The new financial year has started From April 1, 2021, and with it, rules and announcements made by Finance Minister Nirmala Sitaraman in the Union Budget 2021-22 have come into effect.
The new financial year has started From April 1, 2021, and with it, rules and announcements made by Finance Minister Nirmala Sitaraman in the Union Budget 2021-22 have come into effect. Given below are the key announcements, dividend payment to REIT/InvIT exempt from TDS to privatisation of two public sector banks to new highway projects in poll-bound states. Moreover, on the tax front, income tax rules on TDS and new provident fund tax rules have already come into effect in the new financial year 2021-22 (FY22).
Key Union Budget 2021 announcements
PF tax rules: FM had proposed that the interest earned on an employee’s contribution above Rs 2.5 lakh in a fiscal will become taxable in the hands of the employee. But, from April 1, 2021, the interest income earned on contributions above Rs 2.5 lakh per fiscal will be taxable in accordance with one’s tax slab.
TDS (Tax Deducted at Source): FM proposed a higher TDS (tax deducted at source) or TCS (tax collected at source) in order to make more people file their income tax returns (ITRs). The insertion of two new sections — Sections 206AB and 206CCA — were proposed during the Budget 2021 as a special provision for deduction of higher TDS and TCS from those not filing ITR.
Dividend payment to REIT/InvIT exempt from TDS: In order to attract more investment in real estate and infrastructure sectors, FM Sitharaman announced the debt financing of InVITs and REITs by foreign portfolio investors (FPIs). Moreover, the government announced that dividend payments to REITs and InVITs would be exempt from Tax Deduction at Source (TDS).
Disinvestment and strategic sale: The strategic divestment of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited among others would be completed in 2021-22. For the financial year 2021-22, FM Nirmala Sithraman had announced a disinvestment target of Rs 1.75 lakh crore.
Privatisation of 2 PSUs: FM Sitharaman announced the privatisation of two public sector banks and one general insurance company as part of a disinvestment plan to generate Rs 1.75 lakh crore. The minister also informed that in 2021-22, the government would also bring the IPO of LIC.
New highway projects for poll-bound states: Sitharaman announced the National Highways projects for poll-bound states — Rs 1.03 lakh crore for 3,500 km in Tamil Nadu, Rs 65, 000 crore for 1,100 km in Kerala, Rs 25,000 crore for 675 km in West Bengal, and Rs 34,000 crore for 1,300 km in Assam.