Budget 2021: Key Highlights

Budget 2021-22 was presented by Finance Minister Nirmala Sitharaman on February 1, 2021 in the Lok Sabha. This budget is the first in the pandemic affected economy. It is the first budget of the decade in digital format and it aims at reviving and bringing back the economy to life. This budget also aims at recovering from the economic slowdown due to the pandemic situations. This budget mainly focuses on expenditure on infrastructure, health care and development. Finance Minister quoted that this budget was prepared in circumstances like never before.

Overview:

6 Pillars of Budget 2021:

• Health and Well-being
• Physical & Financial Capital, and Infrastructure
• Inclusive Development for Aspirational India
• Reinvigorating Human Capital
• Innovation and R&D
• Minimum Government and Maximum Governance

Key Highlights:

• Health and Well-being – PM AtmaNirbhar Swasth Bharat Yojana will be launched with an outlay of Rs. 64,180 crores over 6 years. Measures will be taken to curb air pollution. The budget allocated for this sector is Rs. 2,23,846 crores with an increase of 137 percent as compared to last year. Out of this about Rs. 35,000 crores are assigned for Covid-19 vaccination.
• Infrastructure – This budget focuses on Capital expenditure as compared to Revenue expenditure for this year. Government has increased capital expenditure by 34.5% to 5.5 lakh crores. Creating Institutional structures, monetizing assets and increasing share capital are the 3 concrete steps in this regard. Government has allocated Rs. 20,000 crores for funding infrastructure projects through development financial institution
• Agriculture – Agriculture credit limit is increased to 16.5 lakh crores thereby ensuring higher availability of credit to the farmers. This will turn out to be a boon for the farmers thereby leading to development in the agricultural, animal husbandry, dairy and fisheries sectors.
• Defence – Government has allocated about Rs. 1,35,060 crore capital expenditure and Rs. 2,12,027 crore revenue expenditure for defence sector in this budget. As compared to last year’s budget about 18.75% increase can be seen for the defence sector
• Direct Tax – Senior citizens who are 75 or more years of age are exempted from filling their income tax returns. Government is committed to make the taxation process faceless. In case the run-over increases to 10 crores the accounts will have t be audited. This limit is increased from 5 crores for last year
• GST – GST is 4 years old system now. Steps have been taken to simplify it even more through electronic invoice system, staggering of returns filling, nil return through SMS, etc. Capacity of GSTN system has been increased
• Start-ups – For tax audit of start-ups the amount is increased to 10 crores. Receipts and payments and payments are to be executed digitally and incorporation of eligible start-ups has been extended by 1 more year. Start-up registered before April 2022 can claim a tax holiday too.
• Automobile – Government has announced a voluntary vehicle scrapping policy to scrap the old vehicles for new ones. This aims at boosting sales and thereby reducing pollution in the environment.
• Renewable Energy – To boost solar energy capacity and domestic production of the same duty on solar inverters is increased from 5% to 20% and on solar lanterns from 5% to 15%
• Real Estate – Tax holiday is announced for affordable rental housing projects. These projects are now approved up to March 31, 2022 instead of March 31, 2021.
• FDI and Banking – In this budget, FDI has been increased in the insurance sector from 49% to 74% with additional control. About Rs. 20,000 crores are allocated for public sector banks in this financial year. For recapitalization the government has made a provision of Rs. 20,000 crores