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Finance

Union Budget 2021 Live Updates: Government focuses on Fiscal Deficit & Tax Exemption for Senior Citizens

Budget 2021 live updates

Finance Minister Nirmala Sitharaman is presenting the most awaited post-COVID Budget 2021. Not only the Union Budget 2021 will be paperless this year, but it will also put forward a concrete plan to boost the COVID-hit economy.

Finance Minister has announced some significant changes to the taxation process that involves the removal of income tax for senior citizens under certain conditions, new rules for the scrapping of double taxation for NRIs, and a reduction in the period of tax assessments. She has also announced that the advance tax liability on dividend income will arise after the declaration of payment of dividends.
In her speech, Nirmala Sitharaman also said that India`s fiscal deficit is expected to jump to 9.5 percent of Gross Domestic Product in 2020-21 as per Revised Estimates. The rise in fiscal deficit is estimated on the account of the increase in expenditure
While unveiling the Union Budget 2021-22 in the Lok Sabha, Sitharaman said that the government is expecting to bring down the fiscal deficit below 4.5 percent, which has soared to a high of 4.6 percent in 2019-20. The fiscal deficit is expected to go down below 4.5 percent of GDP by 2025-26

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What is a Fiscal Deficit?
Fiscal Deficit is the difference between the expenditure of the government and the revenue generated in a financial year. It is calculated both in absolute terms and as a percentage of the country`s gross domestic product (GDP).

According to the Finance Minister, the government is planning to borrow Rs. 80,000 crores during the residual two months of the current fiscal year.

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Finance

Union Budget 2021: How the post-COVID Budget will Impact the Corporates & Common Taxpayers?

union budget-2021
Union Budget 2021-22 | Representational Image

With the economy slowly gaining momentum from the pandemic, a lot of hopes are riding on the Union Budget 2021. Finance Minister Nirmala Sitharaman, who is supposed to announce the first post-COVID Budget 2021 on February 1, is ready to steer the Indian economy back on the growth track.

Due to the global pandemic, almost all the sectors of the economy were knocked-off in 2020. However, there have been few indications that some of them are showing a quick recovery.

The major challenge for the Finance Minister is to hit the perfect balance between managing the fiscal deficit considerations and reviving broad-based growth.

While the auto and real estate sectors are still struggling, MSMEs across several sectors are still facing the financial crunch, resulting in little or no job creation. In the wake of the pandemic-induced economic shock, the government is expected to provide more tax breaks to netizens, so that they can have higher disposable incomes.

Now that the end of the pandemic is in sight, all eyes are on Union Budget 2021 in the hope of some much-awaited reliefs and incentives. The corporates and individual taxpayers are all expecting the tax concessions in this year`s budget.

Let us look at some of the most crucial expectations that the taxpayers have from the upcoming Union Budget 2021:

Tax Reliefs for Corporates

Before the pandemic struck the world, the corporate taxes in India were reduced to 22% for companies and 15% for manufacturing firms. So, any further reduction in corporate tax seems unlikely. However, to support the companies to cope up with the losses suffered during the lockdown, investment-based reliefs and flexible adjustment of the previous year`s losses could be in the pipeline.

Insurance Awareness

The importance of insurance in India has been low for many decades. In 2020, people became more aware due to the pandemic and the high medical costs related to it. Perhaps, this is an excellent time for the insurance sector to increase its foothold in the country.

Worst Hit Industries & Sectors

Several industries like aviation, food & beverages, tourism, etc., have suffered major losses due to the COVID-19 pandemic. The recovery time for these sectors will also be longer as compared to the other industries that are already on their path to recovery.

To provide relief to worst-hit sectors, the government may extend their 8-year-loss-carrying forward window. These industries will have minimal income levels in this as well as in the upcoming financial year until they recover completely.

Vivad se Vishwas Scheme

The introduction of Vivad se Vishwas Scheme was one of the highlights of the 2020 Budget. The government aimed to increase their tax revenues by offering to settle cases upon 100% payment of disputed taxes. This would result in the saving of interest as well as the penalty.

However, there were fewer takers of the scheme due to the pandemic. Thus, the government might consider extending this scheme so that more taxpayers can avail the benefit of this scheme in the upcoming Union Budget 2021.

While there are numerous expectations from Budget 2021, the government has announced various relief policies to keep the economy afloat.

The Budget 2021 will be announced on February 1. Finance Minister Sitharaman will deliver the longest ever budget speech last year. This year the Union Budget 2021 will be paperless.

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Finance

Union Budget 2021: Healthcare, Infrastructure will remain in the limelight!

budget 2021

After the country`s economy has taken a deep blow due to the pandemic, all eyes are on Union Budget 2021. The Union Budget 2021 will be announced by Finance Minister Nirmala Sitharaman on February 1.

The country experts are expecting that the government will take corrective measures to support, revive and boost the economy. Amidst the ongoing pandemic and slowdown of the economy, various industry professionals are also expecting a reduction in GST rates.

The Union Budget is typically classified into Capital, Revenue, and Expenditure budget. The Budget also provides a blueprint of how much money the government is expecting to raise in the coming fiscal and where it is planning to spend it.

For 2021-22, Finance Minister Nirmala Sitharaman has said that the budget will be nothing-like-seen-before. The budget will also see massive investment and expenditure push for sectors like infrastructure and health sectors. Along with these two, other sectors like real estate, railways, and construction too, are expected to be in focus in the budget.

According to Rahul Singh, CIO-Equities, Tata Mutual Fund, “the government will focus on the economic recovery of the country as the upcoming budget will provide the acceleration”.

“The Government can plan its expenditure based on the strong recovery of the economy in nominal GDP growth in FY22, and tolerance for fiscal deficit, even though it will be materially lower than the FY21 levels”, he added.

“We are also expecting the focus to be on other sectors like healthcare, housing, and infrastructure. As the low-interest rates and stable real estate prices have improved affordability, the revival of the real estate sector is also on its way. Production linked incentive (PLI) scheme has been successful earlier, and a further momentum can be imparted by dedicated export zones with associated infra and easy approvals”, Singh further added.

“As there have been many significant changes to the tax structure in the last 2-3 years, hence the government will only make incremental changes. On the reform front, the Government might focus PSU reforms that will also include banks and privatization as one of the most important areas to raise capital over the medium term”, he said.

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Finance

FY Budget 2021-22: FM Sitharaman Says the Upcoming Budget will be like Never Before!

budget 2021

The finance minister Nirmal Sitharaman on Wednesday concluded all the pre-budget consultations for the 2021-2022 Union Budget. 9 stakeholder groups and 170 invitees participated in the 15 meetings held between December 14 to December 23rd, 2020 online.

The Finance minister of India held a meeting with the sector experts related to infrastructure, energy, and climate change to sought suggestions regarding the upcoming budget. According to her recent statement, the upcoming budget will be completely different. The Union Budget for 2021-2022 will be presented under the shadow of the Covid-19 pandemic. The budget for the financial year 2021-2022 will be presented in the parliament on February 1, 2021.

 

The FY22 budget will focus mainly on the infrastructure, which is considered one of the most important parameters of growth. Many economists have predicted that the Indian economy will shrink by 7% to 9% in 2020-21. The finance ministry expects marginal growth in the economy from the December quarter. The Indian economy is also expected to bounce back in double digits on a low base.

 

Apart from the Finance Minister Nirmala Sitharaman, Union Minister of State for Finance and Corporate Affairs Anurag Singh Thakur, DIPAM Secretary Tuhin Kanta Pandey, Finance Secretary AB Pandey, Expenditure Secretary TV Somanathan, Chief Economic Advisor Krishnamurthy Subramanian, DEA Secretary Tarun Bajaj, and senior officers from the Ministry of Finance and other ministries also took part in the meeting.

 

Sitharaman had chaired all the pre-budget meetings that were held online with multiple stakeholders, industrialists, economists, and farmer bodies, etc. for their inputs and suggestions on how to revive the economy that has been severely affected by the coronavirus pandemic.

 

The stakeholder groups made multiple suggestions on various subjects that included Fiscal Policy (including taxation), Insurance, Bond Markets, Health & Education, Exports, Infrastructure Spending, Social Protection, Water Harvesting & Conservation, MGNREGA, Public Distribution System, Production-linked Investment Scheme, Ease of Doing Business, Branding of Made in India products, Public Sector Delivery Mechanisms, Innovation, Green Growth, and Non-Polluting sources of Energy and Vehicles, among others.

 

The stakeholders’ groups included representatives of the Health, Financial and Capital Markets, Education and Rural Development, Trade Unions and Labour Organisations, Water and Sanitation, Industry, and Trade, Services, Infrastructure Agriculture, Energy, and Climate Change sector, and Industrialists, Agro-Processing Industry, and Economists.

 

The Finance Ministry also said “the participants in the meeting lauded the efforts taken by the Indian government to flatten the COVID-19 curve a slow but strong recovery of the economy in the second quarter of 2020-21. They further stated that India is among very few countries whose economic activity has risen with declining pandemic induced fatalities”.