Jilian Consultants Co., Ltd.
Jilian Consultants Co., Ltd.

Key Takeaways From Budget 2021: Turnaround For Pandemic-hit Economy

Business Advisory Companies

Our Honourable FM Nirmala Sitaraman has put across the Budget 2021 on 1st February, 2021 with a main focus on 6 key areas –

  • Health and Wellbeing,

  • Infrastructure, inclusive growth,

  • Human Capital,

  • Research & Development (R&D); and

  • Minimum government and maximum governance

Spotlight on mains of Budget 2021:

  • Government has eased the norms in setting up One-person Companies (OPCs), now NRIs can directly incorporate companies in India via this route.

  • Government has allowed an increase in FDI limit in insurance sector from 49% to 74% and also allowing foreign ownership with some restrictions.

Definition of Small Companies under Companies Act, 2013 has been changed,

  • Threshold of paid up capital has been increased from not exceeding Rs. 50 Lakh to not exceeding Rs. 2 Crores;

  • Threshold of turnover has been increased from not exceeding Rs. 2 Crores to not exceeding Rs. 20 Crores.

New Agri Infra cess introduced and to be applicable from 2ndFebruary, 2021; Rs. 2.5 a litre on petrol and Rs. 4 a litre on diesel.

Impact on Tax related matters:

  • No tax filing for senior citizens above the age of 75 with only pension and interest income.

  • Tax Audit limit increased from Rs. 5 crores to Rs. 10 crores.

  • Tax exemptions for resettling of funds to IFSC.

  • Affordable Housing projects can take an advantage of Tax holiday up to one more year i.e. till 31stMarch, 2022.

  • Under faceless mechanism, one dispute resolution committee will be formed for taking care of small tax disputes.

  • Tax holiday for startups has been extended by one more year i.e. up to 31st March 2022.

  • Reduction in timeline of Income Tax proceeding from 6 years to 3 years.

  • Tabled the proposal for relaxing some of the double taxation norms for NRIs.

  • No deduction of PF for employer if not deposited by employer.

  • In case of dividend, now the liability of advance tax will only arise after declaration plus proposed easement in paying advance tax on dividend Income.

  • GST structure will be reviewed further to minimize hardships

  • No Double Taxation for NRI on their income arise from their foreign retirements benefit accounts

  1. Budget allocated an amount of Rs. 15,700 Crores for MSMEs in FY 2022

  2. Two Public sector banks will be divested by Government.

  3. LIC will be coming up with IPO this year.

  4. Railways – Rs. 1.10 lakh Crores sets aside for railways out of which, Rs. 1.7 lakh will be used for cape purpose.

  5. Government will setup a separate administrative structure cooperatives to ease the ways of doing business.

  6. Allocation for Rural Infrastructure Development Fund to be enhanced from Rs 30,000 crore to Rs 40,000 crore.

  7. Eligibility of minimum loan size under SARFAESI Act 2002 for debt recovery for NBFCs with minimum asset size of Rs 100 crore will be reduced from Rs 50 lakh to Rs 20 lakh.

  8. Deposit Insurance Cover for bank customers to be increased from Rs 1 lakh to Rs 5 lakh.

  • Customs duty

– increased to 15% on selective auto parts.

-rationalised on gold and silver

-reduced to 7.5% on steel products

-reduced to 2.5% from 5% on copper scrap

– reduced to 2.5% on naptha

  • Government plans to spend Rs. 64,180 Crores healthcare sector over next 6 years.

  • Government will be tabling the revised customs duty structure this year after reviewing   around 400 old customs duty exemptions.

  • Gross market borrowing for FY22 has been set at Rs 12 lakh crore.

  • Government will be allocating a budget of around Rs. 3,700 Crores for coming Census as same will be the first digital census in India.

  • Govt proposes 5 major fisheries hubs; to develop harbours and fish planting centre.

  • Divestment of BPCL, CONCOR, SCI in FY22;

  • Government to set up Asset Reconstruction Company Limited to look after existing stressed debts.

  • Government to introduce an Investor Charter.

  • Centralising all securities market laws under one Securities Market Code.

  • Govt sees FY22 fiscal deficit at 6.8%.

  • Government has planned a budget of Rs 5.54 lakh Crore for capital expenditure for FY22in comparison of Rs 4.39 lakh Crore in FY21.

  • Rs 1.18 lakh crore allocated to the road ministry, of which Rs 1.08 lakh crore is for capital investment.

  • Government will provide Rs 2 lakh crore to states for capital expenditure.

  • Seven mega textile parks to be launched over next 3 years.

  • Budget on health in Budget 2021-22 at Rs 2.24 lakh crore, up by 137%

  • Government has strategise to allocate Rs 35,000 crore for Covid-19 vaccine

Budget Insights:

“Relaxations in norms of One Person Companies (OPCs) will act a catalyst for start-ups, especially for NRIs.

  • Earlier only Indian resident was allowed to incorporate OPC, such restriction has been lifted in Budget 2021, Now, NRIs can directly incorporate OPC in India with no paid capital and turn over restrictions.

Our team of experts are pretty much convinced with such new addition which will be beneficial for NRIs entrepreneurs looking for start-up in India and for that matter domestic investors will be in a position to start their company without much restrictions”

“Redefining Small Companies under Companies Act will come out as an easy walk for small businesses when it comes to complying with compliances under this act and also allow them to have a strong competitive position in market    

We have a separate team of professional for Incorporation and Registration of Companies in India as well as consulting team which shall advise you on setting up of Small Companies along with end to end execution.

“Budget 2021 propose to liberalize the Foreign Direct Investment (FDI) in Indian Insurance Companies to 74% from existing 49%  

Now, Insurance Companies will have more certainty while raising capital which will not only benefit the Insurance Companies but Health sector of India as a whole.

JILIAN has been providing FDI consulting services to its wide range of clients and our experts are well prepared beforehand to execute such enhancements for our existing clients as well as new clients as and when budget 2021 gets effective”

“Certain amendments in tax related matters has been proposed like easy payment of advance tax on dividend income, DTAA benefits to Non Residents etc which will benefit individuals taxpayers and corporate especially start-ups, our Tax practitioners are up to date with such amendments and are ready with actions to take”