Union Budget, also known as Annual Financial Statement would be presented on 1st February 2021 at 11 AM. With the big day nearing, industry representatives have started voicing their concerns and expectations from this year’s budget. Will these expectations be heeded? Well, only time will tell that. Until then, let’s look at what industries are expecting from Budget 2021.
Crux of the Matter
Present Day Need
Let’s start by taking a look at the present-day needs.
Expectations Of Individuals
- Raising the basic tax exemption limit.
- Reduction in the non-corporate income tax rate.
- Increase in ‘Standard Deduction‘ amount (at present stays at ₹50,000).
- Introduce separate limit for deduction of principal repayment of housing loan.
- To focus on employment for reviving the economy.
- To increase the affordability of housing by expanding the Income Tax reduction benefits to first-time buyers.
- Removing or easing taxes on notional rental income.
- Streamlining the insolvency process for Real Estates for quick adoption of resolution plans.
- To increase last-mile funding for the completion of mid-income housing projects, to spur its demand.
- Reducing GST rates on Insurance Premium (most products lie in 18% tax rate).
- Tax Exemption on Home Insurance.
- To increase the penetration of Insurance amongst Tier I and Tier II cities with higher tax fee slabs in Section 80C. (Currently exemption up to a limit of ₹1,50,000).
Read more about GST here.
Tourism & Hospitality
- The Federation of Association in Indian Tourism and Hospitality (FAITH) has proposed the creation of National Tourism Council of Chief Ministers headed by the Prime Minister along with Tourism Minister.
- To make export earnings tax free.
- Income Tax exemption on travelling within India or Income Tax credits for up to ₹1.5 lakh in order to boost domestic tourism.
- Luxury carmakers expect a reduction in GST rate (at present stands at 28% GST and additional Cess up to 22%).
- Measures to promote investment in Electric Vehicles and its ancillaries.
- The reintroduction of the 15% additional deduction for capital expenditure on plant and machinery under Income Tax Laws.
- Bring aviation turbine fuel under the GST regime.
- Restricting GST on the travel industry to 5%.
- Lowering Income Tax rates for travel companies.
- To increase the baggage allowance from ₹50,000 to ₹1 lakh, subjected to duty-free shops.
- To remove custom duty on newsprint imports, which at present stays at 5%.
- To increase the advertisement rates paid by the government by 50%.
- To reduce GST on home delivery food from 18% at present to 5%.
- This recommendation comes with an intention to bring parity on rates between dining in (which is at 5%) and food delivery (18%).
Read about the budget of 2020 here.
- The first Union budget of independent India was presented by R. K. Shanmukham Chetty on 26 November 1947. Morarji Desai has presented 10 budgets which is the highest count followed by P Chidambaram’s 9 and Pranab Mukherjee’s 8.
- Until the year 1999, the Union Budget was announced at 5:00 pm on the last working day of the month of February. All that budgets seemed to do was to raise taxes, a presentation in the evening gave producers and the tax collecting agencies the night to work out the change in prices. It was Mr Yashwant Sinha, the then Finance Minister of India who changed the ritual by announcing the 1999 Union Budget at 11 am.
- In 2016, departing from the colonial-era tradition of presenting the Union Budget on the last working day of February, Minister of Finance (India) Arun Jaitley announced that it will now be presented on 1 February. Additionally Rail Budget, presented separately for 92 years, merged with the union budget.