Union Budget 2021 – Important Highlights

The Finance Minister of India, Nirmala Sitharaman has introduced the Union Budget 2021-22 on the 1st of February 2021. The Union Budget of fiscal 2021-2022 was disclosed that focuses on the six pillars for restoring the economy. These include :

1. Health and Well being
2. Physical and Financial Capital and Infrastructure
3. Inclusive Development for Aspirational India
4. Reinvigorating Human Capital
5. Innovation and R&D
6. Minimum Government Maximum Governance

Amendments Direct Taxation (Income Tax)

• The personal tax slabs rates were unchanged. This was proposed for putting a minimum burden on taxpayers.
• Reopening window of IT assessment cases is reduced from 6 to 3 years. However, in serious tax evasion cases of Rs. 50 lakh or more can be made up to 10 years.
• Senior citizens who are 75 years or above age and have a pension and interest income get relief from filing the ITR.
• A Faceless Dispute Resolution Committee is to be set up for small taxpayers. A taxpayer who is having a taxable income of up to Rs. 50 lakhs and disputable income up to Rs. 10 lakhs can approach this committee.
• A Faceless Income Tax Appellate Tribunal is formed for electronically conducting all the appeals.
• Section 35(5) of the CGST Act is omitted and Section 44 is substituted for removing the mandatory requirements such as getting accounts and reconciliation statements audited under GST.
• Few details shall be pre-filled in the ITR form.
• Also, the much-hyped COVID-19 cess was not proposed in Union Budget 2021.
• The last date of filing is extended up to 28, February 2021 under the Vivad se Vishwas Scheme.
• Compliance burden to be eased for small trusts having annual receipts not exceeding Rs. 5 crores.

Amendments in Companies Act 2013:

• Companies having capital up to 2 crores and turnover up to 20 crores are now classified as Small Companies.
• A One Person Company (OPC) to grow without any restriction in turnover or capital share and NRI’s with a minimum 120-day presence in a year can now start OPC’s.
• E-scrutiny, E-adjudication, and compliance management to be easier with the launch of MCA 3.0.

Amendments in Indirect Taxation (GST, Customs)

• Agri Infra Development cess is imposed on certain products.
• Customs duty of 7% will be attracted by the tunnel boring machines.
• All nylon products are to be charged with a 5% customs duty.
• Customs duty on auto parts, solar inverters/lanterns, silk yarn, and cotton increased. There is an exemption on leather import withdrawn.

We have brought you the sector-wise details of the presented measures:

Agriculture

• For infrastructure augmenting the APMCs will be made available with the ‘Agriculture infrastructure fund’
• E-NAM market will have 1000 new Mandis.
• Five major fishing hubs that include Kochi, Chennai, and Paradip are to be developed.
• In Tamil Nadu, a multipurpose seaweed park is to be developed.

Health, Water and Sanitation goals

• For developing primary, secondary, and tertiary healthcare, a new scheme called PM Atma Nirbhar Swasthya Bharat Yojana is to be launched.
• Mission POSHAN 2.0 focuses on improving nutritional outcomes beyond 112 aspirational districts.
• Modernizing the existing health units at 32 airports, 15 land ports, and seaports.
• 17 new public health units at the points of entry to be operationalized.
• Jal Jeevan Mission Urban is aiming at a better supply of water nationwide.
• Urban Swachh Bharat Mission to be strengthened.

Economy and Financial Sector

• FDI limit is proposed to increase from 49% to 74%
• The fiscal deficit stands at 9.5% of the GDP, as is estimated to be 6.8% in 2021-2022.
• For bank depositors, Deposit insurance is increased to Rs. 5 lakhs from Rs. 1 lakh.
• LIC IPO is introduced to debut this fiscal deficit.

Education Sector

• New 100 Sainik schools will be set up.
• Ladakh to have a central university.
• In tribal areas 75 Eklavya schools are to be set up.

Infrastructure

• Road and highway works are announced in Tamil Nadu, Kerala, Assam, and West Bengal.
• Unfit and old vehicles will be phased out under the vehicle scrapping policy. For personal vehicles, every 20 years it is necessary to take fitness tests in automated fitness centres while for commercial vehicles every 15 years.
• 100% Railways electrification to be done by 2023.
• For monitoring the asset monetization process, a National Asset Monetising Policy is launched.
• For bringing a future-ready railway system, a Nation Rail Plan is created.
• The gas pipeline project is to be set up in Jammu and Kashmir.
• LPG scheme of Pradhan Mantri Ujjwala Yojana is to be extended for covering 1 crore more beneficiaries.
• Seven Textile parks to be set up in 3 years.

Housing

• For affordable housing, the tax holiday is extended by a year. Up to 1.5 lakhs of the deduction u/s 80EEA for the paid interest on loans for an affordable home extended till 31st March 2022.
• For residential unit transfer, the variation of 120% is allowed instead of 110% in stamp duty. Under 43 CA:

1. The transfer of this residential unit is taking place during the period – 12^th November 2020 and ending on 30^th June 2021.
2. The transfer is by way of first-time allotment of residential units to any person.
3. The consideration received because of transfer is not exceeding rupees two crores.

Others

1. The buyer responsible for the purchase of any goods of the value exceeding 50 lakhs in the previous year shall at the time of credit of payment deduct an amount equal to 0.1% of the sum exceeding 50 lakhs as income-tax. Under 194Q, TDS is applicable in single transactions and the date of applicability is 1:7:2021.
2. Penalty on GST increased from 100% to 200% of tax in case the foods are detained by a GST officer.
3. Foreigners Investors can attract Lower Treaty Rate Benefit in case of TDS on Dividend.
4. Advance Tax Liability on Dividend to arise only after declaration or payment of Dividend.
5. For home loans taken till 31:3:2022, a deduction of Rs. 1.5 lakhs u/s 80EEA of interest paid on home loan for Affordable housing will now be available.
6. Under 80IBA, the developers of affordable housing projects are entitled to claim deduction of 100% of the profits with the date extended till 31.3.2022.

Author: Team MyEfilings