Highlights of the Union Budget 2021-22
The Union Budget for the financial year 2021-22 was introduced by the Hon’ble Finance Minister of India, Smt. Nirmala Sitharaman on February 1st, 2021. The new budget set the guidelines for the upcoming financial year and highlighted seven flagbearers for the nation’s economy.
The Finance Minister began by stating the issues and the difficulties faced by our nation’s economy as the repercussions of the COVID-19 pandemic and the objectives of the Pradhan Mantri Garib Kalyan Yojana to combat such hurdles. FM also highlighted the availability of two vaccines against COVID-19 and announced the release of two more in the near future.
The flagbearers of Indian economy 2021-22
Under the Union Budget presented in the parliament, the finance minister stated seven components as the backbone for reviving the dwindling economy of our nation. These include:
- Health and Wellbeing
- Physical and Financial Capital
- Inclusive development for Aspirational India
- Reinvigorating Human Capital
- Innovation and R&D
- Minimum Government Maximum Governance
The major goal of the budget is to focus on the development of these components as a strategy for economic spikes and recovering the lost finances of the past.
Union Budget 2021-22 at a glance:
The major announcements made by the Finance Minister under this union budget are mentioned below:
- Health and Wellbeing: The FM announced an increase in the spending with an expense of Rs.64 thousand crores that shall be spread over 6 years as part of a new scheme partnered with the National Health Mission. This has been done to provide aid to the urban and rural healthcare facilities.
- Jal Jeevan Mission: The Finance Minister also declared a new scheme as Jal Jeevan Mission that possessed Rs.2.87 lakh crores as an outlay. The new mission is targeted to sustain and improve the water supply in urban areas and local bodies as well as ensure proper supply to all the tap connections.
- Urban Swachh Bharat 2.0: The Finance Minister also announced Rs.1.41 lakh crores to be given for Urban Swachh Bharat 2.0 to be used over 5 years.
- Physical capital: The Finance Minister reinstated Rs.1.47 lakh crores for 5 years to fulfill the improvement of wastewater treatment and management of water pollution due to plastic wastes.
- Scrapping Policy: One of the innovative policies introduced under the Union Budget 2021 was the scrapping policy that has the objective of reducing vehicular pollution.
- Finance Minister also stated that around Rs.35000 crore shall be allotted for the production and distribution of COVID-19 vaccines.
- Infrastructure: Under the current budget an amount of Rs.1.97 lakh crores has been announced oriented towards manufacture on a global scale and also to grow employment opportunities for the youth. The budget also integrated the development of 7 high-end textile parks across the country over the next 3 years.
- Financial Capital: For boosting the financial capital of the country the Finance Minister announced the establishment of a Financial Institution and has declared Rs.5 crores as development amount. The Minister also announced an amount of Rs.2 lakh crore as state capital expenditure.
- The total capital expenditure for the financial year 2021-22 has been stated to be Rs.5.54 lakh crore and the Year-on-Year growth rate has been estimated at around 34.5% by the finance minister.
- Union Budget also announced the allowance for National Highways for the following states: a) Kerala: RS.65,000 crores, b) Tamil Nadu: Rs.1.03 lakh crores, and c) West Bengal: Rs.25,000 crores
- Inclusive development of Aspirational India: Under this pillar of the Union Budget, the Finance Minister announced a reform in the agricultural sector allowing a 1.5 times greater MSP than the last budget. The agricultural credit has also been increased now to Rs.16.5 crore.
Union Budget and its economic reforms for 2021:
Under the new Union Budget for the financial year 2021-22, the healthcare sector has been considered as a top-tier priority. The sector has been provided with an expense of Rs.64,180 crore as part of the Pradhan Mantri Swasth Bharat Yojana. This allowance is aimed to be spread over the next six years.
To increase the productivity and efficiency of the health and hospitality sector and to support the pillar of Healthcare and Wellbeing of the nation, the Finance Minister has allotted Rs.2,23,846 crore and this outlay will increase at the rate of 137% on a Year-on-Year basis. The institutions such as NCDC and hospitals across the country that has been hit by the worse of the pandemic shall bear some relief under the budget allowance.
The FDI limits have also been increased to 74% from the previous 49% in the insurance sector.
Union Budget 2021-22: Tax Proposals
The Union Budget was not all-too-happy for the salaried individuals or the working professionals as the government didn’t present any evident tax benefits or changes in the corporate tax.
Direct Tax Proposals:
- The Finance Minister announced in what comes as a significant move that the limit of the tax audit has been increased to Rs.10 crore under Section 44AB.
- The budget declared that Senior Citizens whose only source of income is a pension or interest income shall be exempted from taxation. Under the revised Sec 194P, the banks will deduct tax for senior citizens aged 75 years or above.
- There has also been a reduction in time for tax evasions for IT proceedings where the limit has been set at three years.
- Under the budget, a new Dispute Resolution Committee has also been established that shall be in-charge to resolve any tax evasion disputes under Sec 245MA and those with a total income above Rs.50 Lakh can approach this committee for disputed income.
- Finance Minister also announced a faceless appeal in front of ITAT or the tribunal center where a transparent and jurisdiction-free dispute appeal can be made by the taxpayers.
- The budget held good news for startups because their tax holiday has now been extended by one year (March 2022).
- The budget also entails a provision of pre-filling for returns, TDS, salary.
- An additional tax shall now be applied on the dividend income for the financial year
- The Finance Minister stated that the PF contribution of the employee shall not be allowed for taxation deduction in case it has not been deposited by his/her employer.
- For Section 43CA, the amendment remains and the stamp duty value will be at the rate of 120%
- The Sec 44ADA is now applied only to the residents, partnership firm or HUF
- The Finance Minister has also extended the deduction under Section 80EEA until 31st March 2022.
Indirect Tax Proposals:
- Finance Minister has revised the custom duties for various commodities such as Copper scrap- 2.5%, Excise duty on petrol and diesel, Solar inverters- 20%, Solar lanterns- 15%
These custom duties shall be applicable from February 2nd, 2021.
- The budget has also announced an NCCD on tariff items amounting to around 25%. This shall be applicable from January 1st, 2022.
- AIDC has been imposed on diesel and petrol amounting to Rs.4/liter and Rs.2.5/liter respectively.
- The Finance Minister also informed that the customs duty on cotton, alcohol, silks, etc shall be increased.
- Under the new budget, there will be no exemption of leather as it is indigenously produced.
- Turant Customs: The new budget also introduced the Turant Customs service that will be aimed at providing a faster, paperless, and faceless custom procedure
- Several provisions were also introduced for the CGST Act for Sec 16 to enabling the taxpayers’ input tax credit claim, Sec 50 for providing interest on cash liability, and Sec 35 and 44 were amended for enabling the filing of income tax returns on a self-certification basis.
Highlights of the Union Budget 2021-2022 FAQs:
1. When was the Union Budget 2021-22 announced?
The Union Budget for the year 2021-22 was announced by Hon’ble Finance Minister Nirmala Sitharaman on February 1st, 2021.
2. What is the declared budget for COVID support under Union Budget 2021-22?
The Finance Minister has allotted Rs.27.1 lakh crore as COVID support to healthcare and wellbeing.
3. What is the budget announced for healthcare under the financial year 2021-22?
The declared budget for healthcare institutes is Rs.2,34,846 crore
4. What is the proposed railway budget under Union Budget 2021-22?
The Finance Minister has announced Rs.1.1 lakh crore as railway budget for FY 2021-22.
5. What is the outlay for Swachh Bharat Abhiyan proposed under Union Budget 2021-22?
Finance Minister declared that approximately Rs.1.42 lakh crore for the Swachh Bharat Abhiyan 2.0
6. What is the outlay proposed for Aatmanirbhar Health Yojana?
The proposed budget for Aatmanirbhar Health Yojana under Union Budget 2021-22 is Rs.64,180 crore.
7. How much is the total allotted capital expenditure under Union Budget 2021-22?
The total capital expenditure for the financial year 2021-22 has been stated to be Rs.5.54 lakh crore and the Year-on-Year growth rate has been estimated at around 34.5% by the finance minister.
8. Are there any reformations in income tax slab rates for the Financial year 2021-22?
No, the Union Budget 2021-22 did not propose any changes in the tax slab.
9. What is the proposed outlay of Jal Jeevan Mission for the year 2021-22?
The proposed budget for Jal Jeevan Mission is slated at Rs.2.87 lakh crore.
10. What is the proposed outlay for the power sector under Union Budget 2021-22?
The Finance Minister has announced a budget of Rs.3.05 lakh crore for the FY 2021-22.
Budget 2021 PDFs
Budget at a Glance
Transfer of Resources to States and Union Territories with Legislature
Outlay on Major Schemes
Statement I – Consolidated Fund of India
Revenue Account – Receipts
Revenue Account – Disbursements
Capital Account – Receipts
Capital Account – Disbursements
Statement IA – Disbursements ‘Charged’ on the Consolidated Fund of India
Statement II – Contingency Fund of India – Net
Statement III – Public Account of India
Receipts & Expenditure of Union Territories without Legislature
Budget Highlights (Key Features)
Abstract of Receipts
Summary of Estimates of Tax, Non-Tax Revenue and Capital Receipts
I. Tax Revenue
II. Non-Tax Revenue
III. Capital Receipts
1. Trends in Receipts
2. Analysis of Tax and Non-Tax Revenue Receipts included in Annexure 1
3. Reconciliation between estimates of Receipts shown in Annual Financial Statement and Receipts Budget
4. Statement showing State-wise Distribution of Net Proceeds of Union Taxes and Duties for BE 2020-2021
4A. Statement showing State-wise Distribution of Net Proceeds of Union Taxes and Duties for RE 2019-2020
4B. Statement showing State-wise Distribution of Net Proceeds of Union Taxes and Duties for Actual 2018-2019
5. Tax Revenues raised but not realised (Principal Taxes)
6. Arrears of Non-Tax Revenue
7. Revenue impact of Tax Incentive under the Central Tax System: Financial Years 2018-19 and 2019-20
8. Sources and Application of National Small Savings Fund as on 31st March, 2020
PART-B ASSET AND LIABILITY STATEMENTS
1. Debt position of the Government of India
Demands for Grants of Central Government
D.O. Letter from JS(TRU-I)
The Macro Economic Framework Statement
The Macro Economic Framework Statement
Medium Term Fiscal Policy cum Fiscal Policy Strategy Statement
Medium Term Fiscal Policy cum Fiscal Policy Strategy Statement
Output Outcome Framework for Schemes 2020-2021
Output Outcome Framework for Schemes 2020-2021
Last Year: Highlights of the Union Budget 2020-21
The union budget means different things to different people.
To the man in the street it means a new price and tax regime and to the woman in the kitchen it means finding new ways of balancing the home budget.
It all adds up to going round in circles trying to make the ends meet for most citizens.
The budget which the honorable finance minister has presented for the year 2020, with the aim of boosting income and increasing the purchasing power of individuals initially got a thumbs down from the stock market as the indices tanked but later bounced back strongly recouping the losses and cheering the general sentiment.
The following are the highlights of the budget that, according to the government, have been structured around three prominent themes –Aspirational India, Economic Development for all and caring society.
1) For starters, the finance minister has removed more than seventy deductions that provided relief to income taxpayers.
2) With the dividend distribution tax (DDT) scrapped you will now be required to pay income tax as per your individual tax slab.
3) With the new income tax regime that has been introduced, you will pay lower income tax if you forego income tax deductions.
The following proposals will bring cheer to most tax payers:
i) For taxable income up to Rs. 5 lakh tax – Nil tax
ii) For taxable income between Rs5 lakh to Rs7.5 lakh Income tax rate stands reduced from 20% to 10%.
iii) For taxable income from Rs7.5 lakh to Rs10 lakh the tax rate has been reduced from 20% to 15%.
iv) For taxable income between Rs10 lakh to Rs12.5 lakh the applicable tax rate will be 20% as against the earlier 30% to 20%.
v) For taxable income between Rs12.5 lakh to Rs15 lakh, the rate will now be 25% down from 30%.
vi) For taxable income above Rs15 lakh income tax has been retained at 30%.
- Tax on cooperative societies has been revised downward from 30% to 22% surcharge and cess.
- Vivaad se vishvas scheme, a scheme to be launched to settle direct tax disputes has been proposed. Meanwhile, the government will waive interest and penalty for those who wish to pay the disputed amount till 31 March.
- The government has extended a new corporate tax regime for new manufacturing plants to new power generation companies with a view to boost power generation capacity. The companies will pay only 15 % tax under the new corporate tax regime.
- The registration of charity institutions is proposed to be made fully electronic. Pre-filled IT return form to claim exemption easily.
- A new taxpayer charter is to be instituted to end tax harassment.
Agriculture, Irrigation and Rural Development
Allocation of Rs 2.8 lakh crore for the agriculture sector has been made in the budget
- Pradhan Mantri Kisan Urja Suraksha Utthan Mahabhiyan is to be extended under which 20 lakh farmers would be allocated funds for stand-alone solar pumps and additional 15 lakh for grid connected pumps.
- Indian Railways and Ministry of Civil Aviation is to launch ‘Kisan Rail’ and ‘Krishi Udaan’ schemes respectively for a seamless national cold supply chain for perishables.
- It has been proposed to raise fishery exports to Rs1 lakh crore by 2024-25.
Wellness, water and sanitation
The budget has allocated Rs 69,000 crore for the healthcare sector.
- More than 20,000 empanelled hospitals under PM Jan Arogya Yojana to be set up.
- Jan Aushadhi Kendra Scheme proposed to be expanded to all districts by 2024.
- The budget provides for allocation of Rs 12,300 crore for Swachh Bharat this financial year.
- Budget has allocated Rs99,300 crore for the education sector in 2020-21 and around Rs3,000 crore for skill development.
- Full-fledged online degree level education programs from top 100, NIRF ranking institutes to benefit underprivileged students.
- Finance Minister has proposed IND SAT exam for students of Asia and Africa to promote ‘study in India’ program.
- This union budget allocates Rs 1.7 lakh crore for the infrastructure sector.
- Roads: Accelerated development of highways
- Railways: 150 passenger trains through PPP mode. Additional Tejas type trains for tourist destinations.
- Airways: 100 more airports to be developed under UDAAN
- Large solar power capacity for Indian Railways planned
- A suburban rail project for Bengaluru planned at a cost of Rs18,600 crore
- Under the public-private partnership mode the budget provides for five new smart cities.
A national mission for Quantum Technologies and applications proposed with an outlay of Rs 8000 crore.
Banking and financial sector
- Government plans to launch debt ETF aimed at boosting the debt market.
- Deduction of Rs1.5 lakh for affordable housing announced earlier extended by one more year. Projects under affordable housing will get a tax holiday for one more year, but they need to get clearance by March 2021.
- For the security of fixed deposits, the budget has increased deposit insurance cover in banks from Rs 1 Lakh to Rs 5 Lakhs per depositor. The deposit insurance would apply even for deposits in multiple banks, i.e. Rs 5 Lakhs maximum insurance.
- Finance ministry is considering stake sale in LIC through public offering i.e. Initial Public Offering.
- New schemes to encourage the manufacture of mobile phones, electronic equipment and semiconductor packaging being planned
- Private sector to be encouraged to build Data Centre Parks in the country
Women & Child, Social Welfare
- More than 6 lakh anagan wadi workers equipped with smartphones
- Taskforce proposed for recommendations on lowering MMR and improving nutrition levels. Nutrition-related programmes outlay proposed Rs 35600 crore.
Culture and Tourism
- Tourism promotion outlay proposed at Rs2500 crore
- Indian Institute of Heritage and conservation proposed
- Tribal museum to be set up in Ranchi
- Maritime museum planned at Lothal
Environment & Climate Change
- The Coalition for Disaster Resilient Infrastructure was launched in September 2019
- Encouragement to states implementing plans for cleaner air in cities above 1 million population
The budget aims to implement the vision of the government articulated as ‘Sabka Saath, Sab ka vikas’, (Development of all with the cooperation of all).With India emerging as the fifth largest economy in the world, the new thrust of the budget on development of all is a welcome shift in approach.
1. What does the union budget 2020 aim to achieve for the citizen?
The budget with its themes of aspirational India, economic development, and a caring society is aimed at delivering maximum governance with minimum government to enhance the ease of living for citizens.
2. What does the Vivaad se Vishwas Scheme aim to achieve?
The Vivaad se Vishwas Scheme aims to increase the amount of tax the government can net from disputed tax claims. If the taxpayer pays the disputed taxes before 31st March 2020, the interest and penalty will be waived.
3. How do the tax provisions of the budget impact startups?
The tax proposals seek to rationalize provisions of section-IAC for eligible startups by allowing deduction for a period of 10 years from the existing 7 years. Also the condition of turnover of Rs25 crore is sought to be raised to Rs100 crore.
4. How much is the saving potential of 80C for taxpayers in 2020
The provisions of the budget allow taxpayers a deduction of up to Rs1.5 lakh from the total taxable income.
5. How much does the government propose to spend under budget 2020?
The government has proposed Rs30.42 lakh crore as the total budget for 20-21.
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