Highlights of Union Budget 2021-22
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Highlights of Union Budget 2021-22

The Union Budget 2021-22 was presented by the Hon’ble minister of finance Nirmala Sitharaman on 1st February 2021 within the Parliament. The Budget speech was given by the FM from 11 a.m. to 1 p.m.

This year’s Budget lays specialise in the seven pillars for reviving the economy – Health and Wellbeing, Physical and Financial Capital and Infrastructure, Inclusive Development for Aspirational India, Reinvigorating Human Capital, Innovation and R&D, and Minimum Government Maximum Governance. Several regulations round the stock exchange are proposed to be merged as one code. Several direct taxes and indirect taxes amendments were also proposed.

Economic Reforms & Schemes – Budget highlights 2021
The overall cost for FY 2021-22 is Rs.5.54 lakh crore. Since the healthcare sector’s improvement is that the need-of-the-hour, FM proposed a replacement centrally sponsored scheme, PM Aatmanirbhar Swasth Bharat Yojana, with an outlay of about Rs.64,180 crore over six years.

Further, the Budget outlay for Health and Wellbeing is estimated to be Rs.2,23,846 crore for FY 2021-22, which may be a rise by 137% Y-o-Y basis. The increased allocation is predicted to expand and strengthen existing national health institutions, National Centre for Disease Control (NCDC), Health Emergency Operation Centers and mobile hospitals. Another major highlight was the rise within the FDI limits within the insurance sector from 49% to 74%. the govt plans to divest two PSUs also together insurance firm .

Direct Tax Proposals
Certain tax proposals were introduced, providing relaxation to individual taxpayers and startups to some extent. The individual and company tax rates for FY 2021-22 (AY 2022-23) was left unchanged. during a major move, the limit for tax audits under section 44AB has been increased from Rs 5 crore to Rs 10 crore (only where 95% of payments are digitised), providing relief to several corporate houses. the subsequent are other proposed amendments:

  • IT relaxation for senior citizens of 75 years age and above:
    It has been proposed to exempt the senior citizens from filing tax returns if pension income and interest income are their only annual income source. Section 194P has been newly inserted to enforce the banks to deduct tax on senior citizens quite 75 years aged who have a pension and interest income from the bank.
  • Reduction in time for IT Proceedings:
    Except in cases of great evasion , assessment proceedings within the remainder of the cases shall be reopened only up to 3 years, against the sooner deadline of six years.
  • Constitution of ‘Dispute Resolution Committee’:
    Those assessed with a taxable income of up to Rs.50 lakh (for small and medium taxpayers) and any disputed income of Rs.10 lakh can approach this committee under section 245MA. it’ll prevent new disputes and settle the difficulty at the initial stage.
  • National Faceless tax Appellate Tribunal Centre:
    Provision is formed for faceless proceedings before the tax Appellate Tribunal (ITAT) during a jurisdiction less manner. it’ll reduce the value of compliance for taxpayers, and increase transparency within the disposal of appeals. Further, it’ll also help achieve even distribution of labor in several benches and ensure efficient administration.
  • Tax incentives to startups:
    The tax holiday for startups has been extended by another year up to 31st March 2022.
  • Relaxations to NRI:
    There is a proposal to notify rules for removing hardship for double taxation.
  • Pre-filing of returns to be forefront:
    Pre-filling are going to be allowed for salary, tax payments, TDS, etc. Further, details of capital gains from listed securities, dividend income, etc. are going to be prefilled.
  • Advance Tax on dividend income:
    Advance tax will henceforth be applicable on dividend income only after its declaration. Tax holidays are proposed for aircraft leasing and rental companies.
  • Disallowance of PF contribution:
    In case the employee’s PF contribution was deducted but not deposited by the employer, it’ll not be allowed as a deduction for the employer.
  • Section 43CA stands amended:
    The stamp tax value are often up to 120% (earlier 110%) of the consideration if the transfer of “residential unit”, which suggests an independent housing unit is formed between 12th November 2020 and 30th June 2021.
  • Amendment to Section 44ADA:
    Section 44ADA applied to all or any the assessees being residents in India. Now onwards, it applies only to the resident individual, Hindu Undivided Family (HUF) or a partnership firm, aside from LLP.
  • Section 80EEA deduction extended:
    The affordable housing additional deduction was extended till 31st March 2022. The tax exemption has been granted for affordable rental projects.

Indirect Tax Proposals – Budget highlights 2021

  • Few of the items on which Customs Duty Rates are revised are as follows:
    • Reduced duty on copper scrap from 5% to 2.5%
    • Basic and Special additional excise duty on petrol and high-speed diesel oil (both branded and unbranded) is reduced
    • Increased duty on solar inverters from 5% to 20%
    • Raised duty on solar lanterns from 5% to 15%
    • The basic customs duty on gold and silver reduced.
    • The department will rationalise duty on textile, chemicals and other products
    • The revised rates will be applicable from 2nd February 2021 onwards.
  • New tariff items under 2404 11 00 and 2404 19 00 are inserted in accordance with upcoming HS 2022 nomenclature. Further, NCCD of 25% is prescribed on these tariff items with effect from 1st January 2022.
  • Agriculture Infrastructure And Development Cess (AIDC) has been newly imposed on petrol and diesel at Rs2.5 and Rs.4 per litre respectively.
  • Regarding agricultural products, the customs is increased on cotton, silks, alcohol, etc.
  • Exemption of welfare Surcharge on the worth of AIDC imposed on gold and silver. Therefore, these things would attract surcharge at the traditional rate, only on value plus basic customs .
  • The exemption on import of leather are going to be withdrawn as they’re domestically produced.
  • A new initiative called ‘Turant Customs’ are going to be introduced for faceless, paperless, and contactless customs measures.
  • CGST Act was amended for several provisions as follows:
    • Section 16 amended to allow taxpayers’ claim of the input tax credit based on GSTR-2A and GSTR-2B.
    • Section 50 of the CGST Act is being amended to provide for a retrospective charge of interest on net cash liability with effect from the 1st July 2017.
    • Section 35 and 44 amended: Mandatory requirement of furnishing the GST reconciliation report signed by the specified professional is relaxed by allowing the filing of annual return on a self-certification basis. The Commissioner can exempt a class of taxpayers from the requirement of filing the annual return.