Highlights of Union Budget 2021

-Major focus on healthcare and infrastructure

Considering the ongoing COVID-19 pandemic, the Union Budget of India for FY 2020-21 was expected to be India’s most consequential budget of all years. However, apart from being digital in form, the budget seems to be just a vision ahead of the Atma Nirbhar Bharat Abhiyan. Apart from the amendments introduced in the Income Tax provisions, there are six pillars identified as the focus areas for the budget of FY 2020-21, which are as follows:

• Health and well being
• Physical, financial capital and infrastructure
• Inclusive development for aspirational India
• Reinvigorating human capital
• Innovation and R & D
• Minimum government and maximum governance

The virus spread in the country has led the Government to stress more on health care and infrastructure developments. We shall briefly discuss the major amendments introduced in each of the focus areas:

A.     Health and well being

PM Atma Nirbhar Swasth Bharat Yojana– A preventive, curative and well-being approach for having a central health care scheme to develop capacities of primary, secondary and tertiary care health systems. Also, this yojana shall help to strengthen institutes that cater to the detection and cure of new and emerging diseases.

• Mission Poshan 2.0– A collaboration of Supplementary Nutrition Programme and Poshan Abhiyan to strengthen nutritional content in the country as well as increase its outreach.  

• Integrated Health Information Portal– The outreach of the portal shall be extended so as to include all public health labs into its purview.

• Jal Jeevan Mission (Urban)- The mission aims at the universal supply of water to urban local bodies and households as well as focus on liquid waste management.

• Vehicle Scrapping Policy and Fitness Tests- This is a policy to get rid of the old and unfit vehicles which contribute to environmental degradation. Also, the introduction of automated fitness centres has been initiated to undergo fitness tests of vehicles after some specified time period.

• National Commission for Allied Healthcare Professionals Bill- Introduction of the bill for the regulation of healthcare professions. Also, a National Nursing and Midwifery Commission Bill is proposed to be introduced for nursing professions.  

• Other efforts
• Establishing critical care hospital blocks in various districts
• Setting up 15 Health Emergency Operation Centres and 2 mobile hospitals
• Strengthening of National Centre for Disease Control (NCDC)
• Setting up national institutes for virology
• Specific fund allocation for COVID-19 vaccine

B. Physical and Financial Capital and Infrastructure

• Production linked Incentive Scheme (PLI) – The scheme is proposed to be announced for 13 more sectors for enhancing manufacturing capabilities and increasing exports.

• Mega Investment Textiles Part (MITRA)- Initiation of the idea of setting up seven MITRA which will have integrated facilities as well as a quick turnaround time for minimizing transportation losses.

• National Infrastructure Pipeline- The project has been extended to 7400 projects, whereby increasing its coverage.

• Development Financial Institution (DFI)- It is an institution being set up for the purpose of specifically permitting debt financing for infrastructure projects and act as a provider, enabler and catalyst for such financing. Also, financing by FPIs of InVITs and REITs will boost funds in the infrastructure and real estate sectors.

• Asset Monetisation– A National Monetization Pipeline of potential infrastructure assets shall be created along with a dashboard for continuous tracking and visibility for investors.

• ‘Metro Lite’ and ‘Metro Neo’- Setting up of new technologies so as to provide metro rail systems at lower cost in various cities.

• Increasing competition in power distribution– Government shall put in place a framework to allow consumers to choose from alternatives of distribution companies so as to ensure healthy competition.

• Private management of ports– The operational services of major ports shall be managed by private partners.

• Gas Transport System Operator– An independent operator for facilitation and coordination of booking a common carrier capacity of all-natural gas pipelines has been introduced.

1. Consolidation of SEBI Acts into a Securities Market Code– A single code consisting of SEBI Act, 1992, Depositories Act, 1996, SCRA, 1956, and Government Securities Act, 2007 has been introduced.

1. Enhance the Corporate Bond Market– In order to maintain stability in the Bond Market, a permanent institutional framework shall be created for purchasing debt securities during normal as well as stressed times.
2. Regulated Gold Exchanges- The long-waited intention of the Government to set up a regulated gold exchange was discussed in the budget. It is proposed to introduce SEBI as the regulator of the exchange and a commodity market ecosystem shall be developed for this purpose.

• Amendments in the Insurance Act, 1938
  1. Permissible FDI limit in Insurance companies has been increased from 49% to 74%;
  1. Majority of Board and KMP of insurance companies has to be resident Indians;
  1. 50% of the Board has to be independent at all times;
  1. Specified percentage of profits have to be retained as general reserve.

1. Reconstruction of stressed assets of Banks- An Asset Reconstruction Company and an AMC shall be set up for taking over stressed assets of the Banks and dispose off to AIFs or other potential investors.

• Decriminalization of LLP Act, 2008- After decriminalization of CA, 2013, the Government proposes to decriminalize the procedural defaults of LLP Act, 2008 and rationalize the offence from fine to penalty.

• Amendment in definition of ‘small company’- In order to motivate startups and small companies and also protect such companies from long list of compliances, the Government has proposed to increase the triggering limit as follows:

Paid up share capital of Rs. 2 Cr

Turnover of Rs. 2 Cr

Turnover of Rs. 20 Cr

Paid up share capital of Rs. 50 lakhs

1. Ease of incorporation and compliances by OPC–
   1. Removal of any minimum capital or turnover restriction
   1. Conversion of such companies into any other form without any restriction
   1. Residency limit of an Indian citizen intending to set up an OPC has been reduced from 182 days to 120 days only.
   1. NRIs can also incorporate OPCs

1. MCA21 Version 3.0– A new version of MCA website will be launched with additional features of e-scrutiny, e-adjudication, e-consultation and the long-awaited compliance management.

C.     Inclusive Development of Aspirational India

1. One Nation One Ration Card Scheme- A facility to migrant workers and their family to allow access to ration anywhere in India.

• Portal for gig workers and unskilled workers- A separate portal where information of gig workers, building workers and construction workers shall be launched for enabling Government to formulate a database and enable schemes for such workers.
• Credit flow in scheme of Stand-Up India – For SC/STs/Women the margin money requirement shall be reduced from 25% to 15%

D. Reinvigorating Human Capital

1. National Language Translation Mission (NTLM)- Initiative that governance and policy related knowledge shall be made available on Internet in major Indian languages.

• Education related changes
  • 100 new sainik schools will be set up with NGOs
  • Umbrella body for Higher Education of India shall be set up
  • Central University shall be set up in Leh

• SC and ST Welfare– Revamping of Post Matric Scholarship Scheme for welfare of SCs.

• Apprenticeship Promotion Scheme– Realignment of existing National Apprenticeship Training Scheme for providing post education apprenticeship training of graduates and diploma holders.

E.     Minimum Government and Maximum Governance

Conciliation Mechanism- A mechanism is being introduced for quick resolution of contractual disputes.

Amendments in Direct Taxes

1. Exemption from filing of IT Returns by Senior Citizens– Senior citizens of age 75 years and those who have only pension and interest income, they are not required to file IT return. However, this is not an exemption from tax. The tax amount shall be automatically deducted by the payment bank.

Assessment can be reopened upto 3 years, other than in case of serious fraud i.e. involving concealment of income of more than Rs. 50 lakhs, it is up to 10 years.

• Dispute Resolution Committee– Persons with taxable income up to Rs. 50 lakhs and disputed income upto Rs. 10 lakhs can go for dispute resolution committee for easy disposal of disputes.

• Exemption from tax audit– Tax audit shall be applicable only to such persons whose turnover exceeds Rs. 10 crores.

• Amendments related to DDT
  • Dividend payment to REIT/InvIT shall be exempt from TDS
  • Advance tax shall be applicable only once dividend is declared
  • FPI can have TDS at lower rate

• Affordable Housing-
  • The exemption of Rs. 1.5 lakh on interest amount for loan obtained for housing purpose has been extended till 31^st March, 2022.
  • Affordable housing projects can avail tax holiday till 31^st March, 2022

• Exemption to small trusts involved in education or hospitals– The exemption was applicable on trust whose annual receipt did not exceed Rs. 1 crore, now it has been exceeded to Rs. 5 crores.

• Pre-fill of returns– To ease filing of returns, the details of taxpayer including details of capital gains in case of listed securities shall be automatically pre-filled.

Amendments in Indirect Tax

1. Rationalization of custom duty structure by eliminating outdated exemptions
2. Support to MSMEs hit by recent sharp rise in iron and steel prices and relief to metal recyclers
3. Rationalization of duties on raw material inputs to man- made textiles
4. Rationalization of custom duty on gold and silver
5. Increase in duty on solar invertors and lanterns to promote domestic production
6. Agriculture Infrastructure and Development Cess on small number of items