Union Budget 2021: Expectations Of Common Man
To come out of the Covid 19 led economic downturn, FM Sitharaman has already raised hopes saying Union Budget 2021 shall be one in a century budget. While reforms and tax rate and slab changes are unlikely, some direct, indirect tax measures can be taken in respect of the stock markets. And the focus will be boost employment and spur manufacturing activity through schemes such as PLI. Also, spending for the social sector, health services, education and MNREGA will be at the forefront.
The budget also holds importance from the sovereign rating perspective and a corona cess will be introduced to meet the Covid 19 vaccine related expenditure. Amid fiscal deficit scenario and in a path to correct it, limited resources are available for boosting spending by a large percent. And so now, different expense heads shall be reshuffled such that needy sectors get the maximum allocation,while fiscal discipline is adhered to.
There could be indeed aggressive divestment plans as some of the last fiscal's divestment moves have been shifted to next year amid Covid 19 outbreak. Fiscal support could be extended to some of the Covid 19 hit sectors such as hospitality.
Other general expectations however that remain from Union Budget 2021 include indexation while calculating LTCG on equity shares/equity MFs and/or allowing set off of STT against the tax liability thereon, raising mediclaim insurance premium limit, reducing LTCG period to 1 year for debt mutual funds, exempt dividend income in the hand of recipient to the extent of Rs.2-3 lakh p.a., allowing deduction for investment in Infra/Covid bonds, removing tax arbitrage between mutual funds and insurance in terms of switching, STT and capital gains, clarifying tax aspects on F&O trades, raising Rs. 50,000 limit for senior citizens interest income to Rs.1 lakh under Sec 80TTB.
And if the budget is reform oriented in terms of government spending, divestment, revenue raising and even capital-market friendly, the current upmove shall continue.
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