Union Finance Minister Nirmala Sitharaman delivered her third Budget in Lok Sabha on Monday, February 1.
Making no changes in personal income tax slabs, but introducing a slew of hikes in customs duty to benefit Make in India, the Budget speech focussed on the Centre's Atmanirbhar Bharat vision.
Here are the latest updates:
Tax exemption on PF goes?
The Budget has introduced a provision to remove the tax exemption on income from investments in provident funds, relatable to investments exceeding Rs 2.5 lakh a year. "Instances have come to the notice where some employees are contributing huge amounts to these funds and entire interest accrued/received on such contributions is exempt. This exemption without any threshold benefits only those who can contribute a large amount to these funds as their share," the explanatory memorandum to the Finance Bill, 2021, states. - Vikas Dhoot
Govt slashes revenue expectation from telecom sector; pegs receipts at ₹53,986 crore
The government has lowered revenue estimates from the telecom sector while pegging expected receipts at ₹53,986 crore in the next financial year, according to the budget documents presented in Parliament on Monday.
The Finance Ministry in the Budget for 2020-21 had projected a revenue of ₹1.33 lakh crore from the telecom sector which was slashed steeply to ₹33,737 crore in the revised estimates presented in the Budget on February 1.
“Receipts under ‘Other Communication Services’ mainly relate to the license fees from telecom operators and receipts on account of spectrum usage charges. Department of Telecom collects recurring licence fees from various Telecom Service Providers licensed by it,” the document said.
The licence fee is levied at 8% of the adjusted gross revenue (AGR) — which is considered as income from sale of telecom services.
The lowering of revenue estimate comes at a time when the government has set the ball rolling for the spectrum auction in which radiowaves valued at ₹3.92 lakh crore will be put on the block.
Agriculture infrastructure cess to come up in certain items.
Agriculture Infrastructure and Development Cess (AIDC) has been proposed on petrol and diesel. It will Rs.2.5/litre on petrol and Rs.4/litre on diesel.
Consequent to imposition of AIDC, the Basic Excise Duty (BED) and Special Additional Excise Duty (SAED) on petrol and diesel is being reduced so that consumer does not have to bear any additional burden.
Honourable Speaker Sir, With these words, I commend the Budget to this August House, she says.
Nirmala Sitharaman introduces the Finance Bill.
Custom duty changes
Duty of copper scrap reduced to 2.5%.
We have calibrated customs duty rates on chemicals to encourage domestic value addition. We are now reducing duty on naphtha to 2.5%.
Custom duty on gold and silver to be rationalised.
We are raising duties on imported solar inverters from 5% to 20% and on solar lanterns from 5% to 15%.
All nylon products to have 5 % customs duty.
Tunnel boring machines will attract custom of 7%. Exemption on certain leather will be withdrawn.
To benefit farmers, we are raising customs duty on cotton from 0 to 10%.
We have seen record GST collections in the last two months. As chairperson of the GST council, I want to assure this House that we shall take every possible step to smoothen the GST structure further and remove anomalies like inverted duty structures.
A revised custom duty structure is on the annvil.
I now propose to review over 400 old exemptions this year. We will conduct this through extensive consultations and a revised customs duty structure free of distortions will be in place from October 1.
We have noticed that some employers deduct contributions from employees salaries towards provident fund, and other social security schemes, but do not remit them in time.
This means loss of interest and income for employees and trouble if the employer becomes unviable going forward.
To ensure that the contributions are remitted on time, I reiterate that late deposit of contributions will not be allowed as deductions to employers.
Now the Finance Minister presents Part B of the speech, which includes taxes and reforms.
Ms. Sitharaman quotes a Tamil couplet from Thirukkural on the quality of a good king. A good king is one who is able to acquire wealth, guard it and distribute it justly, the couplet says.
Relief for senior citizens - many of them, despite having foregone several basic necessities of their own, have strived to build our nation. We shall reduce compliance burden on those above 75 years. This means people above 75 years, who get pension and earn interest from deposits need not file IT returns.
Presently an assessment can be reopened for six years. This time limit has been reduced to three years. In serious tax evasion cases, when the concealment of income is more than Rs.50 lakh per year, it can be opened for up to 10 years.
Affordable housing projects will get a tax holiday for one more year.
Compliance burden of small trusts whose annual receipts does not exceed ₹5 crore will be eased.
Fiscal deficit pegged at 9.5% of GDP
In these last few paragraphs of Part A of my speech, I draw the attention of this august House to the fact that at the beginning of this financial year, the pandemic resulted in weak revenue inflow, says Ms. Sitharaman.
Unlike many other countries, we opted for a series of medium size packages during the pandemic so that we could calibrate our response as per the situation.
Once the health situation stabilised, we switched to providing a demand push.
Fiscal deficit has been pegged at 9.5% of the GDP. We have funded this through government borrowings, multilateral funds and short term borrowings. We need another ₹80,000 crore for which we will approach the market in the next two months.
For 2021-22, we are estimating at a fiscal deficit of 6.8% of GDP. The gross borrowing from the market next year is expected to be ₹12 lakh core.
We hope to achieve consolidation of debt by increasing buoyancy of tax revenues and increased receipts from asset monetisation.
We propose to allow States to raise borrowings up to 4% of GSDP in 2021-22, based on recommendations of the Fifteenth Finance Commission, a portion of which will have to be earmarked for incremental capital expenditure.
FRBM Act will be amended to allow deviation as the Act mandates a fiscal deficit of 3% of GDP by March 31, 2021.
Based on the 15th Finance Commission's recommendations, the government has decided to retain the States' vertical share of the divisible pool of revenues at 41%. The funds for the union territories of Jammu and Kashmir and Ladakh will be provided by the Centre.
Also, based on the Commission's recommendations, we have allocated a revenue deficit grant of ₹1,18,452 crore for 17 States, compared to ₹74,340 crore paid to 14 States in 2020-21.
Minimum government and maximum governance
We have been taking a number of steps to bring reforms in tribunals, which I will further rationalise this year.
To have ease of doing business for those who deal with govt or central PSEs, I propose a system for swift resolution of contractual disputes.
The forthcoming census will be the first digital census ever. For it, I have allocated ₹3,758 crore in this year.
I propose to grant ₹300 crore to the Govt of Goa to celebrate 50 years of liberation.
₹1000 crore for welfare of tea workers, especially women and children, in Assam and West Bengal.
Sensex in green
Investors have welcomed the Union Budget with cheers as the benchmark stock indices rallied close to 2% by noon.
The market rally has helped increase the overall market capitalization of stocks by about 0.75% this morning.
The biggest gainers have been banks and non-bank financial companies, which have been boosted by the Finance Minister's announcement that the Centre will set up the equivalent of a 'bad bank' to help revive the banking sector from the bad loan crisis.
100 Sainik Schools will be set up. 750 Eklavya schools will be set up in tribal areas.
A Central University will come up in Ladakh.
More than 15,000 schools will be strengthened under NEP 2020.
An 'umbrella' structure will be created for central higher education institutions in various cities such as Hyderabad.
Migrant workers and labourers
We have launched the One Nation, One Ration card to help migrant workers. I am happy to inform you that ON,OR plan is under implementation by 32 states and union territories reaching about 59 crore beneficiaries.
I propose to launch a portal to maintain information on gig workers and construction workers, this will help provide benefits to migrant workers.
Social security will be extended to gig and platform workers. This will be ensured through the four new labour codes.
Women workers will be allowed in night shift with adequate protection.
To further facilitate credit flows for Standup India scheme for SCs, STs and women, I propose to reduce the margin capital required for loans from 25% to 15%.
We have taken a number of steps to help the MSME sector in this Budget with an allocation of ₹15,700 crore, more than double that of last year.
Agriculture and rural development
Our government is committed to the welfare of farmers, Ms. Sitharaman says amid thumping from Treasury and sloganeering by Opposition.
She says the MSP has been increased to 1.5 times. She reads out more data on farm procurement.
In case of wheat, the total amount paid to farmers in 2013-14 was ₹33,874 crore. In 2019 -20, It was ₹62,804 crore. In 2020-21, this amount paid to farmers was ₹75,050 crore. The number of wheat growing farmers benefited, increased to 43.36 lakh compared to 35.57 lakh in 2019-20.
For paddy, the amount paid in 2013-14 was ₹53,928 crore. In 2019-20, this increased to ₹1.41 lakh crore. Even better, in 2020-21, this is further estimated to increase to ₹1,72,752 crore.
Agriculture infrastructure fund will be available for APMCs for augmenting their infrastructure, she says. One of the main argument against the new farm laws is the that these laws will put an end to APMCs.
1,000 more Mandis to be integrated into the E-NAM market place.
Five major fishing hubs will be developed as hubs for economic activity including Chennai, Kochi and Paradip.
To promote seaweed farming, I propose a multipurpose sea weed park to be established in Tamil Nadu.
On the recommendations of the Fifteenth Finance Commission, we have undertaken a detailed exercise to rationalise centrally sponsored schemes.
Disinvestment and strategic sale
Two PSU bank and one general insurance firm will be disinvested this year. An IPO of LIC will be debuted this year.
Idle assets will not contribute to Atmanirbhar Bharat. Monetising of land will be taken up, she says. A SPV will be launched to carry out this activity.
A revised mechanism will be introduced for timely closure of loss making PSUs, she says.
"Inspite of COVID-19, we kept working towards strategic sale of BPCL, IDBI Bank, Air India, which will be completed in 2021-22," she says.
Niti Aayog has been asked to come up with the list of companies that may be disinvested next.... I have estimated receipts of Rs 1.75 lakh crore as receipts from disinvestment in 2021-22, she adds.
I propose to consolidate the provisions of the Sebi Act, Depositories Act, and two other laws, into a Unified Securities Market Code, says Nirmala Sitharaman.
Towards investor protection, I propose to introduce an investor charter as a right for all investors in all financial products.
I propose to amend the insurance act to increase the FDI limit from 49% to 74%.
The high level of provisioning by public sector banks calls for measures to clean up their books. An asset reconstruction company will be set up to take over stressed loans. Asset reconstruction and Asset management companies will be set up for value realisation.
Deposit insurance: The government has approved an increase in the cover from ₹1 lakh to ₹5 lakh for bank depositors. I shall be moving amendments to streamline the provision so that depositors can get easy and time bound access to their savings to the extent of the deposit insurance. This will help depositors in banks that are currently under stress.
Decriminalisation of offences under the Companies Act is now complete. I now propose to complete the decriminalisation of the Limited Liability Partnership Act of 2008.
A gas pipeline project will be taken up in the Union Territory of Jammu and Kashmir.
City Gas Distribution (CGD) programme will be extended to 100 districts in next three years.
The Ujjwala (LPG) scheme which has benefited 8 crore households thus far will be extended to cover 1 crore more beneficiaries.
Shipping and ports
Major ports will be moving from providing operational services on their own, to a system where the private players will manage it for them, says the Finance Minister
Around 90 ship recycling yards at Alang in Gujarat are compliant with latest international norms. Recycling capacity will be doubled by 2024, this will generate an additional 1.5 lakh jobs for our youth.
In a bid to end monopoly of power distribution, the government will create a framework to allow consumers of electricity alternatives to choose from more than one distribution company.
A comprehensive National Hydrogen Mission is being launched for generating hydrogen from green power sources.
Metro services in 27 cities
MetroLite and MetroNeo will be introduced in Tier 2 cities and peripheral areas of Tier 1 cities. These are low cost Metro projects.
Kochi Metro, Chennai Metro Phase 2, Bengaluru Metro Phase 2A and B, Nashik and Nagpur Metros get additional allocations.
"We will work towards raising the share of public transport in urban areas through expansion of metro networks and augmentation of city bus services," Ms. Sitharaman says.
The scheme will facilitate deployment of innovative PPP models to enable private players to provide and operate over 20,000 buses.
A total of 702 km of conventional metro is operational and another 1,016 of metro and RRTS is under construction in 27 cities.
National Rail Plan
National Rail Plan has been created to bring a future ready Railway system by 2030.
The Somnagar-Gomu section of Eastern Dedicated Corridor will be taken up this year. The dedicated Eastern and Western Freight corridors will be ready by 2022, she says.
100% electrification will be completed by 2023. Vistadome coaches in all tourist corridors.
New voluntary scrappage policy
Union Finance Minister announces new voluntary scrappage policy to phase out old vehicles. The details would be unveiled later. The scrappage policy has been long awaited by the automotive industry. Tamil Nadu being a big market for both commercial vehicle and personal vehicles is likely to benefit. - Sanjay Vijayakumar
A national monetising pipeline will be launched and a dashboard will be created to overlook the progress, announces Ms. Sitharaman.
"Monetising operating public infrastructure assets is a very important financing option for new infrastructure construction. A national monetisation pipeline will be launched, with a dashboard to track the progress and provide visibility to investors," she says.
The next lot of airports will be monetised for operation and management.
3900 km of National Highway work will come up in Tamil Nadu. 1,100 km of National Highway works in Kerala, including 600 km in Mumbai-Kanyakumari corridor. 600 km corridor in West Bengal. ₹34,000 crore covering over 1,000 km will be taken up in Assam, she says. It may be noted these four States will be witnessing Assembly elections later this year.
I am also providing an enhanced outlay of ₹1,18,101 crore for ports and highways, she says.
Physical and Financial Capital and Infrastructure
For a five trillion dollar economy, our manufacturing sector has to grow in double digits for a sustained period, says Finance Minister Nirmala Sitharaman.
To achieve the same, a PLI scheme has been announced for 13 sectors. For this government has committed ₹1.97 lakh crore over the next 5 years.
Recalling earlier performance linked schemes announced for the manufacturing sector, she says in addition to that seven textile parks will be added in the next three years.
The National Infrastructure Pipeline (NIP) was launched with 6,835 projects, which has now expanded to 7,400 projects.
The NIP will require a major increase in funding from both the govt and the financial sector. I will take concrete steps to do this - creating institutional structure, monetising assets, and raising the share of infrastructure expenditure in Central and State Budgets.
"I will introduce a bill to set up a Development Finance Institution, and have provided ₹20,000 crore for this. We should have a lending portfolio of ₹5 lakh crore in three years' time," she says.
Health and wellbeing
A new centrally sponsored scheme called PM Atma Nirbhar Swasthya Bharat Yojana at the outlay of ₹64,180 crore over six years to develop primary, secondary and tertiary healthcare systems.
This will be in addition to the National Health mission and will support 17,000 rural and 11,000 urban health care centres.
The government envisages establishing critical health care hospital blocks in 602 districts.
We will launch Mission Poshan 2.0 to improve nutritional outcomes across 112 aspirational districts.
An urban Jal Jeevan Mission to be launched and implemented over five years with an outlay of ₹2.87 lakh crore.
The Urban Swachh Bharat Mission will be implemented over five years.
To tackle the burgeoning air pollution problem, I am allocating ₹2,217 crore for 32 urban centres, says the Finance Minister
₹35,000 crore has been allocated for COVID-19 vaccines and intend to provide further funds if required.
For Atmanirbhar Bharat
Finance Minister Nirmala Sitharaman now reads the Part A of the Budget. She says the Part A of the Budget will lay the vision for Atmanirbhar or Self reliant nation.
"Atmanirbhar is not a new word for India. Ancient India was largely self-reliant and equally, was the epicentre of the world."
She says the vision outlines on 13 points, the first one being health and well being. We will strengthen three areas: preventive, curative and wellbeing.
Ms. Sitharaman quotes Rabindranath Tagore: “ Faith is the bird that feels the light when the dawn is still dark.”
She also compares the economic recovery with that of India's series win in Australia. "Team India's spectacular success in Australia reminds us of the inherent strengths of the people of India."
Ms. Sitharaman says India has witnesses contractions only thrice. This time it was due to the global pandemic.
Lok Sabha assembles. Lok Sabha Speaker Om Birla is in the Chair. He calls Finance Minister Nirmala Sitharaman to present the Budget.
"I present the Budget for the year 2021-22," she begins her speech. Opposition members raise slogans.
She recalls the extraordinary circumstances at which the Budget is being presented amid pandemic. She also recalls the pandemic-induced lockdown, PM's Garib Kalyan Yojana, and the essential services continuing despite lockdown. She expresses her gratitude to the frontline workers during her speech.
She also recalls the three atmanirbhar packages and RBI packages, which amounted to 13% of GDP, close to Rs. 20 lakh crores. These were like five mini-Budgets by itself, she says.
Rahul Gandhi's Budget wish list
Ahead of Budget, Congress leader Rahul Gandhi took to Twitter seeking support to MSMEs and farmers.
Here is Mr. Gandhi's wish list for the Budget:
Budget2021 must: -Support MSMEs, farmers and workers to generate employment. -Increase Healthcare expenditure to save lives. -Increase Defence expenditure to safeguard borders.
Meanwhile, Congress MPs Jasbir Singh Gill and Gurjeet Singh Aujla were spotted wearing a black gown to the Parliament, as a mark of their protest and in solidarity with the protesting farmers.
Union Cabinet meet is underway at Parliament House ahead of the Budget.
Chaired by Prime Minister Narendra Modi, the Cabinet approved the Budget.
Markets in green
Ahead of the Budget, The BSE benchmark Sensex surged over 443 points and the NSE Nifty advanced 115 points in opening trade on Monday.
The 30-share Sensex was trading higher by 443.06 points or 0.96 per cent at 46,728.83; and the broader Nifty was up 114.85 points or 0.84 per cent at 13,749.45.
On the Sensex chart, IndusInd Bank, ICICI Bank, HDFC, ONGC, Titan and HDFC Bank were prominent gainers.
Of the Sensex constituents, 16 shares were trading in the green.
FM meets President
Union Finance Minister Nirmala Sitharaman has called on President Ram Nath Kovind at Rashtrapati Bhavan, before the presentation of Union Budget 2021-22 in the Parliament today.
GST Revenue collection for January 2021 almost touches ₹1.20 lakh crore
The gross GST revenue collected in the month of January 2021till 6PM on 31.01.2021 is ₹ 1,19,847 crore of which CGST is ₹ 21,923 crore, SGST is ₹ 29,014 crore, IGST is ₹ 60,288 crore (including ₹ 27,424 crore collected on import of goods) and Cess is ₹ 8,622 crore (including ₹ 883crore collected on import of goods). The total number of GSTR-3B Returns filed for the month of December up to 31January 2021 is 90 lakhs, according to Press Information Bureau.
Budget in accordance with people's expectations: Anurag Thakur
Budget will be in accordance with people's expectations, MoS Finance Anurag Thakur told ANI .
"Govt which functions on mantra of 'Sabka Saath, Sabka Vikas, Sabka Vishwas' gave new direction to India by announcing Aatmanirbhar package, protecting it from pandemic & bringing economy back on track swiftly," he said.
For the first time, Finance Minister Nirmala Sitharaman will present a paperless Budget. The soft copies of the Budget documents will be distributed electronically to the parliamentarians.
The Finance Ministry has also released an app for the public to download these documents.
Ms. Sitharaman had in her first budget in 2019 replaced the leather briefcase that had been for decades used for carrying budget documents with a traditional red cloth 'bahi-khata'. This year she opted for a tab.
Govt. may tweak customs duty on a host of goods in Budget
The government may tweak customs duty in the Budget next week on several goods, including furniture raw materials, copper scrap, certain chemicals, telecom equipment and rubber products, to promote domestic manufacturing and exports, sources said.
The sources said that while import duty could be tweaked on more than 20 products such as cut and polished diamonds, rubber goods, leather garments, telecom equipment and carpet, customs duty could be removed on select raw materials like wood in rough, swan wood and hard board used for furniture manufacturing and copper concentrate. “Expensive raw materials impact India’s price competitiveness in the international market. The country’s exports of furniture is very low [about 1%], while countries like China and Vietnam are major players in the sector,” they added.
Budget may set higher agri credit target at ₹19 lakh crore
With the aim of doubling farmers’ income by 2022, the government is likely to raise farm credit target to about ₹19 lakh crore in Budget 2021-22 to be presented on February 1, according to sources. For the current fiscal, the government has set a farm credit target of ₹15 lakh crore.
The government has been raising credit target for the farm sector every year and this time too, the target is likely to be increased to around ₹19 lakh crore for 2021-22, sources said.
“Non-banking finance companies (NBFCs) and co-operatives are active in the agriculture credit space. The Nabard refinance scheme will be further expanded. Agriculture credit target for the year 2020-21 has been set up at Rs ₹lakh crore,” Finance Minister Nirmala Sitharaman had said while presenting Budget 2020-21.
Govt may announce formulation of policy for toys sector
The government may in the Budget next week announce formulation of a dedicated policy for the toys sector to boost domestic manufacturing, sources said.
They said the policy will help in creating a strong ecosystem for the industry in the country and also attract startups.
The Commerce And Industry Ministry is already taking steps to promote domestic manufacturing of toys. It has came out with a quality control order for the sector and had also increased import duty last year on toys.