CAC Budget Highlights

Preface

The Union Finance Minister Nirmala Sitharaman presented 1st paperless budget and began the budget speech stating that the Atmanirbhar packages introduced by the government were like 5 mini budgets which included:

  • Performance-linked incentives.
  • Boost for domestic manufacturing.
  • Improved credit access for enterprises.
  • Moratorium on interest payments.
  • Thrust on affordable housing.
  • Booster shots for MNREGA.

The total estimate of all relief measures announced by govt & RBI so far is Rs 27.1 lakh cr (13% of GDP), the FINMIN stated.

On quantitative front:
  • For 2022, FINMIN proposed sharp increase in capital expenditure at 5.54 lakh crore, from Rs 4.39 lakh crore in 2021.
  • Divestment target for FY22 at Rs 1.75 lakh cr.
  • FY21 gross expenditure seen at Rs 34.5 lakh crore.
  • FY21 capital expenditure seen at Rs 4.39 lakh crore.
  • FY21 fiscal deficit pegged at 9.5% of GDP.
  • FY22 fiscal deficit target at 6.8% of GDP.
  • FY22 gross expenditure seen at Rs 34.83 lakh crore.
  • FY22 capital expenditure seen at 5.54 lakh crore.
  • Market borrowing in FY22 seen at 12 lakh crore.
  • Govt aims to bring fiscal deficit below 5% of the GDP by 2025-26.
6 pillars of Budget 2021-22:
  • 1. Health and wellbeing.
  • 2. Physical & Financial infrastructure.
  • 3. Inclusive development
  • 4. Development of human capital.
  • 5. Innovation.
  • 6. Minimum government, maximum governance.

Sectorial Highlights
Agriculture and farmers welfare

Corporate Governance:

  • Revised definition proposed for small companies under Companies Act, 2013 thereby increasing their threshold for capitalization to not exceeding Rs 50 lakh to not exceeding Rs 2 crore and turnover not exceeding Rs 2 crore to not exceeding Rs 20 crore.
  • Allowances for One Person Companies:
    • No restriction on paid-up capital and turnover for incentivizing incorporation of one-person companies.
    • Conversion of one-person company to any other kind, residency limit reduced from 182 days to 120 days.
    • Non-resident Indians can also incorporate one-person companies in India.
  • Government announced multi-state co-operative for ease of doing business.
Agriculture and farmers welfare

Healthcare:

  • Total budget outlay for healthcare is 2.23 lakh crore which is an increase of 137% from last year.
  • Rs 64,180 crore will be invested over 6 years to improve primary, secondary and tertiary healthcare.
  • Rs 35,000 crore for Covid-19 vaccines.
  • 17,000 rural and 11,000 urban health and wellness centres to be set up.
  • Integrated public health labs to be set up in each district.
Agriculture and farmers welfare

Agriculture and farmers’ welfare

  • Over Rs 75,000 crore paid to wheat farmers & Rs 1.72 lakh crore to paddy farmers in 2020-21.
  • MSP procurement to continue at a steady pace.
  • Increase in agriculture credit target to Rs 16.5 lakh crore.
  • 1,000 more mandis to be integrated with electronic national market.
Rural sector

Social sector

  • Social security benefits to be extended to gig and platform workers. for the first time.
  • 69 crore beneficiaries or 86% covered under one-nation, one-ration scheme.
  • Special scheme for welfare of women and children in Assam and West Bengal announced.
  • Rs 1,000 crore for tea workers in Assam and Bengal.
  • Minimum wages to now apply to all categories of workers.
  • Women to be allowed to work in all categories with adequate protection.
Social sector

Education

  • Over 15,000 schools to be qualitatively strengthened under National Education Policy.
  • Central university to be established in Leh.
Infrastructure

Infrastructure

  • Outlay of Rs 2.87 lakh crore for Jal Jeevan Mission.
  • Rs 2,217 crore outlay for 42 urban centers to tackle air pollution.
  • Urban Swachh Bharat 2.0 Mission to be launched at outlay of Rs 1.41 lakh crore over 5 years.
  • Seven textile parks to come up over three years.
  • 11,000km of national highway infrastructure to be built this year.
  • National Monetisation Pipeline for brownfield projects to be launched.
  • Next lot of airports to be privatized in tier 2 and 3 towns and cities.
  • Rs 18,000 crore for public buses.
  • Hydrogen energy mission for generating hydrogen out of green-powered sources announced.
  • Seven projects worth Rs 2,000 crore in PPP mode for ports.
  • Rs 3.05 lakh crore outlay for power sector.
  • 5 major fishing harbors to be developed.
Railways

Railways

  • Rs 1.15 lk cr for Railways, privatizing airports. Out of the Rs 1.15 lk cr for Railways, Rs 1.07 lk cr is towards CAPEX.
  • Indian Railways developed a National Rail Plan for 2030.
Miscellaneous

Miscellaneous

  • Government to set-up a Development Finance Institution (DFI), capitalised with Rs 20,000 crore. New DFI aims to have lending portfolio of Rs 5 lakh crore in 3 years.
  • India will introduce bill to set up new Development Financial Institution.
  • Govt to facilitate a world-class fintech hub at Gift city.
  • FDI in insurance hiked to 74% from 49%.
  • Government approved policy for disinvestment in all non-strategic and strategic sectors.
  • Further infusion of Rs 20,000 crore for public sector banks.
  • Proposal to consolidate provisions of SEBI Act, Depositories Act, Securities Contracts Regulation Act, Government Securities Act.
  • IPO of LIC in FY22.
  • MSME allocation to be doubled, Rs 15,700 crore in FY22.
  • New scrappage policy - 20 years in case of personal vehicles and 15 years in case of commercial vehicles.

Direct Taxation Highlights

  • Pensioners over 75 years of age with only interest and pension income to be exempted from filing income tax returns.
  • Time limit for reopening of cases reduced to 3 years from 6 year. However, if the concealed income concealed exceeds Rs 50 lacs, time limit increased to 10 years.
  • Faceless dispute resolution committee announced for settlement of cases for assessees with total income upto 50 lacs and disputed income upto 10 lacs.
  • Faceless ITAT scheme to be notified in-line with other faceless proceedings. Personal hearing if required will be conducted via video-conferencing only.
  • Rules to be notified to eliminate double tax for NRIs on foreign retirement funds.
  • Tax audit limit increased from Rs 5 crore to Rs 10 crore for users of digital platforms.
  • REITs (Real estate investment trusts) and Invit's (Infrastructure investment trusts) are not required to deduct TDS on dividends.
  • Advance tax liability on dividend income shall arrive only after declaration of dividends.
  • Tax efficient zero-coupon bonds to be introduced.
  • Affordable housing projects can avail tax holiday under section 80-IBA for another year till March 31, 2022. Rental housing schemes also incorporated under section 80-IBA. Exemption to individual tax-payers also extended to March 31, 2022
  • For providing ease in filing IT returns, details of capital gains, dividends and interest from banks, post offices, etc will be pre-filled just like Salary and TDS in ITR forms.
  • Tax exemption for aircraft leasing companies.
  • Tax exemption for relocating funds to IFSC.
  • Extension of tax holiday for start-ups by one more year.
  • Small trusts limit increased from 1 cr to 5 cr.
  • Late deposit of Employee’s contribution to PF and ESI emphasized to be non-allowed as a deduction to the employers

Indirect Taxation Highlights

  • ADD and CVD on certain steel products revoked.
  • Duties on copper scrap from 5% to 2.5% reduced.
  • Some parts of mobiles to move from NIL to 2.5% rate.
  • Cutting duty on copper scrapped to 2.5% from 5%.
  • Duty exempted on steel scrap for a specified period.
  • Rationalisation of customs duty structure by eliminating outdated exemptions.
  • Agriculture Infrastructure and Development Cess on small number of items.