UNION BUDGET 2021 LIVE UPDATES

CATCH LIVE NEWS UPDATES ON BUDGET 2021 By NIRMALA SITHARAMAN On 1st FEB 2021

1. Union Budget 2021 Overview

Budget 2021 Live : It’s that time of the year again. Everyone from large corporates to small businesses to the common man waits with bated breath to see the changes that the budget brings with it. This year will be no different, except that the hype and expectations are larger than ever before as it’s the first budget post the COVID-19 pandemic. The Indian economy had taken a hit but is now on the road to recovery. Let’s take a look at the expectations that people have from the Union Budget 2021.

Budget 2021 Live Event

Union Budget 2021 Announced by

Nirmala Sitharaman (Minister of Finance)

Submitted to

Parliament of India

Budget 2021 date

1st February 2021

Parliament

17th (Lok Sabha)

Party

Bharatiya Janata Party ( BJP )

Finance minister

Nirmala Sitharaman

2. Expectations of the common man from Union Budget 2021

a. ‘Work From Home’ Concessions

Most corporate employees and other employees for whom remote-working was a possible option have been working from home the past year. While certain major corporates have provided work from home allowances such as reimbursement of office furniture costs, telephone and internet expenses, other employees have borne the same out of pocket. A request has been put forward to the government to allow a standard ‘work from home’ deduction for salaried employees concerning the work from home expenses incurred.

b. A Raise in the Standard Deduction For Salaried Employees

The standard deduction for salaried employees was introduced in Budget 2018 and was capped at Rs.40,000. Since then, it has only seen an increase of Rs.10,000 in the last three years. Increasing this limit to a modest Rs.75,000 per annum will benefit millions of salaried employees, especially in a difficult year such as this.

c. Healthcare and the Distribution of the COVID-19 Vaccine

The pandemic was an eye-opener for the healthcare sector in India. The number of active cases may have substantially reduced, but life has still not come back to normal. The priority right now is the effective distribution of the COVID-19 vaccine. The government may announce several concessions to domestic vaccine manufacturing companies under both income tax and GST, in the form of subsidies and exemptions.

d. Keeping Preventive Healthcare Out of the Medical Insurance Deduction

Right now, medical insurance premiums paid on self, spouse, children and parents are allowed as a deduction under Section 80D of the Income Tax Act. The limits stand at Rs.25,000 or Rs.30,000 depending on the age of the insured. The government also allows for a deduction of expenses incurred with regard to preventive healthcare. However, it is recommended that this amount should be allowed as a deduction apart from, and in addition to the medical insurance premiums paid under Section 80D. It is also expected that the government will reduce the GST rate on medical insurance premiums from 18% to 5% to facilitate better market penetration through reduced costs.

e.Deduction For COVID-19 Hospitalisation Under Section 80DDB

Section 80DDB covers serious illnesses such as malignant cancers, chronic renal failure, AIDS, etc. It has been recommended that the government include hospitalisation expenses incurred for COVID-19 too under this section. The deduction limit is currently capped at Rs.40,000 for individuals, except senior and super senior citizens who are allowed a deduction of Rs.1,00,000 per annum.

f. Overhaul of Capital Gains Reporting

Capital gains are split into long-term and short-term capital gains and taxed on various types of capital assets under the Income Tax Act. It is expected that the government will simplify compliance for capital gains and reduce the number of tax rates charged for various types of capital gains income. It has also been recommended that the government extend the timelines for investment of capital gains income under Section 54 of the Income Tax Act.

g. Increase in the Deduction Limit of Interest Paid on House Property

The interest limit of Rs.2 lakh has been constant for a few years now. It is expected that this limit is increased to Rs.4 lakh to promote investment in house property and to indirectly boost the affordable housing segment as well. Eliminating tax on notional income from house property will be another good move to encourage the purchase of new house properties.

h. Deduction For Self-Occupied House Properties

Homeowners who do not rent out their property lose the repairs and maintenance deduction allowed under the Income Tax Act. Hence, it has been proposed to extend this benefit to even self-occupied house property for the various expenses they incur during the year on repairs and maintenance. 

i. Revision of LTA Guidelines

To boost the tourism sector, the government may revise guidelines on claiming Leave Travel Allowance (LTA), by extending the deduction beyond domestic fares to tours and accommodation as well.

j. Salaried Employees - Videos on expectations from budget

3. Expectations From Corporates and Various Industries from Budget 2021

a. Relief for the MSME Sector

India has over 60 million Micro, Small and Medium Enterprises. The Government of India has done a lot for this sector by way of reforms and schemes in the past, while propagating a ‘Make in India’ narrative. While MSMEs make up close to 50% of the total exports, easing foreign exchange norms is the real need of the hour. With stringent RBI norms in place, foreign investors worry about both compliances and the cash flows, both into and out of the country. Reducing the compliance burden and easing foreign exchange flows would give a real boost to the MSME sector.

b. Much-needed Boost for the Hospitality Industry

Travel and tourism took the worst hit during the pandemic both during and after the government-imposed lockdown. This budget, the hotel industry is looking at getting infrastructure status for hotel projects with above a Rs.25 crore investment as against an above Rs.200 crore investment, as was in the past. Besides this, the hospitality sector is looking at easier compliances, loan guarantees and lower direct tax rates. Also, an extension of the business loss carry forward period from eight to twelve years is the need at present. The Federation of Hotel and Restaurant Associations of India (FHRAI) has also requested for a MAT waiver for the next three years due to the business losses suffered by them.

c. Reduction in Taxes For the Automobile Sector

The automobile sector has seen its worst slump in years, and the onset of this decline was way before the COVID-19 pandemic. In this budget, the luxury car segment is pushing for a reduction in the tax rates, as they have been the hardest hit during the pandemic. The GST rate on luxury cars falls in the highest slab of 28%. Besides, a cess is further imposed on these cars ranging from 1% to 22%. Imported vehicles also have customs duty ranging from 60% to 100% value of the vehicle, insurance and freight.

d. Increased Spending on the Healthcare Sector

The pandemic has unveiled a situation of having more patients than hospital beds in our country. It is expected that the government will increase spending on medical infrastructure in the coming financial year. Further, allocation of funds to preventive medicine, medical research and healthcare startups is vital in the wake of the ongoing global pandemic.

e. Monetary Allocations for the Agriculture sector

The focus on agriculture is expected to continue this financial year. The agriculture sector will be looking at a large budget allocation in the form of subsidies and incentives. Farmers currently lack the infrastructure for effective market participation and in realising fair prices for their produce. This year’s budget allocation should focus on strengthening farmer producer organisations, and infrastructure for irrigation, food processing, etc. to improve the prices of produce sold and to effectively increase farmers’ incomes.

f. Business owners - Videos on expectations from budget 2021

4. Expectations For the General Economy from Union Budget 2021

a. Creation of Employment Opportunities

It is unfortunate that millions of people lost their jobs last year due to layoffs, a result of the pandemic. This year, the hope is that the Finance Ministry will help fuel employment opportunities by giving a boost to major employment-generating sectors such MSMEs, textiles, hospitality, housing, etc.

b. Simplification of Reporting Under GST

The government has eased GST compliance by a fair bit by reducing the number of returns to be filed by taxpayers, especially small taxpayers, under GST. However, it is not just the number of returns but the various compliances in the GST filing mechanism that is turning out to be an inconvenience for honest taxpayers and a disruption to the ease of doing business. The stringent laws with regard to claiming input tax credit, making monthly payments and even registering under GST need to be simplified to a great degree, and with immediate effect.

c. Healthcare and the Distribution of the COVID-19 Vaccine

The pandemic was an eye-opener for the healthcare sector in India. The number of active cases may have substantially reduced, but life has still not come back to normal. The priority right now is the effective distribution of the COVID-19 vaccine. The government may announce several concessions to domestic vaccine manufacturing companies under both income tax and GST, in the form of subsidies and exemptions. 

d. A COVID-19 Cess

It is likely that the government may impose a COVID-19 or other similar cess of 2-4%, on high-income earners this budget. The past year has seen a big drop in revenue collections in some of the months, while the government had to increase assistance to the poorer sections of society, who were deprived of income during the lockdown period. This cess could be imposed to make good the amounts incurred on economic assistance provided. There is a possibility that this cess could also be imposed only on business entities.

e. Rate Changes in Customs Duties

Budget 2021 may see substantial rate reductions in import duties on gold and precious stones, newsprint, and imports on raw material components for electric vehicles. On the other hand, mobile phones and other electronic devices could see an increase in the rate of customs duties this budget.

5. Union Budget App 2021

a. What is the Union Budget App?

Finance Minister Nirmala Sitharaman announced the launch of the Union Budget App in the ‘ Halwa ceremony’. Uptill last year, the Halwa ceremony marked the start of printing of Budget documents. As informed by the department already, the Union Budget 2021 will be announced in a paperless format and there will be no printing of the voluminous Budget documents for the first time since the starting of the history of Budget. Keeping the COVID 19 protocol in mind, this year the Budget will be distributed electronically to the MPs.

b. What are the features of the new Budget App?

  • The application will provide complete hassle free access to 14 Budget documents like Finance Bill, Annual Financial statement, Demand for Grants and all other related documents to the general public and Members of the Parliament.
  • The application is made available in both Hindi and English languages and will be available both on Android (Play Store) and iOS (Apple app store).
  • The App will have features like global search, document search, downloading, printing, table of contents, external links, bidirectional scrolling, zoom in and out etc.
  • The Union Budget mobile app is developed under the guidance of the Department of Economic Affairs (DEA) by the National Informatics Centre.
  • All the Union Budget documents 2021 will be readily available on this mobile app after completion of the Finance Minister's Budget Speech on 1st of February 2021 in the Parliament.
  • The Union Budget App's link is available on the Union Budget web portal (www.indiabudget.gov.in), and hence can be easily downloaded from there.

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6. FAQs on Budget 2021

  • When is the budget 2021 date?
    Finance minister Nirmala sitharaman is set to announce Union Budget 2021 on 1st February 2021. This i9s the first time the Union Budget will not be printed
  • Who presented the Union Budget of India 2020 and 2021?
    Our country's finance minister, Nirmala Sitharaman presented the union budget 2020 on 1st February 2020 for the second time. Coming Budget 2021 is also proposed to be presented by Nirmala Sitharaman on 1st of February 2021.
  • What is the largest item of expenditure in Union Budget 2020 -2021?
    The largest amount of central government expenditure is the ‘state’s share of taxes and duties’ which come to approximately around 20 % of total expenditure of the central government.
  • What is the theme of Union Budget 2021?
    Theme of Budget usually means the main focus areas of the budget for that particular year. For upcoming budget 2021, it seems that main theme would be focus on manufacturing sector, making India self reliant i.e Atmanirbhar Bharat , bringing more focus on digitization through Digital India and last but not least Healthcare sector. These sectors are expected to get a major push in the budget 2021.
  • What is the total budget of India 2020-21?
    The government had proposed to spend Rs 30.42 lakh crores during the year 2020-21 in its Union Budget 2020. The status of actual expenditure will be presented in the upcoming Union Budget 2021..
  • What are the 3 types of budget?
    The budget are of 3 types,
    1. (i) Balanced budget- When the governments expenditure is equal to the revenues
    2. (ii) Surplus Budget- when governments revenue exceeds the estimated government expenditure
    3. (iii) Deficit Budget- When the expenditure exceeds the expected government revenue.