Finance Minister Nirmala Sitharaman presented the Union Budget 2021 today. The budget gave major emphasis to healthcare and infra sectors. Besides, a host of substantial announcements were made on the divestment front, including the coming IPO of Life Insurance Corporation. Here are the Key highlights of the Union Budget 2021:
- No significant change was made in the area of income tax.
- For Y21 fiscal deficit at 9.5% of GDP, with FY22 fiscal deficit target at 6.8% of GDP. Hope to get to back to fiscal consolidation path by FY26. Fiscal deficit will reach below 4.5% by FY26. FY22 gross expenditure seen at Rs 34.83 lakh crore.
- For Y22 capital expenditure provided is up 34.5% (vs FY21 BE) at Rs 5.54 lakh crore, said the Finance Minister. Rs 44,000 crore under capital expenditure will be given to Department of Economic Affairs in FY22, she added. FY21 capital expenditure is seen at Rs 4.39 lakh crore.
- The government has left direct taxes unchanged, but took steps in direct tax incentives to ease compliance for taxpayers. The FM proposed making it so that advance tax liability on dividend income shall arise only after payment of dividend. The Budget also looked at pre-filled tax forms with respect to details like salary income, tax payment and TDS.
- No tax filing for seniors above 75 with only pension, interest income. A dispute resolution committee for small taxpayers is being planned. Anyone with taxable income of up to Rs 50 lakh, disputed income of up to Rs 10 lakh eligible to approach dispute resolution committee.
- Agri Infrastructure and Development Cess on a number of items including fuel and liquor was announced today but the finance minister also said there would be no additional burden on the consumer overall. Budget imposed a Rs 2.5 per liter agri infra cess on petrol, Rs 4 on diesel, and of 100% on alcoholic beverages.
- The finance minister announced that in case a bank fails or withdrawals from the bank are stopped due to financial pressure on the bank, the depositors will be able to get immediate access to their deposits up to the deposit insurance amount of of Rs 5 lakh.
- The Budget proposes setting up faceless dispute resolution committee for individual tax payers, making Income Tax Appellate Tribunal faceless, and constituting the dispute resolution committee for small taxpayers.
- The FM outlined six pillars of proposals to strengthen the vision of Atmanirbharta, namely health and wellbeing, capital and infrastructure, inclusive development, reinvigorating human capital, innovation and R&D and minimum government and maximum governance.
- By announcing 1000 more agriculture product marketing committees (APMCs) or mandis will be linked to e-national agriculture market (e-NAM), Nirmala Sitharaman subtly sent a message to farming groups that the government has no intention of dismantling an established APMC system.
- The allocation to healthcare in this budget has been increased substantially. The areas of focus will be preventive and curative healthcare as well as well being, she said. The allocation is likely to be around Rs 2,23,846 crore, a 137% percentage rise from the previous budget. Rs 35,000 cr has been budgeted for COVID-19 vaccination expenditure in FY22.
- The Govt sees FY22 fiscal deficit at 6.8%, according to the FM, while she had pegged deficit at 3.5% for FY21 in the last Budget. Govt aims to get Rs 1.75 lakh crore through divestments in 2021-22, according to Budget documents. In FY21, it planned to raise Rs 2.1 lakh crore through divestments, falling short. CPSEs in all but four sectors will be eventually privatized.
- The Budget 2021 gave a renewed push to disinvestment and asset monetization as the government strives for capital creation. “Monetizing of land will be taken up. A SPV will be launched to carry out this activity,” said the FM.
- Sitharaman said govt will borrow Rs 80,000 crore in the remaining two months to meet FY21 expenditure, and is projected to borrow about Rs 12 lakh crore in FY22.
- The FM announced plans to privatize 2 PSU banks and one general insurance company in FY22. The Govt will bring the long-awaited LIC IPO in FY22, adding that it plans to complete the divestments of BPCL, CONCOR and SCI in 2021-22.
- The Govt is set to introduce a Development Financial Institution (DFI). Rs 20,000 crore will be provided to capitalize the new DFI, with an aim to have a lending portfolio of Rs 5 lakh crore in 3 years. National Monetization Pipeline for brownfield projects will be launched, the FM announced with NHAI and PGCIL having sponsored one InvIT each. She also added that vehicles will undergo fitness tests after 20 years for PVs, 15 years for CVs, announcing a voluntary vehicle scrapping policy.
- The Govt plans to allot Rs 20,000 crore for bank recapitalization of PSBs. The FM also proposed to revise definition under Companies Act, 2013 for small companies by increasing their threshold for capitalization.
- FM says projects for building 8,500 km of highways will be awarded by March 2022. While presenting the Union Budget 2021-22 in Parliament, the finance minister also said poll-bound West Bengal will see highway projects worth Rs 25,000 crore.
- The government has raised basic customs duty on import of sub-parts of mobile phones and battery chargers from nil to 2.5% in FY21-22. The price impact will be known once the details are clear.
- India will set up seven textile parks over three years under the scheme of mega investment textile parks which was announced in Budget FY22. The parks to be setup over 1,000 acres of land with world class infrastructure, and plug-and-play facilities, will be addition to the Rs 10,683-crore production linked incentive (PLI) scheme for technical textiles and manmade fibers.
- The Budget set agriculture credit target of Rs 16.5 lakh crore for FY22, and will further increase provision to rural infra development fund to Rs 40,000 crore from earlier Rs 30,000 crore. Sitharaman said the govt is committed to welfare of farmers, pointing at how 1.54 crore farmers benefited from MSP in paddy and wheat in FY21. Furthermore, underlined that Rs 75,060 crore was paid to farmers for wheat in FY21 versus Rs 62,802 crore in FY20.
- FM Sitharaman proposed to consolidate provisions of the Sebi Act, Depositories Act, Securities Contracts Regulation Act, and the Government Securities Act. Government aims to amend Insurance Act to allow higher FDI, increasing FDI limit in insurance to 74% from 49% and allowing foreign ownership.
- An allocation of Rs 1,10,055 crore to be made. Of this, Rs 1.07 lakh crore is for capital expenditure for FY22. The eastern and western dedicated freight corridors will be commissioned by June 2022, it was announced. The FM also announced plans for east coast corridor, east-west corridor, north-south corridors. 100% electrification of broad-gauge routes will be completed by December 2023, she said.
- The government will enable electricity connections portability to consumers by introducing competition in the power distribution space and kickstart a Rs 3 lakh crore reforms scheme for state power distribution companies, finance minister Nirmala Sitharaman announced.
- The government on Monday said the free cooking gas LPG scheme, Ujjwala will be extended to one crore more beneficiaries. She further said city gas distribution network of providing CNG to automobiles and piped cooking gas to households will be expanded to 100 more districts.
- 69 crore beneficiaries (86% beneficiaries) were covered under the One-Nation, One-Ration card implemented by 32 states and union territories.
- The FM proposed doubling of MSME allocation, setting aside Rs 15,700 crore for medium and small enterprises in FY22.
- The govt plans to allow incorporation of one-person companies with no restriction on paid-up capital and turnover. Non-resident Indians will also be allowed to incorporate one-person companies in India, the FM added.
- The government has withdrawn a tax benefit for mergers and acquisitions (M&A) that would result in marginal increase in the cost of transactions. The government in the Budget 2021 said that no depreciation would be allowed on goodwill.
- India to launch Deep Ocean Mission, with allocation of Rs 4,000 crore over next four years.
- Finance Minister Sitharaman allocates Rs 3,726 crore for the forthcoming Census, calling it “the first digital census”.
- Government to notify rules to eliminate double tax for NRIs on foreign retirement funds
- Govt to extend eligibility of erstwhile tax sop on home loan up to FY22. The FM also said that affordable housing projects can further avail tax holiday for one more year. The FM proposed extension of tax holiday for start-ups by one more year, a tax exemption for relocating funds to IFSC, and tax holiday for aircraft leasing business in Gift city.
- She said that income tax return filers increased to 6.48 crore in 2020 from 3.31 crore in 2014.
- Propose to review more than 400 old exemptions to customs duty, and from October 1 will put in place a revised customs duty structure free of any distortion, the FM said. Govt plans on reducing customs duty uniformly to 7.5% on products of non-alloy, alloy and stainless steel, exempting duty on steel scrap till March 2022. The FM added that to provide relief to copper recyclers, the govt will be reducing duty on copper scrap from 5% to 2.5%.
- The Department of Space has been allocated Rs 13,949 crore in this Budget, of which Rs 8,228 crore have been earmarked for capital expenditure. Rs 700 crore has been allocated for the New Space India Limited (NSIL), a newly formed PSU under the Department of Space. Also as part of the Gaganyaan mission activities, four Indian astronauts are being trained on Generic Space Flight aspects, in Russia. The first unmanned launch is slated for December 2021;
- A total of Rs 39.67 crore has been allocated to the Lokpal for the next fiscal, according to Union Budget 2021-22. The provision is for establishment and construction related charged expenditure for the Lokpal, it said.
- “I propose to provide Rs 1,000 crores for the welfare of tea workers especially women and their children in Assam and West Bengal,” the FM said while presenting the Union Budget 2021-22.
Maruti Suzuki five seater to be launched in India soon
The Jimny has been around long enough in global markets for it to be time for a mid-life nip and tuck, but more importantly this also means that the 5-door Jimny is one step closer to making it to reality. The 5-door Jimny, introduced to India as the Sierra at the 2020 Auto Expo is ear-marked for India. Recent spy-shots reveal a few more details of the India bound SUV.
Like the Jimny Sierra, the 5-door version of the Jimny will be about 300mm longer than the 3-door both in terms of wheelbase and length. The Jimny 5-door will measure in at 3,850mm in length, 1,645mm in width and 1,730mm in height and a wheelbase of 2,550mm. Like the 3-door the Jimny 5-door will have a ground clearance of 210mm and weigh in a 1190kg, 100 more than the 3-door. In the India perspective, this means that the Jimny will come in under the 4-meter mark, although the 1.5 liter petrol motor in the Jimny is likely to negate the benefit of its overall length in terms of taxation.
In global markets the K15B 1.5 litre petrol is rated for 102bhp, although it will be interesting to see if Maruti Suzuki opt for the mild-hybrid powertrain that usually accomanies this motor in India. At present Maruti Suzuki uses this motor with the smart hybrid system in the Vitara Brezza, the S-Cross, the Ciaz as well as the Ertiga. It is likely that the Jimny 5-door will use the same 5-speed manual and 4-speed torque converter that we’ve seen on all the above cars.
Now it is likely that the 5-door Jimny will debut alongside the 3-door Jimny facelift globally with similar cosmetic tweaks. India has already been manufacturing the Jimny 3-door for export markets for some time now, and now we can confirm that the 5-door has been earmarked for a launch in India shortly after the global launch, either by the end of 2021 or early next year.
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