1. The government has mopped up 26,104.37 crores as dividend from 23 listed PSUs in FY21 so far, a 123.63% increase over the previous fiscal year, bringing welcome relief to a treasury that has taken a massive hit from two waves of the coronavirus pandemic. Bharat Petroleum Corp. Ltd (BPCL) leads the largest dividend-paying companies for the fiscal year 2021 with a dividend of ₹8,759.71 crores to the government followed by Coal India Ltd (6,520.66 crores), Indian Oil Corp. (5,817.95 crores), State Bank of India (2,031.95 crores) and GAIL India (1,142.29 crores).
According to Jasani, the guidelines issued by the department of investment and public asset management (Dipam) in 2016 that every PSU would pay a minimum annual dividend of 30% of profit after tax or 5% of the net worth, whichever is higher, will push PSUs to declare higher amounts as dividends.
Dividends from PSUs have been used by governments in successive years to raise revenues and bridge the fiscal gap that would have arisen due to various reasons including a shortfall in divestment revenues.
2. The Union Cabinet is set to take up a proposal to permit 100 percent foreign direct investment (FDI) in state-owned oil refiners to clear the regulatory path for the privatization of Bharat Petroleum Corporation Ltd (BPCL), according to government officials. The divestment of the Centre’s 53 percent stake in BPCL is a key part of the former’s disinvestment target of Rs 1.75 lakh crore for FY22.
3. TPG-backed Dodla Dairy intends to raise Rs 520.17 crore at the higher end of the price band of Rs 421-428 per equity share. The IPO comprises a fresh issue of Rs 50 crore and an offer for sale of up to 1,09,85,444 equity shares by TPG Dodla Dairy Holdings Pte Ltd and promoters.
Dodla Dairy is an integrated dairy company based in south India. Its primary source of revenue is the sale of milk and dairy-based value-added products (VAPs) in the branded consumer market. Amongst private dairy players with a significant presence in the southern region of India, it is the third-highest in terms of milk procurement per day and second highest in terms of market presence across India among private dairy players.
Dodla Dairy has delivered consistent growth over the last three financial years both in terms of financial and operational metrics. Its revenue from operations, EBITDA and profit after tax for nine months period ended December 2020 were Rs 1,413.5 crore, Rs 206.5 crore and Rs 116.38 crore respectively.
The initial public offering has been subscribed 1.40 times on June 16, the first day of bidding. Dodla Dairy has a good potential for the future and is also available at a reasonable valuation compared to its peers.
4. The Federal Reserve on Wednesday considerably raised its expectations for inflation this year and brought forward the time frame on when it will next raise interest rates.
US FED MEDIAN PROJECTIONS SHOW TWO RATE INCREASES BY END-2023. INFLATION IS EXPECTED TO BE 3.4% IN 2021 (PREVIOUSLY 2.4%), 2.1% IN 2022, AND 2.2% IN 2023,
US INTEREST RATE DECISION ACTUAL 0.25% (FORECAST 0.25%, PREVIOUS 0.25%). RATES ARE EXPECTED TO REMAIN UNCHANGED UNTIL 2021, ACCORDING TO ALL FED OFFICIALS.
The FED Predicts GDP expectations for this year to 7% from 6.5%, 3.3% IN 2022, AND 2.4% IN 2023, WITH A MEDIAN LONG-RUN PROJECTION OF 1.8% (PREVIOUSLY 1.8%). The unemployment estimate remained unchanged at 4.5%
FED LEAVES ITS BENCHMARK RATE UNCHANGED AND CONTINUES TO PURCHASE $120 BILLION IN BONDS. However, the central bank gave no indication as to when it will begin cutting back on its aggressive bond-buying program
A financial planning platform where you can plan all your goals, cash flows, expenses management, etc., which provides you advisory on the go. Unbiased and with uttermost data security, create your Financial Planning without any cost on: http://bit.ly/Robo-Fintoo
The most feared and most awaited event of the year; The Budget. Every person, every industry waited patiently for the announcement from our respected Finance Minister Nirmala Sitharaman.
With COVID-19 pandemic on the backdrop, India was waiting for a “get well soon”.
Let’s see what the Budget 2021 brought forward for us – Decoding Budget 2021:
1. No changes in personal income tax
Budget 2021 did not alter the personal income tax structure which meant that the common man is not burdened with tax levy this time. However, we have tried to summarise a few pointers to understand the changes
2. No ITR filing for senior citizen above the age of 75 years
Budget 2021 dictates that Senior citizens above the age of 75 years need not file Income Tax returns henceforth. However, this exemption is valid only if the senior citizen has income from pension and interest.
Only snitch here is that the bank interest should have been received from the same bank where the pension gets deposited.
3. Prefilled Income Tax Returns
Ease of filing will be achieved as a result of Prefilled Income tax returns with the details of interest, dividend, capital gains etc. This is a welcome change since time will be saved and accuracy will be achieved.
Capital gains especially for trading in shares and mutual funds is a very cumbersome task. Prefilled details of capital gain will be a relief.
4. Dividend not required to be considered for determining the advance tax
The dividend has been made taxable only on the receipt or declaration of the same from the view of Advance Tax calculation.
Earlier the taxpayers would need to pay the interest due to underestimation of dividend income while calculating the advance tax. However, with the change in Budget 2021, the taxpayer need not consider dividend in advance tax calculation unless it is declared or paid. This will reduce the interest and penalty on advance tax payments of the taxpayers.
Related article: Reviewing Your Financial Plan? Keep This Checklist Handy
5. Taxability of Interest on Employees Provident Fund (EPF) contribution
Interest on EPF contribution in excess of Rs. 2.5 lakhs, however, will be taxed only if withdrawn in such year.
This move is expected to divert the investors away from EPF, so that the investors would prefer to move in the funds to more lucrative options.
6. Double TDS rate where the taxpayer does not file Income Tax Return (ITR)
Budget 2021 has prescribed TDS at double rates where the taxpayer does not file Income Tax return.
This will encourage and push the non filers to file their ITR, which will increase the coverage of Income Tax.
7. Deduction for interest exemption of Affordable Housing remains unchanged this year too
The deduction will be allowed till the year-end i.e. March 2022, on the Affordable Housing Scheme for Rs. 1.5 lakhs.
This was a specific benefit given by Budget 2019, however, FM has reconsidered extending the same to the year 2021 is a positive sign for especially migrant workers and the lower working class.
Related article : How to select a suitable Tax regime for Yourself?
8. ULIPs brought into the tax net
Budget 2021 has brought in ULIPs under taxability net, prescribing that the capital gains on ULIPs will be taxable if the yearly premium is more than Rs. 2.5 lakhs.
ULIPs were having a specific advantage over regular ELSS (Equity Linked Saving Schemes) Funds due to no restriction on premium payments. However, with this amendment, ULIPs are pretty much at par with Mutual Funds.
9. Revision of return preponed by 3 months
Henceforth the taxpayers would be required to file the revised / belated returns by December 31st of every assessment year.
10. Rush start to Startups
Budget 2021 has boosted up the way ahead for the startups by prescribing some booster doses for revival and growth.
11. Removal of condition of waiting period for conversion of One Person Company (OPC)
Budget 2021 has removed the waiting period of 2 years for converting the OPC into a public limited company or private limited company.
12. No Cap on paid-up capital and turnover
Budget 2021 has eliminated the restrictions with respect to paid-up capital and turnover.
13. Non-Resident Indians (NRI) can incorporate OPC in India
This amendment will bring in the most required capital inflow in India especially in start ups.
14. Emphasis on healthcare
COVID-19 was an alarming state of events in the year 2020, which has reaffirmed the need to improve healthcare and sanitization activity.
15. Increased spending to 137% on Healthcare facilities.
Prime Minister Atmanirbhar Swasth Bharat Yojana will have competitive healthcare facilities with this spending.
16. COVID-19 Vaccine
FM has assured that more vaccines will be available soon and an amount of Rs. 35000 crores would be spent on vaccine efforts.
17. Privatisation, Divestment and Foreign Direct Investment (FDI)
Budget 2021 hs been truly an example of a progressive budget since it has talked in lengths and details about Divestment, privatization and foreign direct investment in government companies and public sector units
18. The monetisation of assets of PSUs
FM has announced that assets of Railways, Airports etc will be monetised through National Asset Monetisation Plan.
19. Disinvestment of PSUs (Public Sector Units)
List of PSUs will be made which are targeted for disinvestment and strategic disinvestment will be carried out to garner the funds
20. Changes in the Insurance Act to attract FDI (Foreign Direct Investment)
Budget 2021 has raised the FDI limit to 74% which was 49% earlier. This will attract more international players into the Insurance field due to allowability f foreign ownership.
21. Acche din for Government schemes
- Free Cooking gas
- Application of Minimum Wages Act to all workers inclusive etc.
Decoding Budget 2021 in all can be looked like more of an ambitious budget which has paved the way for the much sluggish economy bearing the impact of COVID19 hit. However, there is too less for the common man in terms of tax impacts and exemptions, apart from health and wellbeing concerns.
For any assistance on Financial planning and Tax planning book your appointment now – Click here