Budget 2021-2022: What All You Need to Know

Union Budget 2021

After a year of the Covid – 19 pandemic, Hon’ble Finance Minister Nirmala Sitharaman presented the budget for FY 2021 – 2022.

While last years’ budget had a more diverse financial partition, this year focuses more on rebuilding the economy.

Some of the significant allocations presented in the budget this year are to revive India’s economy. Most of the implementations this year are suggestions from economists and businesses alike.

Healthcare and Infrastructure

A big dose of the budget is set to flow into healthcare and infrastructure. The FM announced a scheme to help pillar healthcare called PM Aatmanirbhar Swasth Bharat Yojana. The budget allocated for this field circles around Rs. 64,180 crores for six years.

Moreover, allocations for health and wellbeing will also increase yearly.

The increase in allocations for healthcare and its departments seek to strengthen health institutions in India. National Centre for Disease Control is a primary focus in the budget. Hospitals and Emergency operators are also priorities in the budget.

The limit of Foreign Direct Investment is increased from forty-nine to seventy-four percent in the insurance sector. The government also seeks to divest one insurance company.

Tax

In the sphere of direct tax, proposals providing relaxations to individual taxpayers are taking their place.

Other relaxations include –

  • Assessment of tax proceedings can be reopened up to three years.
  • Relaxations for taxpayers above the age of seventy – five.
  • Start-ups to receive incentives.
  • Removal of double taxation to the NRI
  • Tax exemption for certain rental projects.
  • Foreign shareholders can benefit more from withholding rates under tax treaties.
  • Interest in Provident Fund

However, the budget also comes with flaws as well. One implementation is not allowing any deduction in merger transactions. While constituting a ‘dispute resolution committee’ only for small and medium taxpayers is a hurdle for larger tax disputes.

Bank Privatization

The budget from 2021 – 2022 plans to privatize at least two public sector banks in 2019 with IDBI Bank Ltd.

The 2021 Budget also proposes to set up an asset reconstruction company (ARC) for Non-performing Asset (NPA).

Sudhir Kapadia, leader of EY India, lays down few suggestions in implementing various sections of the budget. Kapadia seeks to make reforms in the field of investment irrespective of sector.

The budget is limited to some sectors only. Therefore, all sectors should be able to invest and gain incentives from the budget.

In terms of tax, Kapadia highlights the slow collection of revenue will continue for the government.

Conclusion

With the world still recovering and stabilizing its economy, this years’ budget also focuses on bringing back growth and development.

The FY 2021 – 2022 visualizes a sustainable economy that can handle crises like the pandemic without falling too far behind. Therefore, FY 2021 – 2022 seeks to put India’s economy on track through its allocations.

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