Budget 2020-2021 Highlights Part-II

Last Updated On: Feb. 2, 2021, 10:10 p.m.
...

BUDGET 2021-HIGHLIGHTS

1. Direct Taxes

Achievements:

  • Corporate tax rate slashed to make it among the lowest in the world
  • The burden of taxation on small taxpayers eased by increasing rebates
  • Return filers almost doubled to 6.48 crore in 2020 from 31 crores in 2014
  • Faceless Assessment and Faceless Appeal introduced

Relief to Senior Citizens:

  • Exemption from filing tax returns for senior citizens over 75 years of age and having only pension and interest income; tax to be deducted by paying bank
  • Reducing Disputes, Simplifying Settlement:
  • The time limit for reopening cases reduced to 3 years from 6 years
  • Serious tax evasion cases, with evidence of concealment of income of Rs. 50 lakh or more in a year, to be re-opened only up to 10 years, with approval of the Principal Chief Commissioner
  • Dispute Resolution Committee to be set up for taxpayers with taxable income up to Rs. 50 lakh and disputed income up to Rs. 10 lakh
  • National Faceless Income Tax Appellate Tribunal Centre to be established
  • Over 1 lakh taxpayers opted to settle tax disputes of over Rs. 85,000 crore through Vivad Se Vishwas Scheme until 30th January 2021

 

Relaxation to NRIs:

Rules to be notified for removing hardships faced by NRIs regarding their foreign retirement accounts

Incentivising Digital Economy:

Limit of turnover for tax audit increased to 10 crores from Rs. 5 crores for entities carrying out 95% transactions digitally

Relief for Dividend:

  • Dividend payment to REIT/ InvIT exempt from TDS
  • Advance tax liability on dividend income only after declaration/ payment of dividend
  • Deduction of tax on dividend income at lower treaty rate for Foreign Portfolio Investors
  • Attracting Foreign Investment for Infrastructure:
  • Infrastructure Debt Funds made eligible to raise funds by issuing Zero-Coupon Bonds
  • Relaxation of some conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment

Supporting ‘Housing for All’:

  • Additional deduction of interest, up to Rs. 1.5 lakh, for a loan taken to buy an affordable house extended for loans taken till March 2022
  • Tax holiday for Affordable Housing projects extended till March 2022
  • Tax exemption allowed for notified Affordable Rental Housing Projects

Tax incentives to IFSC in GIFT City:

  • Tax holiday for capital gains from incomes of aircraft leasing companies
  • Tax exemptions for aircraft lease rentals paid to foreign lessors
  • Tax incentive for relocating foreign funds in the IFSC
  • Tax exemption to investment division of foreign banks located in IFSC

Ease of Filing Taxes:

Details of capital gains from listed securities, dividend income, interest from banks, etc. to be pre-filled in returns

Relief to Small Trusts:

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

Labour Welfare:

  • Late deposit of employee's contribution by the employer not to be allowed as a deduction to the employer
  • Eligibility for tax holiday claim for start-ups extended by one more year
  • Capital gains exemption for investment in start-ups extended till 31st March, 2022

 

2. Indirect Taxes:

GST:

Measures taken till date:

  • Nil return through SMS
  • Quarterly return and monthly payment for small taxpayers
  • Electronic invoice system
  • Validated input tax statement
  • Pre-filled editable GST return
  • Staggering of returns filing
  • Enhancement of capacity of GSTN system
  • Use of deep analytics and AI to identify tax evaders

Custom Duty Rationalization:

Twin objectives: Promoting domestic manufacturing and helping India get onto global value chain and export better

  • 80 outdated exemptions already eliminated
  • Revised, distortion-free customs duty structure to be put in place from 1st October 2021 by reviewing more than 400 old exemptions
  • New customs duty exemptions to have validity up to the 31st March following two years from its issue date

 

Electronic and Mobile Phone Industry:

  • Some exemptions on parts of chargers and sub-parts of mobiles withdrawn 16
  • Duty on some parts of mobiles revised to 2.5% from ‘nil’ rate

 

Iron and Steel:

  • Customs duty reduced uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels
  • Duty on steel scrap exempted up to 31st March, 2022
  • Anti-Dumping Duty (ADD) and Counter-Veiling Duty (CVD) revoked on certain steel products
  • Duty on copper scrap reduced from 5% to 2.5%

 

Textiles:

Basic Customs Duty (BCD) on caprolactam, nylon chips and nylon fiber & yarn reduced to 5%

 

Chemicals:

  • Calibrated customs duty rates on chemicals to encourage domestic value addition and to remove inversions
  • Duty on Naptha reduced to 2.5%

 

Gold and Silver:

  • Custom duty on gold and silver to be rationalized

 

Renewable Energy:

  • Phased manufacturing plan for solar cells and solar panels to be notified
  • Duty on solar invertors raised from 5% to 20%, and on solar lanterns from 5% to 15% to encourage domestic production

 

Capital Equipment:

  • Tunnel boring machine to now attract a customs duty of 7.5%; and its parts a duty of 2.5%
  • Duty on certain auto parts increased to general rate of 15%

MSME Products:

  • Duty on steel screws and plastic builder wares increased to 15%
  • Prawn feed to attract customs duty of 15% from earlier rate of 5%
  • 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

Agriculture Products:

  • Customs duty on cotton increased from nil to 10% and on raw silk and silk yarn from 10% to 15%.
  • Withdrawal of end-use based concession on denatured ethyl alcohol
  • Agriculture Infrastructure and Development Cess (AIDC) on a small number of items

Rationalization of Procedures and Easing of Compliance:

  • Turant Customs initiative, a Faceless, Paperless, and Contactless Customs measures
  • New procedure for administration of Rules of Origin
  • Achievements and Milestones during the COVID-19 pandemic

Pradhan Mantri Garib Kalyan Yojana (PMGKY):

  • Valued at 2.76 lakh crore
  • Free food grain to 80 crore people
  • Free cooking gas for 8 crore families
  • Direct cash to over 40 crore farmers, women, elderly, the poor and the needy

AatmaNirbhar Bharat package (ANB 1.0):

  • Estimated at 23 lakh crore – more than 10% of GDP
  • PMGKY, three ANB packages (ANB 1.0, 2.0, and 3.0), and announcements made later were like 5 mini-budgets in themselves
  • 27.1 lakh crore worth of financial impact of all three ANB packages including RBI‟s measures – amounting to more than 13% of GDP

Structural reforms:

  • One Nation One Ration Card
  • Agriculture and Labour Reforms
  • Redefinition of MSMEs
  • Commercialisation of the Mineral Sector
  • Privatisation of Public Sector Undertakings
  • Production Linked Incentive Schemes

Status of India’s fight against COVID-19:

  • 2 Made-in-India vaccines – medically safeguarding citizens of India and those of 100-plus countries against COVID-19
  • 2 or more new vaccines expected soon
  • Lowest death rate per million and the lowest active cases
  • 2021 – Year of milestones for Indian history
  • 75th year of India’s independence
  • 60 years of Goa’s accession to India
  • 50 years of the 1971 India-Pakistan War
  • Year of the 8th Census of Independent India
  • India’s turn at the BRICS Presidency
  • Year for Chandrayaan-3 Mission
  • Haridwar MahaKumbh
  • Vision for AatmaNirbhar Bharat
  • AatmaNirbharta – not a new idea – ancient India was self-reliant and a business epicentre of the world
  • AtmaNirbhar Bharat – an expression of 130 crore Indians who have full confidence in their capabilities and skills

Strengthening the Sankalp of:

  • Nation First
  • Doubling Farmer’s Income
  • Strong Infrastructure
  • Healthy India
  • Good Governance
  • Opportunities for Youth
  • Education for All
  • Women Empowerment
  • Inclusive Development
  • 13 promises made in the Union Budget 2015-16, and resonating with the vision of AatmaNirbharta, to materialise during the AmrutMahotsav of 2022 – on the 75th year of our independence
ABOUT LEGAL SUVIDHA

Copyright © 2019 - All Right Reserved