In today's budget, Finance Minister Nirmala Sitharaman is expected to unleash a slew of measures to bring the Indian economy back on track amidst the constant pandemic threat and continuing global risks. Healthcare and infrastructure are likely to receive the highest priority in her big spending plan.
The Economic Survey tabled yesterday painted a cautious yet encouraging picture, raising expectations that today's budget would bring in targeted measures for an expedited recovery.
Industry lobby groups and India Inc are pinning hopes on the government's capex push to create jobs and also seeking tax breaks for industries such as tourism, automobiles and manufacturing, which are severely hit by the pandemic.
Some of Sitharaman's budget announcements are likely to be influenced by the upcoming assembly elections in five states, including in India's most-populous state Uttar Pradesh. The other states going for polls alongside UP are Punjab, Uttarakhand, Goa and Manipur. Next year, seven more states will go to polls and that could mean some populist measures or giveaways in the budget.
Though various indicators suggest that the third wave of Covid has already peaked in India, it will have some bearing on the government's spending plan and also on economic growth and tax receipts.
In the personal income tax domain, there is clamour this year from some quarters for tax sops for those working from home. Some call for a new deduction for home office expenses. Another demand entails an increase in the the standard deduction limit for those working from home.
Last year, the Finance Minister had left direct tax rates unchanged. In what was hailed as a 'get-well' budget aimed at dealingn with Covid, emphasis had been laid on the healthcare and infra sectors. Below are some of the highlights from last year.
On direct taxes, there were some steps to ease compliance for taxpayers, such as:
Infra push
Fiscal glide path
The Economic Survey tabled yesterday painted a cautious yet encouraging picture, raising expectations that today's budget would bring in targeted measures for an expedited recovery.
Industry lobby groups and India Inc are pinning hopes on the government's capex push to create jobs and also seeking tax breaks for industries such as tourism, automobiles and manufacturing, which are severely hit by the pandemic.
Some of Sitharaman's budget announcements are likely to be influenced by the upcoming assembly elections in five states, including in India's most-populous state Uttar Pradesh. The other states going for polls alongside UP are Punjab, Uttarakhand, Goa and Manipur. Next year, seven more states will go to polls and that could mean some populist measures or giveaways in the budget.
Though various indicators suggest that the third wave of Covid has already peaked in India, it will have some bearing on the government's spending plan and also on economic growth and tax receipts.
In the personal income tax domain, there is clamour this year from some quarters for tax sops for those working from home. Some call for a new deduction for home office expenses. Another demand entails an increase in the the standard deduction limit for those working from home.
Last year, the Finance Minister had left direct tax rates unchanged. In what was hailed as a 'get-well' budget aimed at dealingn with Covid, emphasis had been laid on the healthcare and infra sectors. Below are some of the highlights from last year.
On direct taxes, there were some steps to ease compliance for taxpayers, such as:
- 75+ pensioners need not file ITR
- Plan for a dispute resolution committee for small taxpayers
- Anyone with taxable income of up to Rs 50 lakh, disputed income of up to Rs 10 lakh eligible to approach the committee
- Advance tax liability on dividend income to arise only after payment of dividend
- Pre-filled tax forms with details like salary income, tax payment and TDS
- Re-opening of past assessments reduced from 6 years to 3 years
- In a boost to NRIs, rules to eliminate double tax for NRIs on foreign retirement fund to be notified
- Interest earned by the PF contributions above Rs 2.5 lakh a year to be taxed at normal rates (to only apply to the employee’s contribution and not that of the employer. It was a blow to high-income salaried people who use the Voluntary Provident Fund to earn tax-free interest.)
- Extensions for tax holidays
- Eligibility of erstwhile tax sop on home loan extended up to FY22
- Onen more year tax holiday for affordable housing projects
- Extension of tax holiday for start-ups by one more year
- Tax exemption for relocating funds to IFSC
- A Rs 2.5 per litre agri infra cess has been imposed on petrol, Rs 4 on diesel
- 100% cess imposed on alcohol.
- Planned allocation around Rs 2,23,846 crore, a 137% jump from the previous budget
- Rs 35,000 cr for COVID vaccination spend in FY22
- 2 PSU banks + one general insurance company + LIC IPO + Air India + BPCL + SPV for PSU land sale
- The aim was to get Rs 1.75 lakh crore through divestments in 2021-22
Infra push
- 34.5% higher capital budget
- 13,000 km length of roads at a cost of Rs 3.3 lakh crore awarded under Bharatmala
- More economic corridors to come up in the future
Fiscal glide path
- Fiscal deficit pegged at 9.5% of GDP, with FY22 fiscal deficit target at 6.8% of GDP
- Deficit to reduce from 9.5% in FY21 to 4.5% by FY26
- Govt to borrow Rs 80,000 crore in the remaining two months to meet FY21 expenditure
- Projected to borrow about Rs 12 lakh crore in FY22.
- FY22 capital expenditure provided is up 34.5% (vs FY21 BE) at Rs 5.54 lakh crore
- Rs 44,000 crore under capital expenditure will be given to Department of Economic Affairs in FY22
- FY21 capital expenditure is seen at Rs 4.39 lakh crore
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