Budget 2021 Live Updates

Budget 2021: (Updates & Highlights) | 1st February 2021

[01.25 PM]:

Introduction of agricultural infrastructure cess

  • FM imposes an agricultural infrastructure cess on fuel such as petrol and diesel. 

  • Around Rs. 2.5 per litre shall be added onto the price of petrol and Rs. 4 per litre shall be added onto the price of diesel fuel.

[1.08 PM]:

Positive reaction from the Stock Markets

  •  Sensex is currently trading at around 47,810 points, up by more than 1500 points (3.18%) from the previous day’s close. 
  • Nifty, on the other hand, is currently trading at around 14,090 points, up by more than 450 points (3.23%) from the previous day’s close.

[01.01 PM]:

Revision in customs duty on mobile phone parts

  • Exemption of customs duty on parts of mobile phone chargers and sub-parts of mobile phones stands withdrawn. 

  • Customs duty on some parts of mobile phones will be increased to 2.5% from the present nil rate. 

[12.48 PM]:

Revision in customs duty on agricultural products 

  • Customs duty on cotton has been raised from nil to 10%.

  • Customs duty on raw silk and silk yarn has been raised from 10% to 15%.

[12.47 PM]:

Revision in customs duty on capital equipment and auto parts 

  • Customs duty exemption for tunnel boring machines have been withdrawn. They will now be taxed at a rate of 7.5% and its parts shall be taxed at 2.5%

  • Customs duty on certain auto parts have been raised to 15%

[12.45 PM]:

Revision in customs duty on chemicals 

  • Customs duty on naphtha reduced to 2.5%

[12.44 PM]:

Revision in customs duty for iron and steel

  • FM proposed a reduction in the customs duty for both Iron and Steel to 7.5%

  • Customs duty on steel scrap will be exempted up to March 2022.

  • Customs duty on copper scrap has been reduced from 5% to 2.5%

[12:43 PM]:

Revision of the customs structure

A revised customs structure will be notified by October 2021.

[12.41 PM]:

Tax relief for startups 

Tax relief for startups has been extended by 1 more year.

[12:38 PM]:

Extension of tax holiday for loans on affordable homes 

  • FM proposes to extend the eligibility for affordable housing and rental housing over and above what was stated in the July 2019 budget.

  • Government to extend the eligibility of such home loans up to FY22.

  • Affordable housing projects can avail the tax holiday for one more year.

[12:35 PM]:

Limit for exemption from tax audit for businesses

  • The limit for exemption from tax audit has been increased from Rs. 5 crore to Rs. 10 crore, for those who carry out 95% of their transactions through digital medium.

[12:31 PM]:

Direct Tax Proposals - Dispute resolution committee for small taxpayers

  • The Finance Minister proposes to constitute a dispute resolution committee for small taxpayers.

  • Anyone with a taxable income up to Rs. 50 Lakhs and a disputed income up to Rs. 10 Lakhs can approach the committee.

[12:30 PM]:

Direct Tax Proposals - Reopening of assessments

  • FM Nirmala Sitharaman proposes a reduction in the time limit for reopening of assessments from 6 years to 3 years.

  • In cases of serious tax, and only where there is evidence of concealment of income of Rs. 50 Lakhs or more in a year, the time limit for reopening of assessment has been proposed to be 10 years

[12:27 PM]:

Direct Tax Proposals - Relief for senior citizens

  • Relief to senior citizens: FM Nirmala Sitharaman proposes the reduction of compliance burden on senior citizens aged 75 years and above. 

Senior citizens who have income only from interest and pension are to be exempt from filing income tax returns

[12:20 PM]:

1 Nation, 1 Ration Card

  • The '1 Nation 1 Ration Card' plan is under implementation by 32 States & UTs. 

  • The Centre will launch a portal to collect data on migrant workers. 

  • Further, social security benefits will be extended to platform and gig workers.

  • Minimum wages will apply to all categories of workers.

[12:14 PM]:

Incentives for digitization

FM proposes an outlay of Rs. 1,500 crore for financial incentives to promote digital modes of payment.

[12.12PM]:

Innovation and R&D

The NRF outlay has been proposed at Rs. 50,000 crores over 5 years.

[12.08PM]:

Setting up of new schools

  • 15,000 schools to be qualitatively strengthened as per the National Education Policy (NEP).

  • 100 new Sainik Schools to be set up in partnerships with NGOs.

[12:05 PM]:

MSME allocation

Government to set aside Rs. 15,700 crore in FY22 for MSMEs.

[12.05PM]:

Financial inclusion

Stand-Up India for SC and ST: The FM has proposed a reduction in the margin money from 25% to 15% for startups. This includes loans for allied activities in agriculture.

[12:01 PM]:

Divestment targets for FY22

  • The government sets the disinvestment target for the year 2021-22 at Rs. 1.75 Lakhs crore 

  • The divestments of BPCL, CONCOR, AIR INDIA and SCI are expected to be completed in the financial year 2021-22.

  • The IPO of LIC is to be launched in FY22

[11: 55 AM]:

Proposals for one-person companies

  • No restriction on paid-up capital and turnover for one-person companies

  • For the conversion of OPCs to any other kind of organization, the residency limit has been reduced from 182 days to 120 days

  • Non-resident Indians will be allowed to incorporate OPCs in India

[11: 53 AM]:

Measures to strengthen state-owned banks

  • With an emphasis on the need to clean up the bank's books, Rs. 20,000 crore have been allocated for bank recapitalisation.

[11: 48 AM]:

Consolidation of existing financial regulations

Finance Minister Nirmala Sitharaman proposes to consolidate the provisions of the SEBI Act, the Depositories Act, the Securities Contracts Regulation Act, and the Government Securities Act

[11: 46 AM]:

Increase in FDI limit in the insurance sector

FDI limit in the insurance sector to be increased from 49% to 74%.

[11: 45 AM]:

Ujjawala Scheme updates

  • The Ujjwala Scheme is to be extended to include 1 crore more beneficiaries, with 100 more districts to be added to the scheme in the next 3 years

  • FM Nirmala Sitharaman announces that an independent gas transport system is to be set up

[11:35 AM]:

Proposed National Highway Infrastructure 

  • FM announces the government’s aim to complete 11,000 kilometers of national highway infrastructure by March 2022.

  • The following highway works have been proposed:

  1. 3,500 km national highways corridor in Tamil Nadu, at an investment of Rs. 1.03 Lakh crore 

  2. 1,100 km of national highway works in Kerala, at an investment of Rs. 65,000 crore (this includes the 600 km section of the Mumbai-Kanyakumari corridor in Kerala)

  3. 675 km of national highways in West Bengal, at an investment of Rs. 25,000 crore 

  4. 1,300 km of national highways in Assam in the next 3 years

[11:32 AM]:

MARKET: In light of the presentation of Budget 2021, the market witnesses a 811-point gain in Sensex; Nifty climbs above 13,800 points

[11:31 AM]:

Seven textile parks to be set up in 3 years

Seven 'Textile Parks' to be developed in the next 3 years to create world class infrastructure and champions

[11:23 AM]: 

Automobile industry: voluntary vehicle scrapping policy

Personal vehicles to undergo fitness tests after 20 years and after 15 years in case of commercial vehicles .

[11:18 AM]:

Health and well-being

  • [11:18 AM]: To increase the focus on Swachh Bharat and Swasth Bharat, FM Nirmala Sitharaman said the government intends to increase the focus on reduction of single use plastic, air pollution, and segregation of waste. 

  • [11:19 AM]: The Urban Swachh Bharat scheme is to be implemented with an outlay of over Rs 1.4 Lakh crore. 

  • Government to launch Mission Poshan 2.0 and Jal Jeevan Mission Urban. Jal Jeevan Mission Urban to have an outlay of Rs 2.87 Lakh crore.

  • [11:21 AM]: Of the Rs. 2,23, 846 crore announced as the outlay for health and well-being, of which Rs. 35,000 crore is for the COVID vaccine

  • The FM announces a new health infra scheme with higher outlay of Rs. 61,000 crore

  • 17,000 rural and 11,000 urban health centres are to be set up to improve health infrastructure in the country

  • [11:39 AM]: Government introduces the PM Aatmanirbhar Swasth Bharat Yojana, with an outlay of Rs. 64,180 crore spread over a period of six years. This is expected to strengthen the National Centre for Disease Control. The government also intends to set up 15 emergency health centers.

[11:11 AM]: 

Part A of Budget 2021 will strengthen the idea of Atma Nirbharta - or Nation First. 

It will include six pillars:

  1. Health and wellbeing

  2. Physical and financial capital, and infrastructure

  3. Inclusive development

  4. Reinvigorating Human capital

  5. Innovation and Research & Development (R&D)

  6. Minimum government and maximum governance

[11:07 AM] : 

Two or more vaccines are also expected soon.

[11:05 AM]: 

The COVID-19 support measures implemented amounted to 13 percent of the GDP, and the total COVID-19 support measures by the government and the RBI amounted to Rs 27.1 Lakh crore

[11:05 AM]: 

The Finance Minister referred to the Atma Nirbhar packages, which accelerated the structural reforms in the country.

[11:00 AM]:

Union Budget 2021: Finance Minister Nirmala Sitharaman begins the budget speech, referring to the unprecedented times we witnessed during the past year.

 

Mr. Anurag Thakur, the Union Minister of State for Finance further asserted that the budget 2021-22 will be at par with people's expectations. Government's constant efforts towards making India a self-reliant nation are likely to reflect with the new budget, making India's economy grow. 

Budget 2021: Overview

Amidst the country’s massive recovery plan from the pandemic, the Union Budget 2021-22 is thought to be the epicenter of a robust fiscal strategy for post-pandemic economic revival.

Union Budget 2021-22 Announcement: When & by Whom?

The Union Budget is to be presented on the 1st of February, at 11am by our Finance Minister (FM), Nirmala Sitharaman. It will be interesting to know whether FM Sitharaman, in her third Budget session, breaks the last year’s record of the largest Budget announcement in India’s history.

Budget 2021: Expectations

From tax deductions to creating jobs, the Union Budget is expected to bring significant changes for a new, geared up India. With concerns over the impact of the pandemic on India’s economy and GDP growth in 2020, citizens are keenly eyeing on Budget 2021.

Here, we pen down some crucial expectations from Budget 2021-22:

Strengthen the Healthcare Infrastructure 

With a healthcare allocation that is just 1% of GDP, it is highly inadequate for a significant leap in the sector. It is expected that the healthcare allocation in the upcoming Budget would be around 2% of the GDP, to change this scenario substantially. Moreover, with significant healthcare expenditure observed across the country since 2020 amid the pandemic, the Government should consider increasing investment towards healthcare technology framework. Additionally, with extensive Research and Development (R&D) that went about in the development of vaccines and medications, 2020 underlined the criticality of the R&D arm of the nation. Hence, government should consider offering subjective tax reliefs for R&D expenses, especially for the healthcare industry.

Tax Relief in the Real Estate Sector

The downfall of the real estate sector after the pandemic has raised concerns for those dealing in this market. While the fair market values dropped, the stamp duty rates have remained unchanged.  Additionally, while the properties are sold on dropped fair market value, tax calculations depend on the stamp duty value, further raising major concerns. Thus, Budget 2021 is expected to bring considerable amendments, offering tax reliefs.

Digital Infrastructure Enhancement

Digital infrastructure and virtual business models have transformed the education and other business sectors during 2020. While in the state of lockdown, the nation revisited the idea of digitization in a transformational way. From digital boards to utilization of virtual reality for learning, India has witnessed a major digital transformation. Pushing the legacy further, the government must strengthen the digital infrastructure for education sector and businesses.

Corporate Tax Relief

Previous year’s Budget provided 15% reduction in corporate tax rates for manufacturing firms and 22% for other companies. While further tax cuts may seem like a far-fetched idea, adjusting previous year’s financial losses through relief and flexibility in investments can be expected from Budget 2021.

Stressed Industries & Sectors

Industries like tourism, aviation, food and beverages, etc. suffered substantial losses due to the pandemic followed by a nation-wide lockdown. This was majorly due to the lesser virtual opportunities, resulting in lesser scope of recovery for these sectors. In light of this, the government is expected to provide relief to these sectors considering a loss-carrying-forward window until they recover.

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