The Stage is Set for the Union Budget 2021
Like every year, at 11 am on Feb 1, the Finance Minister of India Nirmala Sitharaman will present the budget of 2021-22 in the parliament. But this year will be different, for the first time since independence the Union Budget will not be printed as it is done every year.
Every year, the Union Budget is printed in the Finance Ministry’s in-house press, involving nearly 100 employees who have to stay together for nearly a fortnight till the time the papers are printed, sealed, and delivered on the day of the Budget.
The government has come up with a digital solution where everyone will have access to the budget document – “Union Budget Mobile App”. Budget documents will be available on the Mobile App after the completion of the Budget Speech by the Finance Minister in Parliament on 1st February 2021.
As per the media reports, Nirmala Sitharaman launched this app so that everyone will have access to the document in an easy and hassle-free manner. With this mobile app, people will have access to 14 Union Budget documents, which will include the Annual Financial Statement, Demand for Grants, Finance Bill, and so on as prescribed by the Constitution.
The app reportedly has features such as downloading, printing, search, zoom in and out, bidirectional scrolling, table of contents and external links, etc. It is bilingual (English & Hindi) and will be available on both Android and iOS platforms.
The app can also be downloaded from the Union Budget Web Portal (http://indiabudget.gov.in).
Historic Halwa Ceremony
Every year the final stage of the Union Budget is kicked off with the Halwa Ceremony which marks the beginning of the printing of budget documents.
This year too, along with the Finance Minister, the Minister of State Anurag Thakur, Finance Secretary & Secretary Revenue, Secretary Expenditure, Secretary of Economic Affairs, Secretary DIPAM, Secretary of Financial Services, Chief Economic Advisor, Additional Secretary (Budget) & other officials of the Ministry attended the Halwa Ceremony where the Finance Minister launched “Union Budget App”.
Budget Expectations & Its Impact
2020 has been a rollercoaster ride, with over 4 months spent indoors due to the Covid-19 lockdown, many businesses suffered and people were jobless. This budget people are looking forward to the budget reforms that are in store to curb the economic slowdown that has gripped our nation in the past year.
The adverse economic impact of the coronavirus pandemic has been felt by everyone, be it MNCs, big domestic companies, or micro, small and medium enterprises (MSMEs). Though there are a few sectors that have been resilient to the pandemic, most others are reeling, and at this juncture, may need some support from the government.
The government has taken several steps to support and revive the economy such as introducing labour reforms, production-linked incentives, and relief packages, particularly for the MSMEs. In line with earlier relief packages, there is a lot of expectation from the upcoming Union Budget on 1 February.
The Finance Minister’s primary and biggest task in this budget would be to roll out reforms to boost the economy. Unemployment, the underperformance of certain sectors are certain areas the government may target.
While we wonder what’s in store for the nation, here are a few expectations from the budget, as expressed by India Inc and the general public. Let’s see the likely Budget expectations and their impact as the Finance Minister has promised a budget like never before.
Likely Changes in Direct Taxes
As per various media reports, the government is likely to keep income tax slabs in the forthcoming Budget 2021-22. This means any changes in personal tax rates seem off the table as of now. Let’s see what are the few changes in the direct taxes that are on the table. (The data is as per the Financial Express report)
Increase in tax-saving investment limits
As per the reports, the government is likely to get long-term funds at a fixed rate easily by increasing the limits of tax-saving investments under various sections – like 80C, 80CCD(1B), etc.
Deductions on Covid-related expenses
To help people struggling financially after getting infected by Covid-19, Covid-related hospitalisation expenses could be allowed as a tax deduction.
Introduction of a new category of tax-saving bonds
The government may launch a new category of bonds eligible for a tax deduction – like Covid bonds.
Tax incentives for non-resident investors
To attract foreign capital in various sectors, the government may reduce compliance and provide lucrative tax incentives for non-resident investors.
Increase in income tax threshold limit
The government would consider the reintroduction of a single tax slab structure and increase the minimum taxable income threshold.
Tax incentives on work from home expenses
Work from home allowances or reimbursements made to employees by employers would be made non-taxable in the hands of the employee and allowed as a business expense in the hands of the employer.
Reduction in LTCG holding period of debt funds
The government would consider a reduction in the holding period for capital gains from debt-oriented growth mutual funds to 12 months from the existing 36 months for it to qualify as a long-term capital asset.
LTCG incentives on real estate
Long Term Capital Gains rate on real estate assets should be reduced from 20% to 10% and the holding period should be reduced from 24 months to 12 months.
This year’s Union Budget is expected to be different and new in many ways, and with the Finance Minister reportedly saying that it will be a Budget like never before, Indians & India Inc are eagerly waiting for the announcements that would revive the economy.