Today, as clocks turned 11 a.m., Finance Minister presented first ever digital Union Budget for Year 2021-22. The Union Budget 2021-22 was focussed on 6 pillars – Health and Well Being, Physical and Financial Capital and Infrastructure, inclusive development for aspirational India, Reinvigorating Human Capital, Innovation and R&D and Minimum Government and maximum governance.

Let us look upon some of the highlights of the budget:

ü   DIRECT TAX

                 i.    No changes in current slab rates and rates of tax.

          ii.    Exemptions from filing returns for senior citizen (age 75 years and above) who only have pension and interest income. Bank will deduct necessary tax on their income.

              iii.    Reducing time limit for re-opening of income tax assessment:

1.    In normal cases: Time limit has been reduced from 6 years to 3 years.

2.   In serious tax evasion cases (where concealment of income is more than ₹ 50 Lakhs): can be reopened till 10 years.

              iv.    Income Tax Appellate Tribunal (ITAT) to be made faceless.

              v.    Dividend payment to REIT/InvIT to be exempted from TDS

         vi.    Salary, TDS and Tax payments are already covered in pre filling of returns. Now, it will also cover capital gains from listed securities, dividend income, etc.

         vii.    Increase in limit for tax audit to ₹ 10 crores for persons who carry out 95% of their transactions digitally.

       viii.    Additional deduction of ₹1.5 lakh shall be available for loans taken up till 31st March 2022 for purchase of affordable house.

          ix.    Eligibility for claiming tax holiday for start-ups proposed to be extended by one more year.

          x.    Constitution of a Dispute Resolution Committee for small tax payers (Taxpayers having taxable income upto ₹ 50 Lakhs and disputed income upto ₹10 Lakhs)

        xi.    'Advance tax liability' on dividend income shall rise only after the declaration or payment of dividend.

      xii.    PF amount was deducted but not deposited by the employer, it will not be allowed as a deduction for the employer.

     xiii.    Deduction of tax on dividend income at lower treaty rate for Foreign Portfolio Investo₹

    xiv.   Exemption limit of annual receipt revised from ₹1 crore to ₹5 crore for small  charitable trusts running schools and hospitals.

     xv.  Proposing Cash allowance in lieu of LTC, subject to fulfillment of certain condition which are as under:

      • Expenditure should be incurred by individual or a member of his family on goods and services which are liable to GST at a rate of 12% or more, purchased from registered GST taxpayers.
      • Payment to vendor should be made through banking channels
      • Expenditure should be incurred during the period commencing from 12th October, 2020 and ending on 31st March, 2021.
      • Maximum exemption = ₹ 60,000 or 1/3 of total expenditure, whichever is less. (upto the extent of LTC amount)
   xvi.  Goodwill not to be considered as a depreciable asset, thus, no depreciation u/s 32 will be allowed on goodwill in any case. 

 

ü   INDIRECT TAXES

                i.     Use of deep analytics and AI to identify tax evaders in GST.

         ii.    Annual Accounts audit and submission of reconciliation statement by specified professional required u/s 35(5)  of CGST Act, 2017 is proposed to be removed. 

       iii.  Removing the mandatory requirement of furnishing a reconciliation statement duly audited by specified professional under Sec. 44 of CGST Act, 2017. Now, annual return is to be filed on self-certification basis. 

        iv. Custom Duty: 

                

Particulars

Amendment

Some parts of Chargers and sub-part of mobiles

Exemption withdrawn

Some parts of mobiles

Increased from ‘NIL’ to ‘2.5%’

Semis, flat, and long products of non-alloy, alloy, and stainless steels

Reduced uniformly to 7.5%

Steel Scrap

Exempted upto 31st March, 2022

Copper Scrap

Reduced from 5% to 2.5%

Caprolactam, nylon chips and nylon fiber & yarn

Basic Custom Duty (BCD) reduced to 5%

Naptha (Chemical)

Reduced to 2.5%

Solar Inverters

Raised from 5% to 20%

Solar Lanterns

Raised from 5% to 15%

Tunnel boring machine and its parts

On machine – 7.5%

On its parts – 2.5%

Certain auto parts

Increased to general rate of 15%

Steel screws and plastic builder wares

Increased to 15%

Prawn feed

Increased to 15% (earlier 5%)

Cotton

Increased from 0% to 10%

Silk Yarn

Increased from 10% to 15%

OTHER POINTS   

        ·        Turant Customs’ initiative for faceless, paperless, and contactless customs measures.

        ·        New procedure for administration of Rules of Origin.        

        ·        Custom duty on Gold and Silver to be rationalised.    

    ·    Anti-Dumping Duty (ADD) and Counter-Veiling Duty (CVD) revoked on certain steel products 

        ·        Exemption on import of duty-free items rationalized to incentivize exporters of garments, leather, and handicraft items.

        ·        Exemption on imports of certain kind of leathers withdrawn

        ·        Customs duty on finished synthetic gem stones raised to encourage domestic processing

        ·        Withdrawal of end-use based concession on denatured ethyl alcohol

        ·        Agriculture Infrastructure and Development Cess (AIDC) on a small number of items

 

ü   COMPANIES ACT

                 i.    Decriminalize the Limited Liability Partnership (LLP) Act, 2008

               ii.    Revised Definition of Small companies under Companies Act, 2013:

Particulars

Old Limit

Revised Limit

Paid Up Capital

Not exceeding ₹ 50 Lakhs

Not exceeding ₹ 2 crores

Turnover

Not exceeding ₹ 2 crores

Not exceeding ₹ 20 crores

              iii.    Promoting start-ups and innovators by incentivizing the incorporation of One Person Companies (OPCs):

a.      No restrictions on paid up capital and turnover

b.      Allowing their conversion into any other type of company at any time,

c.      Reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and

d.      Allowing Non Resident Indians (NRIs) to incorporate OPCs in India.

              iv.    To ensure faster resolution of cases by:

a.      Strengthening NCLT framework

b.      Implementation of e-Courts system

c.      Introduction of alternate methods of debt resolution and special framework for MSMEs

                v.    Launch of data analytics, artificial intelligence, machine learning driven MCA21 Version 3.0 in 2021-22

 

ü   OTHER LAWS

                 i.    Various allied laws of the securities market to be merged to the Securities Market Code.

               ii.    Amend the Insurance Act to increase the FDI limit to insurance companies from the existing 49% to 74%.

              iii.    Setting up of new Asset Management Company to provide resolution to stressed assets in PSUs.

              iv.    The DICGC Act, 1961 is to be amended to streamline its provision where the depositors of the bank can get easy access to deposits through insurance in the case of a stressed bank.

                v.    Minimum loan size eligible for debt recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 proposed to be reduced from ₹ 50 lakh to ₹ 20 lakh for NBFCs with minimum asset size of ₹ 100 crore.


For Finance Bill, click here

For Memorandum, click here


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