(taresh@advantagefp.in)
In the Union Budget 21-22 the Government expects to spend 44.5% more than last year. For a 5-trillion-dollar economy, manufacturing sector has to grow in double digits on a sustained basis.
The FM outlined six pillars of proposals to strengthen the vision of Atmanirbharta.
1: Health and well-being: These will bring more employment, more industrial activities and boost the economy. Vehicle scraping policy will encourage fuel-efficient, environment-friendly vehicles, thereby reducing pollution and oil import bill.
2: Capital and Infrastructure: Will boost the economy, bring more jobs, and create more industrial products setups.
3. Inclusive Development. Agriculture and Allied sectors, farmers’ welfare and rural India, migrant workers and labor, and financial inclusion. One Nation One Ration Card plan is under implementation.
4. Reinvigorating Human Capital: More schools, new Sainik Schools, Central University in Leh, Post Matric Scholarship Scheme for Scheduled Caste welfare.
5. Innovation and R&D: more job opportunities: National Research Foundation, to boost to digital transactions, National Language Translation Mission, New Space India Limited (NSIL), Gaganyaan mission activities, Deep Ocean Mission
6. Minimum Government, Maximum Governance: fiscal deficit pegged at 9.5% of GDP will be funded by tax revenue through improved compliance, increased receipts from monetization of assets and Including Public Sector Enterprises and land.
Senior citizens who are 75 years of age and above- who only have pension and interest income-exemption from filing their income tax returns:
1. Reduction in Time for Income Tax Proceedings-for re-opening of assessment to 3 years from the present 6 years.
2. Direct Tax Vivad Se Vishwas Scheme- 1,10,000 taxpayers have already opted to settle tax disputes of over Rs. 85,000 crores under this Scheme.
3. Reduce litigation for small taxpayers:-Anyone with a taxable income up to Rs. 50 lakh and disputed income up to Rs. 10 lakhs
4. Faceless assessment and appeal this year. All communication between the Tribunal and the appellant shall be electronic
5. Relaxation to NRI-Notify rules for removing their hardship of double taxation.
6. Exemption from Audit: if your turnover exceeds (digital transactions and reduce compliance burden): from Rs. 5 crores to Rs. 10 crores.
7. Dividend Distribution Tax (DDT) in order to incentivize investment.
8. Attracting foreign investment into infrastructure sector: to relax some of these conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment in infrastructure.
9. To allow funding of infrastructure by issue of Zero-Coupon Bonds, make notified Infrastructure Debt Funds eligible to raise funds by issuing tax efficient Zero-Coupon Bonds.
10. Additional deduction of interest, amounting to Rs. 1.5 lakh, for loan taken to purchase an affordable house.
11. To ease compliance for the taxpayer, details of salary income, tax payments, TDS, etc. already come pre-filled in income tax returns.
12. Reduce the compliance burden on small charitable trusts running educational institutions and hospitals, increased this amount to Rs 5 crores
13. To ensure that employees’ contributions are deposited on time, the late deposit of employee’s contribution by the employer will not be allowed as deduction to the employer.
14. To extend the eligibility for claiming tax holiday for start-ups by one more year – till 31st March, 2022.
15. To incentivize funding of the start-ups, to extend the capital gains exemption for investment in start-ups by one more year – till 31st March, 2022.
16. GST is now four years old- measures to further simplify it. No New GST taxes.
17. Overhauling the Customs Duty structure, eliminating 80 outdated exemptions.
18. Gold and silver- rationalizing custom duty on gold and silver.
19. To encourage domestic production, we are raising duty on solar invertors from 5% to 20%, and on solar lanterns from 5% to 15%.
20. Initiatives on Education for 92 lakh teachers of public and private school system in the country.
21. Rationalization of taxation of Unit Linked Insurance Plan (ULIP): to allow tax exemption for maturity proceed of the ULIP having annual premium up to Rs 2.5 lakh-to provide parity.
22. Rationalization of Tax- free Income on Provident Funds: In order to rationalize tax exemption for the income earned by high income employees, restricts tax exemption for the interest income earned on the employees’ contribution to various provident funds to the annual contribution of Rs. 2.5 lakh.
23. Taxability of Surplus amount received by partners: In order to provide certainty, it is proposed to rationalize the provisions relating to taxation of the assets. Another loophole plugged.
24. Clarification on Depreciation on Goodwill – to clarify that no depreciation on Goodwill shall be allowed.
25. Exemption for Leave Travel Concession (LTC): tax exemption to the amount given to an employee in lieu of LTC subject to incurring of specified expenditure.
26. Cheaper now: Iron, Steel, Nylon clothes, Copper items, Insurance, Shoes, Agricultural equipment.
27. Expensive now: Mobile phones, Chargers, Power banks, Imported raw silk, Solar inverters, Leather items, Gemstones, Tunnel boring machines, Kabuli chana, Pulses, Urea, Auto parts and automobiles, Gems and Jewelry – Cut and Polished Cubic Zirconia Synthetic Cut and Polished Stones.
The budget is a growth-oriented budget. India is now very self-confident and a major signal to the world that we are ready to be a global player! FDI will come in huge numbers with New Opportunities.
1. Urban Clean India Mission, Urban Swachh Bharat 2.0 Mission and JalJeevan Mission Urban- will boost the economy and raise GDP also.
2. An increase in the Deposit Insurance cover from Rs. 1 lakh to Rs. 5 lakhs.
3. Disinvestment of 10% in LIC itself can take care of all the extra spending by the govt.
4. The proposal to revise definition under Companies Act, 2013- The small and medium enterprises and businessmen shall get a big boost and encourage more employment opportunities.
5. No new major direct taxes including wealth tax, surcharge and LTCG.
6. The move to reduce the time limit for reopening income tax assessments will bring in more confidence to the ordinary tax payer.
7. Relaxation to NRIs – Rules to remove hardship of Double Taxation
8. Tax Audit Limit to be increased to Rs.10 crores from Rs.5 crores for those having less than 5% cash transactions.
9. Dividend Tax- Dividend will be exempt from TDS.
10. Affordable Housing – Additional Interest deduction of Rs.1.5 lakhs to be extended for loans taken till 31st March, 2022
11. Relief to Trusts: Charitable trusts running Hospitals and Educational Institutions relief increased from Rs.1 crore to Rs.5 crore.
12. Tax holiday for Start-Ups extended to 31st March, 2022. Capital Gains exemption on investment in startups also extended to 31s March, 2022.
13. Allow One Person Companies (OPC) to grow without any restriction in Share Capital. NRIs will be allowed to set-up OPCs. Presence in India of 120 days in a year enough to start an OPC.
14. The proposal to consolidate provisions of SEBI Act, Depositories Act, Securities Contracts Regulation Act, Government Securities Act will bring more confidence and boost investments.
Finally, a great budget with no significant changes for the common man! This definitely leads to creating an environment of ease of doing great business in India, where the Government and the common man, the investor, the salaried, the businessman, can all feel positive and contribute to the growth of India.
(The author is a CERTIFIED FINANCIAL PLANNER and Partner in the firm-Advantage Financial Planner LLP)