Union Budget 2021: After being battered by the Covid-19 induced lockdowns and shutdowns, Union Budget 2021 was largely expected to reaffirm the Government’s commitment to the economy and signal an era of recovery.
By Gunjan Prabhakaran
Union Budget 2021: After being battered by the Covid-19 induced lockdowns and shutdowns, Union Budget 2021 was largely expected to reaffirm the Government’s commitment to the economy and signal an era of recovery and steadfast development in the country.
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With all eyes on the budget, not just domestically but internationally as well, the Hon’ble Union Finance Minister, Ms. Nirmala Sitharaman, presented the much-anticipated budget for the Fiscal year 2021-22. From the very beginning, she reiterated the Government’s commitment to achieving the USD 5 trillion milestones and conveyed that the budget proposals rest on 6 important pillars viz.
1. Health & Wellbeing
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
Under each of these broad focus areas (pillars), the FM proceeded to explain her proposals and the funding allocated for each measure, ensuring that every critical aspect of the economy is addressed.
With an emphasis on the implementation of Pradhan Mantri Atmanirbhar Swasth Bharat Yojna in addition to the National Health Mission, the Government has signalled to strengthen the country’s healthcare infrastructure and tend to the overall care and well-being of the citizens including measures to help overcome the pandemic.
With a long-term vision of making India a global investment destination, the Government allocated a Capex spending of INR 5.54 lakh crores in the Fiscal Year (34% increase over the previous year) to develop infrastructure. Out of this INR 1.97 lakh crores over 5 years shall be earmarked for Productivity Linked Incentive Schemes (PLIs).
The Government has also announced a slew of measures including setting up of 7 Mega-Investment Textile parks with world-class infrastructure to promote the textile industry and setting up of a Development Financial Institution, monetisation of assets of NHAI, PGCIL, GAIL, IOCL and HPCL, launch of Hydrogen Energy Mission and management of Ports under the PPP Model etc, which are all aimed at the development of physical and financial infrastructure in the nation.
Measures to promote agriculture and allied sectors and to help migrant labourers through upskilling and training have also been proposed, and allocations to the tune of INR 40,000 crores to the Rural Infrastructure Development Fund and INR 5,000 crore to the Micro-Irrigation fund have been made in this regard.
With regard to tax measures, the Government provided relief from income tax to senior citizens aged over 75 years with only pension income. Even though some income tax relief was sought by salaried taxpayers, they ended up getting the short end of the stick in this budget as well.
On an administrative front, provisions relating to assessments and proceedings have been relaxed to provide relief to small taxpayers who were undergoing severe hardships due to prolonged hearings and investigations.
On an indirect tax front, the budget proposed rationalisation of Customs Duties in a bid to promote domestic manufacturing by reducing duties on inputs and increasing duties on finished goods. Various sectors ranging from metals and mining, textiles, automobiles, and renewable energy were covered under these measures.
In addition to the above, the Government has also proposed the levy of an Agricultural Infrastructure Development Cess on certain limited goods to help modernise the agricultural sector and provide the much-needed infrastructure to boost production and distribution.
On ease of compliance, amendments have been proposed to remove the requirement for GST Audit in favour of self-certification and greater powers have been conferred on the tax authorities for effective and efficient tax administration.
Overall, the budget is all-encompassing and progressive, paving the way for a resilient economy.
(Gunjan Prabhakaran is Partner & Leader – Indirect Tax, BDO India. Views expressed are the author’s own.)