net borrowing for the States.
A fiscal deficit of 3 percent of GDP is required by the FRBM Act to be reached by 31 March 2020-2021. The consequence of this year’s unexpected and unprecedented circumstances necessitated the submission of a declaration of deviation pursuant to Sections 4(5) and 7(3)(b) of the FRBM Act, which, as part of the FRBM Documents, the Finance Minister put on the House Table.
On 9 December 2020, the 15th Finance Commission submitted its final report to the Rashtrapatiji, covering the 2021-2026 period. Along with the explanatory memorandum keeping the vertical shares of the States at 41%, the Government has laid down the Commission’s study. On the recommendation of the Commission, in 2021-22, the Budget gave Rs. 1,18,452 crore as a revenue deficit grant to 17 states.
In Part B of the Speech on the budget, the Union Minister, Smt. Nirmala Sitharaman seeks to further simplify the administration of taxes, the management of litigation and encourage Direct Tax Administration enforcement. The indirect plan focuses on the rationalization of customs duties as well as on the rationalization of procedures and facilitation of compliance.
DIRECT TAX PROPOSALS
The Minister of Finance granted relief to senior citizens in the filing of income tax returns, announced the creation of the Dispute Resolution Committee for the shortened time period for income tax proceedings, faceless ITAT, relaxation of NRIs, an increase of the audit exemption limit, and relief of dividend income. She also announced measures to attract international infrastructure investment, relief for affordable housing and rental housing, IFSC tax incentives, relief for small charitable trusts, and steps to promote start-ups in the country.
In her Budget address, Smt. Nirmala Sitharaman said that a new world order appears to be emerging after the pandemic and India will have a leading role in it. In this scenario, she said, our tax system must be open, effective, and foster investment and jobs in the country. The Minister said that, at the same time, our taxpayers should bear the least burden. She claimed that the government had implemented a range of reforms for the good of taxpayers and the economy, including the reduction of the corporate tax rate, the elimination of the dividend distribution tax, and the expansion of the rebate for small taxpayers. In the year 2020, income tax return filers saw a dramatic rise from 3.31 crore in 2014 to 6.48 crore.
The Budget aims to reduce the cost of compliance for senior citizens aged 75 years and older. These senior citizens would be exempted from filing their income tax returns if they have only pension and interest income. The paying bank will subtract from its revenue the requisite tax. The Budget proposes that the guidelines for reducing the misery of non-resident Indians returning to India should be informed on the question of their accumulated income in their international retirement account. The Budget recommends that the payment of dividends to REIT/InvIT be excluded from TDS. For International Portfolio Holders, the budget recommends that dividend income tax be deducted at the lower treaty limit. The Budget provides that only after the declaration or payment of the dividend can the advanced tax obligation on dividend income occur. The Minister claimed that this was done because shareholders could not accurately estimate the amount of dividend income for paying advance tax.
The Finance Minister suggested extending the qualifying period to 31 March 2022 for claims of additional interest deduction of Rs. 1.5 lakh paid for a loan taken for the purchase of an affordable home. In order to increase the availability of affordable houses, she also announced an extension of one more year to 31 March 2022 of the qualifying period for demanding tax holidays for affordable housing projects. The Minister has proposed a new tax exemption for recorded affordable rental housing projects to encourage the availability of affordable rental housing for migrant workers.
To encourage start-ups in the region, Smt. Sitharaman declared that the right to demand tax leave for start-ups will be extended by one more year until 31 March 2022. In order to promote start-up financing, she suggested an extension of the Capital Gains exemption for start-up investment by one more year until 31 March 2022.
The Minister of Finance claimed that the delay in the deposit of employee contributions to different welfare funds results in a permanent loss of employee interest/income. In order to ensure that employers make a timely deposit of the employee’s contribution to these accounts, she declared that the late deposit of the employee’s contribution would never be permitted to the employer as a deduction.
In order to reduce the cost of enforcement, the budget allows for a reduction in the time period for the reopening of the income tax process from the existing six years to three years. The assessment can be reopened for up to 10 years, but only after the approval of the Principal Chief Commissioner, in serious tax evasion cases where there is proof of concealment of income of Rs. 50 lakh or more in a year.
The Finance Minister claimed that the Direct Tax Vivad se Vishwas Scheme announced by the Government has been well received, stating the Government’s resolve to minimize litigation in the taxation system. More than 10,000 taxpayers have chosen to resolve tax disputes of over Rs. 85,000 crores under the Scheme before 30 January 2021. In order to help limit small taxpayers’ lawsuits, she suggested creating a Dispute Resolution Committee. Anyone with a taxable income of up to Rs. 50 lakh and a contested income of up to Rs. 10 lakh is eligible for admission to the Committee. She also announced the creation of an Appeal Tribunal Centre for the National Faceless Income Tax.
The Budget proposes to raise the tax audit cap for persons who conduct 95% of their transactions digitally from Rs. 5 Crore to Rs. 10 Crore in order to facilitate digital transactions and to reduce the enforcement burden of a person who carries almost all transactions digitally.
The budget aims to loosen some conditions relating to the prohibition of private financing, the restriction of commercial activities, and direct investment in infrastructure, in order to attract foreign investment into the infrastructure sector. The Budget aims to make reported infrastructure debt funds eligible to raise funds by issuing tax-efficient zero-coupon bonds in order to allow infrastructure financing through the issuance of zero-coupon bonds.
The Budget recommends more tax incentives in order to support the International Financial Services Centre (IFSC) in GIFT City.
In order to simplify the filing of returns, the budget proposes that details of capital gains from listed shares, dividend income, and interest from banks, post offices, etc. will also be pre-filled. In returns, details of salary earnings, tax payment, TDS, etc. are already pre-filled.
The Budget proposes to raise the cap on annual receipts for these trusts from the existing Rs.1 Crore to Rs. 5 Crore for the non-applicability of different compliances, in order to reduce the enforcement burden on small charitable trusts operating educational institutions and hospitals.
INDIRECT TAX PROPOSALS
On the topic of the Indirect Tax Proposals, the Minister claimed that in the past few months, record GST collections have been made. She said several steps have been taken to simplify the GST further. The GSTN system’s capability has been announced. To identity tax evaders and bogus billers, deep analytics and artificial intelligence were deployed, launching special drives against them. The Minister of Finance told the House that all necessary steps should be taken to further smooth out the GST and eradicate irregularities such as the configuration of the inverted duty.
With regard to the customs duty policy, the Minister of Finance claimed that it has the twin goals of promoting domestic output and helping India to move global value and export better. She said the emphasis now needs to be on easy access to raw materials and value-added exports. In this regard, 400 old exemptions in the customs duty system have been suggested to be reviewed this year. She announced that comprehensive consultation will be undertaken and a revised, distortion-free customs duty system will be placed in place from 1 October 2021. She also indicated that any new exemptions from customs duty would be valid until 31 March following 2 years of the date of its issue.
The Minister of Finance declared that a few exemptions for parts of chargers and sub-parts of cell phones would be removed, while other parts of mobile phones would switch from the ‘Zero’ rate to a modest 2.5%. She also declared a uniform reduction in customs duties to 7.5 percent on non-alloy and stainless steel semi-, flat and long goods. She also declared an exemption from steel scrap duty for a period until March 31, 2022.
Stressing the need to rationalize duties on man-made textiles for raw material inputs, the Minister of Finance declared that nylon chains would be paired with polyester and other man-made fibers. Announcing a uniform deduction of 5% of the BCD prices on Caprolactam, nylon chips, and nylon fiber and yarn, the Minister said this would benefit the garment, MSME, and export industries as well. She also declared the calibration of the rate of customs duty on chemicals to facilitate the addition of domestic value and to eliminate reversals. The Minister also declared the nationalization of gold and silver customs duties.
The Minister of Finance announced that it will be informed of a phased production plan for solar cells and solar panels in order to build up domestic capacity. She declared an increase in duty from 5 percent to 20 percent on solar inverters and 5 percent to 15 percent on solar lanterns.
In her Budget address, the Finance Minister stated that there is tremendous potential in the domestic manufacturing of heavy capital equipment and that the rate structure will be thoroughly reviewed in due course. However, she immediately announced a revision of duty rates on certain products, including tunnel boring machines and certain automotive components.
In order to support MSMEs, the Budget recommends such amendments, which include an increased duty on steel screws, plastic building goods, and prawn feed. It also allows for the rationalization of the duty-free import exemption as an incentive for exporters of clothing, leather, and craft products. It also provides for the removal of the exemption on imports of some types of leather and the raise of the customs duty on synthetic finished gemstones.
The Finance Minister proposed an increase in customs duties on cotton, raw silk, and silk yarn in order to support farmers. She also declared the removal of denatured ethyl alcohol end-use related concessions. On a limited number of products, the Minister also proposed an Agriculture Infrastructure and Development Cess. She said, “we have taken care not to put additional burden on consumers on most items while applying the cess.”
The Finance Minister introduced some amendments to the provisions relating to ADD and CVD levies with regard to the rationalization of procedures and easing of compliance. She also said that definite time-lines are being recommended to complete customs investigations. The Minister said the Turant Custom Project, introduced in 2020, helped to test the misuse of FTAs.