Union Budget 2021 explained in 15 charts

The government now proposes to sell a part of its holding in LIC by way of Initial Public Offer . The cess will be levied on some imported items including gold, silver, alcoholic beverages, coal, and cotton, and basic customs duty will be reduced by an equal amount. The cess will be levied on petrol and diesel at the rate of Rs 2.5 and Rs 4 per litre respectively, with equivalent cuts in excise duty.

• Since this fiscal year began with the ferocious second wave of the pandemic, there were worries that the fiscal strategy would become irrelevant.
• Keeping in view the need of this sector, customs duty is being raised on items like footwear and furniture.
• Central Government to provide 20 per cent of equity and facilitate external assistance up to 60 per cent of the project cost.
• Clearly, the allocations to PMMVY need to be substantially higher if the scheme aims to reach all those for whom it is intended.
• The government mainly generates revenues from different types of taxes such as income tax, corporate tax, goods and services tax, excise and custom duties.
• PPF Calculator This financial tool allows one to resolve their queries related to Public Provident Fund account.

The government capital expenditure as a proportion of GDP is set to pick up from 1.7 per cent in FY20 to 2.3 per cent in FY21 and further to 2.5 per cent in FY22, which will be a 17-year high figure and will enhance medium-term growth prospects. Besides, GST and income tax collections have also been a major source of revenue for the government in the past year. There was no big bang increase in the overall defence budget, but India did spend an additional unbudgeted Rs 20,776 crore on emergency arms procurements in the current fiscal in face of China’s ongoing belligerence on the northern borders, especially in eastern Ladakh. The government did not announce any changes in income tax slab in 2022. However, it introduced changes to make Income Tax Returns filing easier by allowing a one-time window to correct omissions and the tax deduction limit for state government employees contribution to NPS raised to 14% from 10%.

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Most of the countries that made larger fiscal interventions were richer than India. The IMF estimates that by April 2021, the median on-budget fiscal response for emerging markets was 4% of GDP. Also, as a percentage of its GDP, India’s discretionary fiscal response was larger than some richer emerging market economies like Mexico, Turkey and the Philippines.

An increase is proposed in National Calamity Contingent Duty on Cigarettes and Tobacco products. In the coming months, Rules of Origin requirements shall be reviewed, particularly for certain sensitive items, so as to ensure that FTAs are aligned to the conscious direction of our policy. In order to claim the tax exemption, charity institutions have to be registered with the Income Tax Department. It is proposed to make the registration completely electronic under a unique registration number to be issued to all new and existing charity institutions.

This is a cause for concern, and the challenges faced by the ministry need to be explored and addressed. Similarly, amounts paid to women under the Indira Gandhi National Disability Pension Scheme and the National Family Benefit Scheme should be reported in the GBS Part B as well. The Rural Development department is the largest contributor to the budgetary estimates reported in the gender budget 2020–21.

A sum of Rs 100 crore (US$ 14.15 million) allocated to begin the preparations for G20 presidency to be hosted in India in the year 2022. An Indian Institute of Heritage and Conservation under Ministry of Culture proposed, with the status of a deemed University. Policy to enable private sector to build Data Centre parks throughout the country to be launched soon. 148 km long Bengaluru Suburban transport project at a cost of Rs 18,600 crore (US$ 2.63 billion), to have fares on metro model. Central Government to provide 20 per cent of equity and facilitate external assistance up to 60 per cent of the project cost. National Police University and National Forensic Science University proposed for policing science, forensic science, and cyber-forensics.

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New provisions were introduced in September 2019, offering a concessional corporate tax rate of 15% to the newly incorporated domestic companies in the manufacturing sector which start manufacturing by 31st March, 2023. The safe harbour threshold for real estate transactions above the circle rate increased from 10% to 20%. Encashment of leave travel concession will be exempt from tax if the amount is used for purchasing certain goods.

Anyone with a taxable income up to Rs 50 lakhs and disputed income up to Rs 10 lakhs shall be eligible to approach the committee, she said. In 2016, the government had announced its intent to privatise public sector enterprises, but not much progress was made. Now, with the privatisation of Air India, it is possible that this agenda has made its way onto the list of priorities and, if the budget indicates large receipts from strategic disinvestments, it would reveal that the shift is real and not just a one-off transaction. Thirdly, this year, the government seems to have unusual flexibility to choose how to use its fiscal power during the rest of the year. Usually, by November-end, about half of the year’s total non-debt receipts are collected and about two-thirds of the expenditure is incurred. However, this year, about 70% of the non-debt receipts were collected and less than 60% of the budgeted expenditure had been incurred by November.

The hike in duty is ranging from 2.5% to 10% for different products effective April 1, 2021. This will effective increase the cost of imports and subsequently the cost of mobile phones across the Board since the margins are limited in the Industry. Further, farmer welfare has been reinforced with announcements on minimum selling price, Svamitva scheme and significant outlays for animal husbandry and fisheries to double farmers’ income. The Budget proposes to abolish Dividend Distribution Tax from 1 April 2020. The dividends will consequently be taxable in the hands of the shareholders. Further, the Budget proposes introduction of a new personal tax regime.

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About 60% of the budgeted revenue expenditure and about 50% of the budgeted capital expenditure had been incurred by November. However, in key infrastructure areas, – roads and highways, railways, housing and urban affairs – about two-thirds of the budgeted capital outlay had been spent by November. Budget is basically a microeconomic concept that is estimation of Revenue and Expenses that must be undertaken for a specified future period and is utilized by governments. Legally, According to Article 112 of the Constitution of India, the Union Budget of a year is an ’Annual financial statement’ i.e. the estimated receipts and disbursements of the government of the current fiscal year. The amounts budgeted for police for the safety of women under the Nirbhaya fund show a decline relative to the budget estimates of 2019–20.

Sitharaman proposed increasing healthcare spending to Rs 2,200 crore to help improve public health systems and fund a huge vaccination drive to immunise 1.3 billion people. The loan guarantees may have helped save some employment in formal sector micro, small and medium enterprises. However, while there are automatic stabilisers, like employment guarantees in rural areas, there are no suitable mechanisms in place to address the problem in urban areas. It would be interesting to see if the budget suggests a change in approach towards this problem – reaching the urban poor with more support and reaching the informal sector enterprises.

This new regime is optional for the taxpayer and provides for lower tax slab rates. New regime to entail estimated revenue forgone of Rs 40,000 crore (US$ 5.66 billion) per year. Rs 53,700 crore (US$ 7.60 billion) provided to further development and welfare of Scheduled Tribes. More than 6,500 projects across sectors, to be classified as per their size and stage of development. The first Union Budget of the third decade of 21st century was presented by the Minister for Finance & Corporate Affairs, Ms Nirmala Sitharaman in the Parliament on February 1st, 2020.

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At Deloitte, we have tailored our services portfolio to bring innovation, deliver value and lead the evolution of GCCs from resource centers to Centers of Excellence . The Income Tax Act, 1961 specifies various conditions for determining the resident status of an Indian citizen or a person of Indian origin. A person will be considered a resident, i.e. their global income is taxable in India, if they are in India for more than 182 days. Also many times the policies remain a data only on paper because of its bad implementation.

On the other hand, more than half of the total number of ministries/ departments did not comply with the directions of the Finance Ministry regarding the reporting of information . These include commerce, posts, telecom, consumer affairs, corporate affairs, finance, defence, parliamentary affairs, and panchayati raj ministries. However, some of the above ministries/departments had reported in GBS in the past. Every year, a few months before the preparation of the annual budget, the Ministry of Finance issues a budget circular. This is usually issued to various departments in September or early October, and contains formats, circulars, guidelines, timelines, etc., for submitting information to the Budget division of the Finance Ministry.

Similarly, rest areas could be developed at multiple points along arterial roads and highways. Clearly, the allocations to PMMVY need to be substantially higher if the scheme aims to reach all those for whom it is intended. Following up to ensure that union budget 2020-21 analysis women who are entitled to benefit from the scheme are aware of it, for the scheme to be successful. Second, the Rs 19,500 crore includes Rs 2,800 crore for interest payment to the National Bank for Agriculture and Rural Development for loans .

But first, a brief overview of the fiscal context just before the pandemic. Global Business Tax Deloitte delivers deep knowledge of tax and Consultants Global Business Tax like Cross-border tax advisory, Corporate tax advisory, Tax compliance support etc. Global Capability Centers Global Capability Centers have transitioned from being cost drivers to strategic business enablers and value creators.

This year’s budget will give a better picture of the fiscal projections and the fiscal policy strategy that the government intends to implement in the medium-term. It is not easy to scale down a large fiscal intervention of the kind we have seen in these two years. It would also be interesting to see how the government sees the contingent liabilities impacting the budget in the coming years. The recapitalisation of public sector banks was also done through off-budget or ‘below-the-line’ securities. The government also raised cesses and surcharges, especially on petroleum products, as such collections are not shareable with the states. What’s more, the government also sold some public sector enterprises to other public sector enterprises to get cash from them.

It also requires that all ministries and departments “strictly” follow the instructions issued by the secretary of the Ministry of Women and Child Development in this regard. Two budget heads, National Rural Livelihood Mission—Aajeevika and Mahatma Gandhi National Rural Employment Guarantee Scheme , have been reported in Part B of the GBS. NRLM includes schemes, such as the Deen Dayal Upadhyaya—Grameen Kaushalya Yojana (DDU-GKY) and Rural Self Employment Training Institute , that provide skill development training to boys and girls. The budget estimate reported for NRLM is ₹ 4,610.90 crore or around 50% of the total demand for the grant of Rs 9,210.04 crore. However, more than 50% should be reported in the GBS since the bulk of the benefits of NRLM are for women and girls.

An additional push to the environmentally friendly power area is to be 1500 crore to IREDA. In a democratic developing country, budget management is always interesting and challenging. The stakes are high, but it is also not easy to take the right decisions. The political economy makes many demands for expenditure, which are settled through a complicated and often opaque political and administrative process. Even if the right decisions are taken, constraints of institutional capacities also create differences between expectation and implementation. Multiple sources of information suggest what we suspected intuitively – that the pandemic has hugely increased income poverty in India, especially in urban areas.

The Finance Minister said she had reviewed all exemptions and deductions which got incorporated in the income tax legislation over the past several decades. Currently more than one hundred exemptions and deductions of different nature are provided in the Income Tax Act. She said that she has removed around 70 of them in the new simplified regime. She said that the remaining exemptions and deductions would also be reviewed and rationalized in the coming years, with a view to further simplifying the tax system and lowering the tax rate. Senior citizens above 75 years of age with only pension and interest incomes have been exempted from filing tax returns, the finance minister announced. It is not that nothing has been done; the increase in the food subsidy would have helped.

Fifthly, the budget recognizes the urgent need to bridge India’s skill gap by encouraging the education sector. Allowing foreign investments and external corporate borrowings by educational institutions will provide much needed new funding sources to facilitate their growth. Further, offering full degree programmes online will enable those who cannot access regular colleges to avail of the qualifications they need to gain full employment. As much as 90% of the amount reported by the Rural Development department for 100% women-specific allocations is allocated to the Pradhan Mantri Awaas Yojana . However, reporting the entire amount of Rs 19,500 crore budgeted for PMAY houses in the Part A of the GBS is inaccurate for two reasons.