Union Budget 2021 highlights of tax and of all sectors of economy

The Finance minister Smt. Nirmala Sitharaman has presented the budget in Parliament for year 2020-21 on 1st February, 2021. The official website for union budget is https://www.indiabudget.gov.in/, where the current and previous budgets documents, economic surveys are available.

Highlights of the Union Budget 2021

1. Income tax slab, exemption, deduction, new tax, new cess, GST:

A) Income tax return (ITR) filing simplification in Union Budget 2021:

  1. For senior citizens aged more than 75 years, having only pension and interest income, are exempted from filing their income tax returns (ITR), if the paying bank has deducted the full payable income tax.
  2. To further ease filing of returns, details of capital gains from listed securities, dividend income, interest from banks, post office etc. will also be pre-filled in ITR form online.
  3. If your TDS / TCS is ₹ 50,000 or more for past 2 years, and not filing ITR, then you have to pay double rate of TDS or 5%, whichever is higher. Except, where full amount of tax is required to be deducted e.g. salary income, payment to non-resident, lottery, etc.

B) Reduction in time for Income tax proceedings in Union Budget 2021:

  1. The time limit for re-opening of assessment has been reduced to 3 years from 6 years.
  2. For serious offence above ₹ 50 lakh, the time limit for re-opening of assessment has been maintained to 10 years.

C) Exemption from Audit for ITR filing:

The turnover limit for account audit exemption has been increased from ₹ 5 crore to ₹ 10 crore, if their digital transactions are 95% of total transactions.

D) Changes in the Income tax slab in Union Budget 2021 for FY 2021-22:

No change from last FY 20-21.

E) Changes in the Income tax exemption and exemption limit in Union Budget 2021:

  1. If employees’ contribution to provident funds are ₹2.5 lakh per year or more, then the interest income earned by above that will be taxable as per your income tax slab. This rule will be applicable for the contribution made from 01.04.2021.
    • Example – Like for ₹3.5 lakh per year contribution to PF, the extra ₹ 1 lakh will earn interest ₹ 9,000 at the rate of 9%. So, this ₹ 9,000 will be added to your income and will be taxed as per your income tax slab.
  2. It is proposed to make dividend payment to Real Estate Infrastructure Trusts or Infrastructure Investment Trusts (REIT/InvIT) exempt from TDS.
  3. It is proposed to provide tax exemption to the amount given to an employee in lieu of LTC, Leave Travel Concession.

F) Changes in the Income tax deduction in Union Budget 2021 :

No change from last FY 20-21.

G) New cess introduced in Union Budget 2021:

  1. Agriculture Infrastructure and Development Cess (AIDC) on some items on Customs side.
  2. Agriculture Infrastructure and Development Cess (AIDC) of ₹2.5 on Petrol and ₹ 4 on diesel, on excise side.

2. Start up program incentive schemes in Union Budget 2021 :

  1. It is proposed to extend the capital gains exemption for investment in start-ups by one more year till 31st March, 2022.
  2. It is proposed to incentivize the incorporation of One Person Companies (OPCs) by allowing OPCs to grow without any restrictions on paid up capital and turnover, allowing their conversion into any other type of company at any time, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and also allow Non Resident Indians (NRIs) to incorporate OPCs in India.

3. Stock Market, Investment, Short term capital gain tax (STCG), Long term capital gain tax (LTCG), Securities transaction tax (STT):

  • Will launch merged single Securities Market Code in place of various SEBI regulators.

4. Education related incentives in Union Budget 2021 :

  1. 100 New Sainik Schools will be opened.
  2. 1 Central University will be opened in Leh-Ladakh.
  3. A commission will be formed for higher education.
  4. More than 15,000 schools will be qualitatively strengthened to include all components of the National Education Policy.
  5. Under NEP (New Education Policy) – Standards will be developed for all 92 lakh school teachers in the form of National Professional Standards for Teachers- NPST.
  6. A National Digital Educational Architecture (NDEAR) will be set up under NEP.
  7. National Initiative for School Heads and Teachers for Holistic Advancement (NISTHA) will train the teachers digitally under NEP.

5. Indian Railway news in Union Budget 2021 :

  1. For future-ready plans, Indian Railways have prepared a National Rail Plan for India – 2030.
  2. ₹ 110,055 crore is allocated to Indian Railway for expansion and expenditure.
  3. Railways will monetise Dedicated Freight Corridor assets for operations and maintenance, after commissioning.
  4. 100% electrification of Broad-Gauge routes will be completed by December, 2023. 72 % electrification of Broad-Gauge routes will be completed till 2021.

6. Metro and Bus projects and services in Urban areas news in Union Budget 2021 :

  1. 18,000 crore allocated for Public buses.
  2. Presently, total 702 km of conventional metro is operational.
  3. Presently, 1,016 km of metro and RRTS is under construction in 27 cities.
  4. ‘MetroLite’ and ‘MetroNeo’, two new technologies of metro for Tier-2 and peripheral of Tier-I cities will come at very less cost with safefty.

7. Financial News in Union Budget 2021 :

  1. 35 lakh crore budget for FY 2021-22.
  2. Fiscal Deficit for FY 20-21 is expected to be at 9.5% of GDP.
  3. Fiscal Deficit for FY 21-22 is expected to be at 6.8% of GDP.
  4. Fiscal Deficit for FY 2025-26 is expected to be at 4.5% of GDP.
  5. 20,000 crore to PSBs for FY 2021-22.
  6. FDI in insurance limit increased from 49% to 74%.
  7. 15,700 croe allocated for MSMEs sectors.
  8. To give a further boost to digital transactions, ₹1,500 crores has been earmarked to provide financial incentive to promote digital modes of payment.
  9. The forthcoming Census could be the first digital census in the history of India. For this allocation of ₹3,768 crores in the year 2021-2022 has been done.

8. Disinvestment News in Union Budget 2021 :

  1. 1.75 Lakh crore Disinvestment receipt target during FY 2021-22.
  2. BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam and others will be disinvested in FY 2021-22.
  3. IPO of LIC will come in FY 20-21.
  4. In strategic sectors, only one may be kept with Government and rest would be privatised or closed. While in non-strategic sectors, all CPSEs and state PSEs will be privatised or closed.
  5. Strategic sectors are classified as;
    1. Atomic energy, Space and Defence
    2. Transport and Telecommunications
    3. Power, Petroleum, Coal and other minerals
    4. Banking, Insurance and financial services

8. Home and Real estate sector in Union Budget 2021 :

  1. The existing additional deduction of ₹ 1.5 lakh will continue for loans taken up till 31st March 2022, for the purchase of an affordable house. It is extended for one more year till 31st March 2022.
  2. Increase in ‘safe harbour limit’ from 10% to 20% for the primary sale of residential units to incentivise the home buyers and real estate developers.
  3. It is proposed to make dividend payment to Real Estate Infrastructure Trusts or Infrastructure Investment Trusts (REIT/InvIT) exempt from TDS.

9. Roads and Highways development in Union Budget 2021 :

  1. Delhi-Mumbai Expressway: Remaining 260 km will be awarded before 31.3.2021.
  2. Bengaluru – Chennai Expressway: 278 km will be initiated in the current financial year. Construction will begin in 2021-22.
  3. Delhi-Dehradun economic corridor: 210 km corridor will be initiated in the current financial year. Construction will begin in 2021-22.
  4. Kanpur-Lucknow Expressway: 63 km expressway providing an alternate route to NH 27 will be initiated in 2021-22.
  5. Chennai – Salem corridor: 277 km expressway will be awarded and construction would start in 2021-22.
  6. Raipur-Vishakhapatnam: 464 km passing through Chhattisgarh, Odisha and North Andhra Pradesh will be awarded in the current year. Construction will start in 2021-22.
  7. Amritsar-Jamnagar: Construction will commence in 2021-22.
  8. Delhi –Katra: Construction will commence in 2021-22.

10. Scheduled Castes and Scheduled Tribes Welfare:

  1. Target of establishing 750 Eklavya model residential schools in our tribal areas.
  2. Increasing the unit cost of Eklavya model residential school from 20 crore to 38 crore and 48 crore in hilly areas.
  3. Emphasis on Post Matric Scholarship Scheme, for welfare of Scheduled Caste students.
  4. Allocation of ₹35,219 crores for 6 years till 2025-2026, to benefit 4 crores SC students.

Industry specific or sector wise announcement in Union Budget 2021

Agriculture and Horticulture sector in Union Budget 2021 – Key points :

  1. Agriculture Infrastructure and Development Cess (AIDC) on some items to fund the Infrastructure of Agriculture and boost the income of farmers as well as economy.
  2. Increase in agricultural credit target to ₹16.5 lakh crores in FY21-22 to provide credit to farmers especially to animal husbandry, dairy and fisheries.
  3. The scope of ‘Operation Green Scheme’ in agriculture will be enlarged from tomatoes, onions, and potatoes to 22 products, to boost the agri- economy.
  4. 1,000 more mandis will be integrated with e-NAM.
  5. The Agriculture Infrastructure Fund would be made available to APMCs for augmenting their infrastructure facilities.
  6. Increasing customs duty on cotton from 0 to 10% and on raw silk and silk yarn from 10% to 15%.to benefit the farmers.
  7. A Multipurpose Seaweed Park is to be established in Tamil Nadu to provide provide large scale employment and additional incomes.

Auto and Auto Ancillaries sector in Union Budget 2021 – Key points :

  1. Under Scrapping Policy, a voluntary vehicle scrapping policy has been brought, in which Vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles.
  2. Changes in basic customs duty in Auto Sector like ignition wiring sets, safety glass, parts of signaling equipment, etc. from 7.5% / 10% to 15%.

Banking and Finance sector in Union Budget 2021 – Key points :

  1. Public sector banks’ recapitalization of ₹ 20,000 crores is proposed in 2021-22.
  2. An Asset Reconstruction Company Limited and Asset Management Company would be set up to handle the bad loans or stressed debts by Public sector banks. It can then find value realization from those stressed assets by disposing and monetising.
  3. Increase in the deposit Insurance cover from ₹ 1 lakh to ₹5 lakh for bank customers through DICGC Act, 1961.
  4. Privatization of 2 public sector banks other than IDBI bank in FY 21-22 will be taken up.
  5. Privatization of one General Insurance company in FY 21-22 will be taken up.

Chemicals sector in Union Budget 2021 – Key points :

  • Reduced customs duty on Naptha to 2.5%.

Electronics and Electronic equipments sector in Union Budget 2021 – Key points :

  1. Customs duty in the Electronics Sector has been increased an many items like
    • Inputs, parts or sub-parts for manufacture of specified parts of mobile phones
    • Printed Circuit Board Assembly [PCBA] and Moulded Plastic, for manufacture of charger or adapter
    • Compressor of Refrigerator/Air Conditioner
    • Solar Inverters, Solar lanterns or solar lamps

Fisheries sector in Union Budget 2021 – Key points :

  1. Five (5) major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat will be developed as hubs of economic activity.
  2. Development of inland fishing harbours and fish-landing centres along the banks of rivers and waterways will be done to boost economy.

Health and Hospital sector in Union Budget 2021 – Key points :

  1. PM AtmaNirbhar Swasth Bharat Yojana, will be launched with an outlay of about ₹ 64,180 crores over 6 years.
  2. The Jal Jeevan Mission (Urban), will be implemented over 5 years, with an outlay of ₹ 2,87,000 crores.
  3. Pneumococcal Vaccine will be rolled out all India.
  4. Provided₹ 35,000 crores for Covid-19 vaccine.

Infrastructure sector in Union Budget 2021 – Key points :

  1. Increase in the allocation to Rural Infrastructure Development Fund from ₹ 30,000 crores to ₹ 40,000 crores.
  2. The Micro Irrigation Fund under NABARD, has been increased from ₹ 5,000 crores to ₹ 10,000 crores.

Iron and Steel sector in Union Budget 2021 – Key points :

  1. MSMEs and other user industries have been severely hit by a recent sharp rise in iron and steel prices. Therefore, Customs duty are reduced uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels.
  2. To provide relief to metal re-cyclers, mostly MSMEs, duty on steel scrap is exempted for a period up to 31st March, 2022.
  3. ADD and CVD are revoked on certain steel products.
  4. Also, to provide relief to copper recyclers, duty on copper scrap is reduced from 5% to 2.5%.

Petroleum, Gas and Petrochemicals sector in Union Budget 2021 – Key points :

  1. Ujjwala Scheme which has benefited 8 crores households will be extended to cover 1 crores more beneficiaries.
  2. An independent Gas Transport System Operator will be set up for facilitation and coordination of booking of common carrier capacity in all-natural gas pipelines on a non-discriminatory open access basis.

Power sector in Union Budget 2021 – Key points :

  1. For Distribution Companies’ viability, ‘Distribution sector scheme’ will be launched with an outlay of ₹ 3,05,984 crores over 5 years.
  2. The scheme will provide assistance to DISCOMS for Infrastructure creation including pre-paid smart metering and feeder separation, upgradation of systems, etc.
  3. It is proposed to launch a Hydrogen Energy Mission in 2021-22 for generating hydrogen from green power sources.

Tea / Coffee sector in Union Budget 2021 – Key points :

  • 1,000 crore allocated for the Tea sector workers of Assam and West Bengal.

Textiles sector in Union Budget 2021 – Key points :

  1. 7 Mega Textile park will be constructed.
  2. BCD rates on caprolactam, nylon chips and nylon fiber & yarn are reduced to 5%.

Union Budget 2021 – BUDGET AT A GLANCE (Full) pdf to download : (Source: indiabudget.gov.in/)

Union Budget 2021 Highlights – Key Features pdf to download :

Union Budget 2021 Speech in English pdf for download:

Economic Survey volume 1 in pdf to download:

Economic Survey volume 2 in pdf to download:

Mobile app for Union Budget 2021

The NIC of Govt. has launched a mobile app for Union Budget 2021 documents. So, anyone can install on the mobile from Google ‘Play store’ for android users and from Apple ‘App store’ for iOS users.

Mobile app for Union Budget 2021
Mobile app for Union Budget 2021

Union Government Budget App makes Government of India budget documents available to Members of the Parliament (MPs) and general public alike, at one place. The App would facilitate viewing of total 14 Union Budget documents, including constitutionally prescribed Annual Financial Statement (AFS), Demands for Grants (DG), Financial Bill etc., in digital mode and eco-friendly manner. This initiative is aimed at providing Union Budget information to various stakeholders including general public at the click of a button.

The list of Budget documents (14) presented to the Parliament include:
A. Finance Minister’s Budget Speech
B. Annual Financial Statement (AFS)
C. Demands for Grants (DG)
D. Finance Bill
E. Statements mandated under FRBM Act:
a. Macro-Economic Framework Statement
b. Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement
F. Expenditure Budget
G. Receipt Budget
H. Expenditure Profile
I. Budget at a Glance
J. Memorandum Explaining the Provisions in the Finance Bill
K. Output Outcome Monitoring Framework
L. Key Features of Budget 2020-21
M. Key to Budget Documents

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