The pandemic led Union budget turns out to be better than the expectation of masses which were, not adding COVID-19 cess, not increasing the capital gains tax, looking for non-tax revenue like divestment structure. The budget proposals broadly were based on 6 pillars viz. Health and wellbeing, Physical and Financial capital Infrastructure, Inclusive development of aspirational India, Reinvigorating human capital, Innovation and R&D and Minimum Government, maximum Governance.

Key Budget Highlights:

     1. Tax related announcement

• • With a view to provide relief to senior citizens, no income tax filling required for senior citizens above 75 years of age and have income only from pension and interest income.

  • The central government also reduced the timeline for reopening tax cases to three years from six years.

  • In order to rationalize tax exemption for the income earned by high income employees, it is proposed to restrict tax exemption for the interest income earned on the employees’ contribution to various provident funds to the annual contribution of Rs. 2.5 lakh. This restriction shall be applicable only for the contribution made on or after 1 April 2021.

  • For ULIPs taken on or after Feb 1, 2021, the maturity proceeds of policies with an annual premium of more than Rs 2.5 lakh will be taxable at par with equity-linked mutual fund schemes and will no longer be tax free. This brings parity between ULIPs and equity MFs which serve the same purpose of long-term investments.

  • Eased rules for NRIs related to their accrued income and getting credit for Indian taxes in foreign jurisdictions.

  • To boost real estate sector, finance minister extended the additional relief in interest paid of Rs. 1.5 lakh over and above Rs. 2Lac for home loans for affordable housing. Now the homebuyers can avail additional tax relief on home loans till 31^st March 2022.

     2. Others – Health, Infrastructure, Investment.

• • New centrally sponsored scheme PM Aatmanirbhar Swasth Bharat Yojana to be launched with an outlay of Rs 64,180 crore over 6 years.

  • A 137% increase in spending for healthcare to Rs. 2.23Lac crore. Rs. 35,400 Crore for Covid-19 vaccination drive in FY22.

  • The government raised the agriculture credit target to Rs 16.5 lakh crore in 2021-22.

  • Allocation of Rs 1.18 lakh crore proposed for Ministry of road, transport and Highway.

  • The FDI in insurance increased to 74% from 49%.

  • The government pegged divestment target for FY22 at Rs. 1.75Lac crore, LIC IPO would be brought in FY22.

  • Custom duties on gold cut to 7.5% from a 12% earlier.

  • Tax exemptions on the revenue and investments of start-ups extended by one more year.

  • National Research foundation to be set with an outlay of Rs. 50,000 Crore over 5 years.

     3. Fiscal Estimates

• • FY21 fiscal deficit pegged at 9.5% of the GDP.

  • FY22 fiscal deficit pegged at 6.8% of the GDP, it also aims to bring this down to 4.5% by FY26.

  • Gross borrowing for FY22 planned to be Rs.12 lac crore v/s earlier estimates of Rs.7 Lac crore approximately.

  • The government plans to spend a total of Rs.34.83 Lac crore higher than the estimate of the previous year that is Rs.30.42 lac crore.