Highlights of Union Budget 2021-22

February 1, 2021

In the new decade, today on 1st February 2021, with the change in post COVID, honourable Finance Minister Smt. Nirmala Sitharaman has presented the first ever digital budget.  The budget has six pillars as under:

  • Health and Wellbeing
  • Physical & Financial Capital, and Infrastructure
  • Inclusive Development for Aspirational India
  • Reinvigorating Human Capital
  • Innovation and R&D
  • Minimum Government and Maximum Governance

Following are the key takeaways:

  • A new centrally sponsored scheme to be launched called PM AatmaNirbhar Swasth Bharat Yojana.
  • Mission Poshan 2.0 to be introduced.
  • For universal water supply, a JalJeevan Mission (Urban), will be launched.
  • Increase in FDI limit from 49% to 74%.
  • In addition to the PLI scheme, Mega Investment Textiles Parks (MITRA) will be launched. Further, 7 Textile Parks will be established over 3 years.
  • Government provides a big boost to the Startups by allowing Non-Residents to incorporate OPCs in India.
  • Government is all set to introduce Data Analytics, Artificial Intelligence, Machine language-driven 3.0 version of MCA portal.
  • Director Residence criteria is changed to 120 days from earlier 182 days.
  • There will be set up of Separate administration structure to promote ease of doing business.
  • In Stand-Up India Scheme, margin money requirement reduced from 25% to 15%.
  • The senior citizens will be exempted from filing their income tax return who have only pension and interest income.
  • A dividend payment to REIT/InvIT will be exempt from TDS.
  • The advanced tax liability on dividend income shall arise only after the declaration or payment of dividend.
  • Reopening of assessment: for normal cases the time limit has been reduced to 3 years from 6 years and for serious tax evasion cases it will be till 10 years, if the concealment of income is more than 50 lakhs.
  • To reduce litigations for small taxpayers FM announced that the ‘Faceless dispute resolution committee and mechanism’ is set up. Any taxpayer with taxable income up to 50 lakh and disputed income up to 10 lakhs can approach the committee.
  • Now eligibility period for claiming tax extends for one more year i.e. up to 31st March, 2022 holiday for affordable housing projects.
  • Start-ups can claim tax holiday by one more year till 31st March, 2022.
  • The tax audit limit for the persons who carries on 95% of transactions digitally increases from Rs. 5 crore to 10 crore.
  • FM proposes the decriminalization of LLP Act, 2008.
  • Definition of small companies to be raised by increasing the capital limit from Rs 50 lakh to Rs 2 crore and turnover from Rs 2 crore to Rs. 20 crores.
  • ‘Capital’ and ‘Turnover’ qualifying criteria for ‘One Person Company’ are proposed to be removed.
  • It is proposed that E-court shall be implemented to strengthen the NCLT.
  • The Finance Minister informed that the country’s fiscal deficit settled at 9.5% in 2020-21 and will be targeted at 6.8% in 2021-22, The central government had pegged the fiscal deficit at 3.5% for FY21 in the last budget before the onset of the Covid-19 crisis.
  • Vehicle Scrappage Policy:  under this policy 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.
  • The FM proposed doubling of MSME allocation, setting aside Rs 15,700 crore for medium and small enterprises in the Financial year 2021-22.
  • The LIC IPO is proposed in Financial Year 2021-22.
  • FM proposes to strategically divest two PSU banks and one General Insurance Co.; Disinvestment Target for F.Y. 22 set at Rs. 1.75 lakh crore.
  • The late deposit of employee’s contribution will not be allowed as deduction to the employer.
  • FM proposes to relax certain conditions relating to prohibition on private funding, restriction on commercial activities and direct investment in infrastructure.
  • The notified infrastructure debt funds will be eligible to raise funds by issuing tax efficient zero-coupon bonds.
  • The amount of capital gains from listed securities, dividend income and interest from banks, post office etc. will be pre-filled.


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