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.
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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Interest on EPF contribution in excess of Rs. 2.5 lakhs, however, will be taxed only if withdrawn in such year.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.
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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.
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Union Budget 2021-22 to be presented on February 1
The Union Budget for 2021-2022 will be presented on February 1. According to PTI, the Cabinet Committee on Parliamentary Affairs (CCPA) has said the Budget will be presented on February 1 and President Ram Nath Kovind will address a joint sitting of both the Houses of Parliament on January 29.
Telecom dept likely to issue a notice for spectrum auction this week
The Department of Telecom is expected to issue the notice for an upcoming spectrum auction this week that will have timelines and rules to bid for airwaves. The Union Cabinet approved a proposal for the auction of 2,251.25 Megahertz (MHz) of spectrum worth Rs 3.92 lakh crore at the base price on December 17, 2020.
The DoT was expected to issue the Notice Inviting Application (NIA) for the auction in December but due to an emergency engagement of a top authority, it got delayed.
RBI imposes a penalty on Bajaj Finance for rule violations on recovery practices
The Reserve Bank of India (RBI) on January 5 imposed a monetary penalty of Rs 2.50 crore on Bajaj Finance Limited for violation of rules pertaining to recovery and collection methods.
This penalty has been imposed in exercise of powers vested in RBI under the provisions of the Reserve Bank of India Act, 1934, taking into account the failure of the company to ensure that its recovery agents did not resort to harassment or intimidation of customers as part of its debt collection efforts and thereby failing to adhere to the aforesaid directions issued by RBI.
HDFC’s individual loan disbursements rise 26 pc in the December quarter
Mortgage firm HDFC Ltd on Monday said its disbursements in the individual loan category have grown by 26% during the third quarter ended December 2020. The individual loan business continued to see improvements during the December quarter, HDFC Ltd said in a regulatory filing. Disbursement growth over the corresponding quarter of the previous year was 26 percent. For the nine months ended December 31, 2020, individual loan disbursements stood at 86 percent of the levels in the corresponding period of the previous year.
IndusInd Bank posts 3.2% quarterly growth in net advances
Private lender IndusInd Bank has registered a 3.2% quarter-on-quarter (q-o-q) growth in the net advances in the December quarter, according to provisional data released by the bank on Tuesday. However, the loan growth remained flat during the quarter on a year-on-year (y-o-y) basis. The lender has also managed a 5% quarterly growth in deposits during the December quarter of the current fiscal. On a y-o-y basis, the deposits saw double-digit growth of 10.56% in the December quarter.
Brent oil rises to highest since February after Saudi Arabia output cut
Brent oil prices rose on Wednesday to the highest since February after Saudi Arabia agreed to make bigger cuts in output than expected during a meeting with allied producers, while industry data showed U.S. crude stockpiles fell last week.
Brent crude rose as much as 0.6% to $53.94 a barrel, the highest since Feb. 26, 2020. It was at $53.79 a barrel at 0147 GMT and gained 4.9% on Tuesday. The reductions agreed by Saudi Arabia were included in a deal to persuade other producers in the OPEC+ group to hold output steady.
With coronavirus infections spreading rapidly in many parts of the world producers are trying to support prices as demand takes a hit from new lockdowns being put in place.
Indian steelmakers have raised product prices effective 1 April to factor in rising raw material costs
State-run Steel Authority of India, world’s No. 8 Tata Steel, India’s No. 3 producer JSW Steel, Ispat Industries, and secondary steel maker Uttam Galva have all announced price increases for April.
The price hike is driven by cost on account of coke, iron ore and ferrous alloys.
Iron ore prices have surged more than two-fold in the last 12 months on strong demand from China and a recovery in Europe and the United States to near $160 a tonne.
Tata Steel to develop GreenPro Ecolabel to help steel sector reduce carbon emission
Tata Steel has embarked on developing a GreenPro framework, GreenPro Ecolabel, to manufacture steel rebars, a first of a kind initiative in India, that would help the steel sector reduce the carbon footprint while manufacturing steel products.
The company has joined hands with the CII green business center to develop the framework that offers the Ecolabel program, enabling end-users to buy steel having the lowest environmental impact.
The use of green or low carbon materials has the potential to reduce emissions due to the construction and dismantling of buildings by up to 50%- 70% by 2050.
From performance cars to SUVs and sedans, Audi lines up new cars for India comeback
Audi is looking to make a comeback and is lining up a series of cars – right from small SUVs and sedans, to sports cars and electrics as the company plans fresh investments and new models to gain back the luxury market share which it once dominated.
It is planning to localize certain models, such as the Q2 mini SUV. Also on cards is the much-anticipated eTron electric SUV (and other electric derivatives) which will be priced upwards of Rs 1 crore. Inline are also the Q3, Q5, and Q7 SUVs, the RS5 and S5 performance cars, and the A3 entry sedan.
Rising demand for an owned mode of transport, coupled with decadal low auto loan rates, has resulted in the return of a waitlist for car buyers for up to 10 months.
Dealers said the inventory pipeline has been wiped clean with December being a good month. Hence, because of a gap in the demand and supply, the current situation will take several weeks more to ease out.
Passenger vehicles original equipment manufacturers dispatched 18% more vehicles year-on-year in December. At 2,76,500 units, which was the highest December sales in the last decade.
Bharat Earth Movers Limited bagged an order for the supply of High Mobility Vehicles from the ministry of Defence with an approximate value of Rs 758 Cr. These High Mobility vehicles would play a key role in the logistics management of the Indian Army.
Indian Bond Market:
Indian firms raised a record Rs 7.67 lakh cr in local bond sales
Record low-interest rates prompted many large companies to prefer the local market to that overseas. Excess liquidity in the system paved the way for the record high local bond sales in a single calendar year.
|Year||Funds Raised (Rs. in Crs)|
Covid-19: Boris Johnson announces new national lockdown in UK for 6 weeks
UK Prime Minister Boris Johnson on Monday announced a six-week lockdown for England’s 56 million people, including the closure of schools, after a surge in coronavirus cases brought warnings that hospitals could soon face collapse.
Britain, one of the worst-affected countries by the global health crisis, with over 75,000 deaths has been pinning its hopes on the mass vaccination drive. But more than 50,000 positive cases were recorded across Britain every day for the last week.
With the new lockdown, all non-essential shops will be shut across England, along with bars, restaurants, and other hospitality and entertainment venues.
FII and DII data
Foreign institutional investors (FIIs) net bought shares worth Rs 986.3 crore, whereas domestic institutional investors (DIIs) net sold shares worth Rs 490.03 crore in the Indian equity market on January 5, as per provisional data available on the NSE.