The Financial Year 2020-21 wasn’t a fruitful year for the Indian economy. Due to the lockdown measures the unemployment rate increased, many businesses got shutdown, which led to the downfall of the whole fiscal structure. Now, on February 1, 2021, the Finance Minister of India, Nirmala Sitharaman presented the Union Budget for the year 2021 and it has a slew of changes.
From April 1, 2021, the newly presented Union Budget came into action as it is the start of the New Financial year. There are a few important proposals that came into action from the start of the new financial year. The key announcements are in regards to the dividend payment to REIT/InvIT exempt from TDS, to privatisation of two public sector banks, and also new highway projects in pol-bound states.
Speaking of the newly implemented tax regimes, the Income Tax rules on TDS and new provident fund tax rules have also come into action in the new Financial Year 2021-22.
As of the Tax Deducted at Source (TDS) or Tax Collected at Source (TCS), in order to make more citizens file the Income Tax Returns (ITRs), the Finance Minister of India has announced a higher rate for TDS and TCS respectively. She has also proposed the insertion of two new sections- Section 206AB and 206CA while presenting the Union Budget 2021. It is for a special provision for deduction of higher TDS and TCS for those not filing the ITR.
The payment of Dividend to REIT/InvIT exempt from TDS, in a hope to attract more investment in real estate and infrastructure, Ms. Sitharaman has proposed the debt financing of InVITs and REITs by foreign portfolio investors (FPIs). Other than that, the government has also put forth the dividends payments to REITs and InVITs would be exempted from TDS.
While presenting the Budget for Financial Year 2021-22, Nirmala Sitharaman also spoke about disinvestment and strategic sales. The strategic disinvestment of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam Limited, among others would be completed in the year FY 2021-22. For the ongoing fiscal year, FM of India has also announced a disinvestment target of Rs 1.75 lakh crore.
The privatisation of two public sector banks and one general insurance company was also discussed while the presentation of Budget 2021. It also a part of the disinvestment plan to generate Rs 1.75 lakh core. Nirmala Sitharaman has also informed that in FY 2021-22, the government would also bring the IPO and LIC.
The proposal of new national highways for poll-bound states was also a part of the Budget 2021. According to the reports, Rs 1.03 crore for 3,500 km in Tamil Nadu, Rs 65,000 crore for 1,100 km in Kerala, Rs 25,000 crore for 675 km in West Bengal, and Rs 34,000 crore for 1,300 km in Assam have been discussed in Union Budget 2021.