The Union Budget 2021 - Analysed

For Home makers :

+ves

•  Customs duty on gold and silver reduced from 12.5% to 7.5%.
•  Margin money requirement for loans under Stand-Up India to women reduced from 25% to 15%. Activities allied to   agriculture brought under its ambit as well.
•  Consumers will get to choose their electricity supplier.

-ves

•  Agriculture Infrastructure and Development Cess levied on certain categories of lentils, peas, chick peas, kabuli    chana,  and vegetable oils will increase prices.
•  Imported products such as compressors for refrigerators and ACs, LED lamps, mobile phones, and power banks to   cost more.

How to beat the Budget :

• Domestic products should be preferred. 

For Young Salaried Professionals :

+ves

•  Relief for advance tax liability as dividend income will arise only after the declaration/ payment of dividend.
•  Proposal to introduce an investor charter across all financial products to protect investors.
•  Ease in filing of returns - details of capital gains, dividend income, interest from banks, post office, etc. will be prefilled.
•  Policy framework by the government and the Reserve Bank of India (RBI) for bank depositors to claim deposit   insurance cover, if their banks get into trouble.
•  Retraction of expense apportioning in case of delay will incentivise timely payment of employers’ contribution to the   provident fund corpus.
•  Deadline for additional interest deduction on affordable housing to be extended by a year to March 31, 2022.
•  Women to be allowed to work in all categories in night shifts, too.

-ves

•  Interest earned on annual provident fund contribution exceeding Rs 2.5 lakh will be taxable from April 2021.
•  For any ULIP issued on or after February 1, 2021, tax exemption will not be provided for maturity proceeds with   annual  premium above Rs 2.5 lakh.
•  Imported products such as compressors for refrigerators and air conditioners (Acs), alcoholic beverages, LED lamps,   solar lanterns, mobile phones, and power banks to cost more.
•  Double of the specified rate or 5% of the TDS/TCS will be levied in case of non-filing of return by deductee/collectee   having TDS/TCS of 50,000 or more for the past two years.

How to beat the Budget :

•  Cap contribution to Rs 2.5 lakh in ULIP and voluntary contribution to the provident fund.
•  Timely filing of IT returns to avoid higher TDS/TCS.
•  Domestic products should be preferred.

For Retired Individuals :

+ves

•  No IT filing required for senior citizens above 75 years of age and those with income only from pension and interest   income.
•  Ease in filing of IT returns - details of dividend, capital gain and interest income from banks, post office, etc. will be   prefilled.
•  Policy framework by the government and the RBI for bank depositors to claim the deposit insurance cover, if their   banks get into trouble.
•  Proposal to introduce an investor charter across all financial products to protect investors.
•  As per the National Education Policy, retired and senior teachers will be qualified to mentor school teachers and   educators through online/offline support on subjects, theme and pedagogy. 

-ves

•  Imported products such as compressors for refrigerators and ACs, alcoholic beverages, LED lamps, solar lanterns,   mobile phones, and power banks to cost more.
•  Double of the specified rate or 5% of the TDS/TCS will be levied in case of non-filing of returns by deductee/collectee   having TDS/TCS of 50,000 or more for the past two years.  

How to beat the Budget :

•  Timely filing of IT returns to avoid higher TDS/TCS.
•   Domestic products should be preferred.

For HNIs :

+ves

•  Tax audit turnover limit doubled from Rs 5 crore to Rs 10 crore for people who undertake 95% of their transactions   digitally.
•  Customs duty on gold and silver reduced from 12.5% to 7.5%.
•  Relief for advance tax liability as dividend income will arise only after the declaration/payment of dividends.
•  Exemption of tax deduction at source (TDS) on dividend payment to real estate investment trusts (REITs) and   infrastructure investment trusts (InvITs).
•  Removal of double taxation for non-resident Indians (NRIs) on income arising from foreign retirement benefit account.
•  Eligibility period of claiming capital gains exemption for investment made in start-ups extended by one year to March   31, 2022.
•  Investment opportunities in InvITs issued by the National Highways Authority of India and Power Grid Corporation of   India and tax-efficient zero coupon bonds through infrastructure debt funds.
•  Proposal to introduce an investor charter across all financial products to protect investors .
•  Ease in filing of returns - details of capital gains, dividend income, interest from banks, post office, etc. will be pre-filled.

-ves

•  Interest earned on annual provident fund contribution exceeding Rs 2.5 lakh from April 2021 will be taxable.
•  For any Unit Linked Insurance Plan (ULIP) issued on or after February 1, 2021, tax exemption will not be provided for   maturity proceeds with annual premium above Rs 2.5 lakh.
•  The responsibility of TDS of 0.1% on a purchase transaction exceeding Rs 50 lakh in a year will be on the person   whose turnover exceeds Rs 10 crore.
•  Double of the specified rate or 5% of the TDS/TCS will be levied in case of non-filing of returns by deductee/collectee   having TDS/TCS of Rs 50,000 or more for the past two years 

How to beat the Budget : 

•  Cap contribution to Rs 2.5 lakh in ULIP and voluntary contribution to the provident fund.
  
•  Evaluate investment opportunities in InvITs and tax-efficient zero coupon bonds.
•  Timely filing of income tax (IT) returns to avoid higher TDS/TCS (tax collected by seller) 

For SME owners

+ves

•  Allocation doubled to Rs 15,700 crore.
•  Mega Investment Textiles Parks (MITRA) will be launched to make the textile industry globally competitive.
•  Increased paid-up capital (from Rs 50 lakh to Rs 2 crore) and turnover (from Rs 2 crore to Rs 20 crore) threshold for   small companies to ease compliance requirements.
•  To promote ease of doing business with the government or CPSEs, a conciliatory mechanism is proposed to be set up.
•  Customs duty on semi, flat and long products of non-alloy, alloy, and stainless steel reduced to 7.5%.
•  Duty on steel scrap exempted for a period up to March 31, 2022; while duty on copper scrap has been reduced to   provide relief to metal re-cyclers.
•  Duty on steel screws and plastic builder wares, prawn feed, certain kind of leathers and finished synthetic gem stones   increased to promote the domestic industries.
•  The eligibility period to claim tax holiday for start-ups extended by a year to March 31, 2022, in order to incentivise     setting up of more start-ups. Additionally, the eligibility period of claiming capital gains exemption for investments in the   start-ups extended by a year to March 31, 2022 .
•  Proposal to remove restrictions on paid-up capital and turnover while incorporating One Person Company (OPC). The   residency limit for an Indian citizen to set up an OPC has been reduced from 182 days to 120 days. NRIs are also   allowed to incorporate OPC in India.
•  To ensure faster resolution of cases, special framework for MSMEs to be introduced.

-ves

• Anti-dumping and countervailing duties on certain steel.
• products has been revoked, which will increase their imports.
• Increase in basic customs duty for items such as cotton, raw, silk and silk yarn, certain chemicals, specified auto parts andelectronics items could increase the raw material cost.

How to beat the Budget :

• Utilise benefits offered under MITRA.

Detailed analysis of the Union Budget 2021 by Aditya Birla Sun Life AMC Limited, based on on the Union Budget speech by the Finance Minister on 1st Feb 2021.