analysis of union budget 2021-22bangaloreicai.org/assets/uploads/newsletters/eafe60a7-c... · 2021....

SIRC of ICAI 03/02/2021

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Analysis of

Union Budget 2021-22

Moderators

CA. T.V. Mohandas Pai

and

CA. H. Padamchand Khincha

SIRC of ICAI

Contributors:

Krishnan S, Mayank M, Ravi S, Sivaram R, Sravani N

28th Awareness Programme


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Panelists Mr. Arvind Datar

Senior Advocate, Supreme Court

Mr. Saurabh Mukherjea, FRSA

Founder & Chief Investment Officer,

Marcellus Investment Managers

Dr. Narendar Pani

Economist, Professor & Dean

School of Social Sciences,

National Institute of Advanced Studies, Bangalore

Prof. R. Vaidyanathan

Cho Ramaswamy Visiting Chair Professor for Public Policy

Sastra University, Thanjavur

SIRC of ICAI


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India at a glance

Population 1.388 bn Jan 2021

Population Growth Rate 1.06% Jan 2021

Life Expectancy: Male 68.71 yrs Dec 2020

Life Expectancy: Female 71.49 yrs Dec 2020

Literacy 74.4% 2018

GDP (at current prices) US$ 2,645 bn (1st AE-ES) 2021

Real & Nominal GDP growth -7.7% & -4.2% 2021

GDP (in PPP) 3rd Largest Economy US $9,654 bn 2020

Per capita Income US $1,880 (1st AE-ES) 2021

Exports (goods and services) US $ 473 bn (1st AE-ES) 2021

Imports (goods and services) US $ 469 bn (1st AE-ES) 2021

Foreign Exchange Reserves US $ 586.1 bn (ES) Jan 2021

Government External Borrowings US $ 100 bn (RBI) Jun 2020

External Debt (Govt & Non-Govt) US $ 564 bn (ES) Sept 2020

Interest to Gross Revenue 20.08% 2021 RE (Budget)

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India at a glance


Estimates


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India – Key Economic Indicators 2021 vs. 1991 ….. 30 years’ snapshot post liberalisation

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2021 1991 CAGR

Population (Bn) 1.388 0.89 1.5%

Life expectancy (Years) 70.03 58.8 0.6%

Literacy rate 74% 52% 1.2%

GDP Growth Rate -4.2% 5.3%

GDP (at current prices) – Rs. cr 194.8 lakhs 5.32 lakhs 12.8%

GDP (at current prices) - US$ Bn 2,609 275 7.8%

Per capita income - US$ 1,880 310 6.2%

Exports (G+S) - US$ Bn 473 18 11.5%

Imports (G+S) - US$ Bn 469 24 10.4%

Share in world trade (exports + imports) 3% 1%

Foreign Currency Reserves - US $ Bn 586 5.8 16.6%

Exchange Rate (US $) 74.67 17.9 4.9%

Savings Rate (Mar 2020) 31.4% 22.9%

Investment Rate (Sep 2020) 28.3% 22.5%


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India’s GDP Growth % - Last 11 Years

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Real GDP & Nominal GDP expected to grow approximately @ 11% & 15% respectively in 2021-22 (ES)


8.5

5.2 5.5 6.4

7.4 8.0 8.2 7.2 6.8

4.2

-7.7 -9.0

-6.0

-3.0

0.0

3.0

6.0

9.0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021


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India – GDP Projection

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India needs to grow at 16% CAGR to build a USD 10T economy by 2030

China’s GDP grew at an average of 11.5% p.a. from 1979 to 2020


TRILL

IONS

We are where China was in 2004


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The World is Changing …

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Regions GDP 2018 $ Trilliion

GDP 2025 $ Trilliion

GDP 2030 $ Trilliion

CAGR 2018-2030

US 20.5 24.0 26.9 2.3% EU16 17.9 19.7 21.1 1.4% Japan 4.5 4.7 4.8 0.5% Others 9.6 9.9 9.9 0.3% Total OECD 52.5 58.3 62.8 1.5%

China 13.3 20.1 26.9 6.0% India 2.6 4.7 7.2 8.8% Others 17.3 25.3 33.0 5.5% Total: RoW 33.3 50.0 67.0 6.0%

Total Global 86.6 108.3 129.8 3.5%


Source: OECD, analyst estimates


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India & China – at a glance ……………..China has grown faster

Estimates as of India China

Population 2021 (E) 1.388 bn 1.443 bn

Population Growth Rate 2021 (E) 1.06% 0.22%

Life Expectancy: Male 2021 (E) 68.71 yrs 74.23 yrs

Life Expectancy: Female 2021 (E) 71.49 yrs 78.62 yrs

Literacy 2018 (E) 74.4% 96.8%

GDP (current) 2021 (E) US$ 2,645 bn US $ 14,359 bn

GDP growth (Real) 2021 (E) -7.7% 2.30%

GDP (in PPP) 2021 (E) US $ 9,654 bn US $ 26,731 bn

Per capita Income (current) 2021 (E) US $ 1,880 US $ 9,954

Exports (Goods & Services) 2021 (E) US $ 473 bn US $ 2,590 bn

Imports (Goods & Services) 2021 (E) US $ 469 bn US $ 2,060 bn

Foreign Currency Reserves Jan 2021 (E) US $ 586 bn US $3,217 bn

External Debt Sep 2020 (E) US $ 564 bn US $ 2,132 bn

Debt / GDP ratio 2021 (E) 85% 273%

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Digitization has transformed the

world…

Source: We Are Social

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…and India has benefited tremendously

Source: We Are Social

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Video 1

Prominent themes FM Speech – Para 27 This budget is woven around six prominent themes:

The Budget proposals for 2021-2022 rest on 6 pillars.

i. Health and Wellbeing

ii. Physical & Financial Capital, and Infrastructure

iii. Inclusive Development for Aspirational India

iv. Reinvigorating Human Capital

v. Innovation and R&D

vi. Minimum Government and Maximum Governance

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• Do these themes define the priority that India should have, considering that India is coming out of a stressful Covid world?

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Prominent themes

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Video 2

• Health Systems FM Speech – Para 30 A new centrally sponsored scheme, PM AtmaNirbhar Swasth Bharat Yojana, will be launched with an outlay of about ` 64,180 crores over 6 years. This will develop capacities of primary, secondary, and tertiary care Health Systems, strengthen existing national institutions, and create new institutions, to cater to detection and cure of new and

emerging diseases. This will be in addition to the National Health Mission.

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• The main interventions under PM AtmaNirbhar Swasth Bharat Yojana are:

a. Support for 17,788 rural and 11,024 urban Health and Wellness Centers

b. Setting up integrated public health labs in all districts and 3,382 block public health units in 11 states;

c. Establishing critical care hospital blocks in 602 districts and 12 central institutions;

d. Strengthening of the National Centre for Disease Control (NCDC);

e. To operationalise 17 new Public Health Units and strengthen 33 existing Public Health Units at Points of Entry → at 32 Airports, 11 Seaports and 7 land crossings;

g. To set up 15 Health Emergency Operation Centers and 2 mobile hospitals; and

h. To set up a national institution for One Health, a Regional Research Platform for WHO South East Asia Region, 9 Bio-Safety Level III laboratories and 4 regional National Institutes for Virology.

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Health Systems

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• The Budget outlay for Health and Wellbeing increased by 137% for BE 2021-22

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Health Systems

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• Provided Rs. 35,000 crs for Covid-19 vaccine. Committed to provide more funds if required.

• To launch Jal Jeevan Mission (Urban) which will enable universal water supply in all 4,378 Urban Local Bodies with 2.86 cr household tap connections and liquid waste management in 500 AMRUT cities. It will be implemented over 5 years, with an outlay of Rs. 2.87 lakh crs.

• To implement Urban Swachh Bharat Mission 2.0, with a total financial allocation of Rs. 1.42 lakh crs over a period of 5 years from 2021-2026.

• To tackle the burgeoning problem of air pollution, Rs. 2,217 crores to be provided for 42 urban centres with a million-plus population in this budget

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Health Systems

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• Is the budget outlay a real transformation to meet India’s health needs?

• Will these measures have a real impact in improving India’s health needs?

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Health Systems

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Video 3

• Physical and Financial Capital and Infrastructure

FM Speech – Para 40

AtmaNirbhar Bharat – Production Linked Incentive scheme (PLI) • For a USD 5 trillion economy, our manufacturing sector has to grow in double digits on a

sustained basis. Our manufacturing companies need to become an integral part of global supply chains, possess core competence and cutting-edge technology. To achieve all of the above, PLI schemes to create manufacturing global champions for an AtmaNirbhar Bharat have been announced for 13 sectors. For this, the government has committed nearly `1.97 lakh crores, over 5 years starting FY 2021-22. This initiative will help bring scale and size in key sectors, create and nurture global champions and provide jobs to our youth.

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• Textiles

To enable the textile industry to become globally competitive, attract large investments and boost employment generation, a scheme of Mega Investment Textiles Parks (MITRA) will be launched in addition to the PLI scheme. 7 Textile Parks to be established over 3 years.

• National Infrastructure Pipeline (NIP)

The NIP, launched in December 2019 with 6,835 projects now expanded to 7,400 projects. Around 217 projects worth Rs. 1.10 lakh crs under some key infrastructure ministries have been completed.

• Infrastructure financing

To set up a professionally managed Development Financial Institution (DFI) with a capital of Rs. 20,000 crs. Mandate to have a lending portfolio of at least Rs. 5 lakh crs in 3 years time.

To augment funds for infrastructure and real estate sectors, debt financing of Infrastructure Investment Trusts (InVITs) and Real Estate Infrastructure Trusts (REITs) by Foreign Portfolio Investors will be enabled.

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Physical & Financial Capital, and Infrastructure

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Asset Monetisation

• To monetize operating public infrastructure assets in order to attract finance for new infrastructure construction. A “National Monetization Pipeline” of potential brownfield infrastructure assets to be launched.

• National Highways Authority of India and Power Grid Corporation (PGCIL) have each have sponsored one InvIT to attract international and domestic institutional investors.

Five operational roads with an estimated enterprise value of Rs. 5,000 crs to be transferred to the NHAI InvIT.

Transmission assets of a value of Rs. 7,000 crs to be transferred to the PGCIL InvIT.

• Railways to monetise Dedicated Freight Corridor assets for operations and maintenance, after commissioning.

• Next lot of Airports to be monetised for operations and management concession.

• Other core infrastructure assets to be covered under the Asset Monetization Programme → Oil and Gas Pipelines of GAIL, IOCL and HPCL; AAI Airports in Tier II and III cities; Other Railway Infrastructure Assets; Warehousing Assets of CPSEs such as Central Warehousing Corporation and NAFED and Sports Stadiums.

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• In 2014, India had the aspiration of ‘Make in India’ which was not effective

• Will this PLI scheme help achieve this target?

• Massive investment in infra, will it satisfy India needs?

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Video 4

• Sharp Increase in Capital Budget FM Speech – Para 48 In the BE 2020-21, we had provided `4.12 lakh crores for Capital Expenditure. It was our effort that in spite of resource crunch we should spend more on capital and we are likely to end the year at around `4.39 lakh crores which I have provided in the RE 2020-21. For 2021-22, I propose a sharp increase in capital expenditure and thus have provided `5.54 lakh crores which is 34.5% more than the BE of 2020-21. Of this, I have kept a sum of more than `44,000 crores in the Budget head of the Department of Economic Affairs to be provided for projects/programmes/departments that show good progress on Capital Expenditure and are in need of further funds. Over and above this expenditure, we would also be providing more than `2 lakh crores to States and Autonomous Bodies for their Capital Expenditure.

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Roads and Highways Infrastructure

• To provide an enhanced outlay of Rs. 1.18 lakh crs for Ministry of Road Transport and Highways, of which Rs. 1.08 lakh crs is for capital, the highest ever.

• More than 13,000 km length of roads, at a cost of Rs. 3.3 lakh crs, has already been awarded under the Bharatmala Pariyojana project of which 3,800 kms have been constructed. By March 2022, to award another 8,500 kms and complete an additional 11,000 kms of national highway corridors.

• To further augment road infrastructure, more economic corridors being planned.

Railway Infrastructure

• Outlay of Rs. 1.10 lakh crs for Railways, of which Rs. 1.07 lakh crs for capital expn

• 100% electrification of Broad-Gauge routes to be completed by December 2023.

• To further strengthen safety measures, high density network and highly utilized network routes of Indian railways to be provided with an indigenously developed automatic train protection system that eliminates train collision due to human error.

• Western Dedicated Freight Corridor (DFC) and Eastern DFC to be commissioned by June 2022.

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Urban Infrastructure

• To raise the share of public transport in urban areas through expansion of metro rail network and augmentation of city bus service.

• New scheme to be launched at a cost of Rs. 18,000 crs to support augmentation of public bus transport services. The scheme will facilitate deployment of innovative PPP models to enable private sector players to finance, acquire, operate and maintain over 20,000 buses.

• Central counterpart funding will be provided to:

a. Kochi Metro Railway Phase-II of 11.5 km at a cost of Rs. 1957.05 crs.

b. Chennai Metro Railway Phase-II of 118.9 km at a cost of Rs. 63,246 crs.

c. Bengaluru Metro Railway Project Phase 2A and 2B of 58.19 km at a cost of Rs. 14,788 crs.

d. Nagpur Metro Rail Project Phase-II and Nashik Metro at a cost of Rs. 5,976 crs and Rs. 2,092 crores respectively.

• Two new technologies i.e., ‘MetroLite’ and ‘MetroNeo’ will be deployed to provide metro rail systems at much lesser cost with same experience, convenience and safety in Tier-2 cities and peripheral areas of Tier-1 cities.

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Power Infrastructure

• A revamped reforms-based result-linked power distribution sector scheme to be launched with an outlay of Rs. 3.06 lakh crores over 5 years. The scheme will provide assistance to DISCOMS for creating infrastructure including pre-paid smart metering and feeder separation, etc., tied to financial improvements.

• Proposal to launch a Hydrogen Energy Mission in 2021-22 for generating hydrogen from green power sources.

• A framework to be put in place to give consumers, alternatives to choose from among more than one Power Distribution Company.

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Financial Capital

• To consolidate the provisions of SEBI Act, 1992; Depositories Act, 1996; Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalized single Securities Markets Code.

• Govt to support the development of a world class Fin-Tech hub at the GIFT-IFSC.

• To instil confidence amongst the participants in the Corporate Bond Market during times of stress and to generally enhance secondary market liquidity, it is proposed to create a permanent institutional framework. The proposed body would purchase investment grade debt securities both in stressed and normal times and help in the development of the Bond market.

• SEBI to be the regulator of gold exchanges in the country.

• To introduce an investor charter as a right of all financial investors across all financial products towards investor protection

• To give a further boost to the non-conventional energy sector, proposal to provide additional capital infusion of Rs.1,000 crs to Solar Energy Corporation of India and Rs. 1,500 crs to Indian Renewable Energy Development Agency.

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Increasing FDI in Insurance Sector

• To increase the permissible FDI limit from 49% to 74% in insurance companies and allow foreign ownership and control with safeguards.

• Under the new structure, majority of Directors on the Board and key management persons would be resident Indians, with at least 50% of Directors being Independent Directors. Specified percentage of profits to be retained as general reserve.

Stressed Asset Resolution by setting up a New Structure

• The high level of provisioning by public sector banks of their stressed assets calls for measures to clean up the bank books.

• An Asset Reconstruction Company Limited and Asset Management Company to be set up to consolidate and take over the existing stressed debt of PSBs for better management and disposal of the assets to Alternate Investment Funds and other potential investors for eventual value realization.

Recapitalization of PSBs

• To further consolidate the financial capacity of PSBs, recapitalization of Rs. 20,000 crs is proposed in 2021-22.

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Deposit Insurance

• DICGC Act to be amended to provide for increased Deposit Insurance cover of Rs. 5 lakhs to bank clients. If a bank is temporarily unable to fulfil its obligations, the depositors of such a bank can get easy and time-bound access to their deposits

Company Matters

• Definition of Small Companies to be revised under the Companies Act, 2013 by increasing their thresholds for paid up capital from “not exceeding Rs. 50 Lakh” to “not exceeding Rs. 2 cr” and turnover from “not exceeding Rs. 2 cr” to “not exceeding Rs. 20 cr”. Expected to benefit more than 2 lakh companies in easing their compliance requirements.

• NCLT framework to be strengthened, e-Courts system shall be implemented and alternate methods of debt resolution and special framework for MSMEs

• To incentivize the incorporation of One Person Companies (OPCs) by allowing OPCs to grow without any restrictions on paid-up capital and turnover, allowing their conversion into any other type of company at any time, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and also allow Non Resident Indians (NRIs) to incorporate OPCs in India.

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• Development of Corporate bonds market is being discussed for the last 15 years – why has it failed – what needs to be done ?


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Video 5

• Disinvestment and Strategic Sale • FM Speech – Para 84 & 85 In spite of COVID-19, we have kept working towards strategic disinvestment. A number of transactions namely 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 2021-22. Other than IDBI Bank, we propose to take up the privatization of two Public Sector Banks and one General Insurance company in the year 2021-22. This would require legislative amendments and I propose to introduce the amendments in this Session itself.

In 2021-22 we would also bring the IPO of LIC for which I am bringing the requisite amendments in this Session itself.

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Disinvestment and Strategic Sale

• Policy of strategic disinvestment of public sector enterprises approved. It provides a clear roadmap for disinvestment in all non-strategic and strategic sectors. Govt hase kept four areas that are strategic where bare minimum CPSEs will be maintained and rest privatized. In the remaining sectors all CPSEs will be privatized.

• Strategic disinvestment of companies namely BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited among others to be completed in 2021-22.

• Receipts from disinvestment is estimated to be Rs. 1,75,000 crs in BE 2021-22

• Other than IDBI Bank, two PSBs and one General Insurance company to be privatised in 2021-22.

• Propose to bring the IPO of LIC In 2021-22

• Propose to use a Special purpose vehicle to monetize non-core assets such as surplus lands with Govt ministries/Departments and PSE’s

• To provide an incentive package of central funds to States for disinvestment of their PSE’s

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INDIA

Strong Industrial & Infrastructural Base

− Exports stood at USD 314.31 billion in 2019-20

− Ranked 44th in Logistics Performance Index (LPI) 2018

− Air passenger traffic is growing at 16.5%, to become 3rd largest by 2024

− Produces 95 minerals - 4 fuel-related, 10 metallic, 23 non-metallic, 3

atomic, and 55 others

729.1 (3rd largest)

206.5 (4th largest )

341 (7th largest )

5.9 (2nd largest)

1.7 (by 2021)

1260 (3rd largest)

63.3 (2nd largest)

Production

(Mn MT)

Production

(Mn tonnes)

Passenger

Traffic (Mn)

Network

(‘000

Kms)

Network

(Mn Kms)

Cargo

Traffic

(Bn MT)

Production

(Bn Units)

Production

(Bn Sq. Mt.)

Coal Iron Ore Aviation Railway Roadway Ports Electricity Textile

68.2 (4th largest)


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Strong Industrial & Infrastructure Base

INDIA

JAPAN

USA

99.6 (2nd largest)

83.2

87

545 (2nd largest)

60

166.5

21 (Largest )

-

-

3.4 (5th largest )

9.7

11.3

1 (6th largest)

-

-

191 (4th largest )

-

1,600

1,252 (3rd largest)

1,029

4,127

1,155 (2nd largest )

185

342.5

Production in

Mn tonnes

Capacity

in Mn

tonnes

Production

in Mn Units

Production

in Mn Units

Bn Sq. ft. Revenue

in Bn$ Bn Units Subscribers

in Mn

Steel Cement Two

Wheeler

Four

Wheeler Construction ITeS

Electricity

Production

Wireless

Phone


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Infrastructure Investment … India is spending much below its need and China, way above

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• Is the budgetary allocation adequate to meet India’s infrastructure requirements?

• How do we access long-term low-cost capital to fund infrastructure?

• Does the private sector have the capacity to invest in infra?

• Do we have adequate resources to spend Rs. 100 lakh cr?

• Will we achieve the disinvestment target

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Infrastructure

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Video 6

• Agriculture FM Speech – Para 102 to 104 • To provide adequate credit to our farmers, I have enhanced the agricultural credit

target to `16.5 lakh crores in FY22. We will focus on ensuring increased credit flows to animal husbandry, dairy, and fisheries.

• 103. We are enhancing the allocation to the Rural Infrastructure Development Fund from `30,000 crores to `40,000 crores.

• 104. The Micro Irrigation Fund, with a corpus of `5,000 crores has been created under NABARD, I propose to double it by augmenting it by another `5,000 crores.

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Strong Agricultural Base

INDIA 295.7 (2nd largest )

208 (Largest)

35.7 (Largest)

30.5 (2nd

largest)

3.65 (Largest)

179.8 (Largest)

536 (Largest)

Productio

n (Mn

tonnes)

Production

(Mn tonnes)

Production

(Mn bales)

Production

(Mn tonnes)

Production

(Mn tonnes)

Exports

(in USD

Bn)

(Mn

hectares)

Population

(Mn)

Food Grains Milk Cotton Horticulture Sugar Spices Cropland Livestock

320.5 (2nd largest)

− Major producer of agrochemicals, tea, cashew, jute, oilseeds, etc.

− Largest exporter of cereal products, cotton, bovine meat, sugar, etc.

− All 15 major climates in the world; 46 of the 60 soil types in the world

− Largest manufacturers of farm equipment

− Proximity to food importing nations


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Agriculture, Irrigation and Rural development

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Amount paid to Farmers 2020-21 2019-20 2013-14

Wheat 75,060 62,802 33,874

Paddy 172,752 (E) 1,41,930 63,928

Pulses 10,530 8,285 236

No. of Farmers Benefitted 2020-21 2019-20

Wheat 43.36 Lakhs 35.57 Lakhs

Paddy 1.54 crores 1.24 crores

Rs. Crore


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MSP Purchases of Agricultural Commodities

• To provide adequate credit to farmers, agricultural credit target enhanced to Rs.

16.5 lakh crores in FY22. To focus on ensuring increased credit flows to animal husbandry, dairy, and fisheries.

• Enhancing allocation to the Rural Infrastructure Development Fund from Rs. 30,000 crs to Rs. 40,000 crs.

• Corpus of Micro Irrigation Fund of Rs. 5,000 crs to be doubled by another Rs. 5,000 crs.

• 1,000 more mandis will be integrated with e-NAM

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Inclusive Development for Aspirational India

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2013-14 2019-20 2020-21

Wheat 33,874 62,802 75,060

Paddy 63,928 1,41,930 172,752

Pulses 236 8,285 10,530

Cotton 90 28,500 25,974


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Financial Inclusion

• To reduce margin money requirement from 25% to 15% in order to further facilitate credit flow under Stand Up India scheme for SCs, STs, and women.

• Provided Rs. 5,700 crs to MSME sector, more than double of this year’s BE

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Inclusive Development for Aspirational India

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• To boost value addition in agriculture and allied products and their exports, the scope of ‘Operation Green Scheme’ that is presently applicable to tomatoes, onions, and potatoes, will be enlarged to include 22 perishable products

• Around 1.68 crores farmers are registered and Rs 1.14 lakh crores of trade value has been carried out through e-NAMs. Keeping in view the transparency and competitiveness that e-NAM has brought into the agricultural market, 1,000 more mandis will be integrated with e-NAM

• The Agriculture Infrastructure Fund would be made available to APMCs for augmenting their infrastructure facilities

• Proposal of substantial investments in the development of modern fishing harbours and fish landing centres. To start with, 5 major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat – will be developed as hubs of economic activity. We will also develop inland fishing harbours and fish-landing centres along the banks of rivers and waterways

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• Seaweed farming is an emerging sector with potential to transform the lives of coastal communities. It will provide large scale employment and additional incomes. To promote seaweed cultivation, I propose a Multipurpose Seaweed Park to be established in Tamil Nadu

• We have launched the One Nation One Ration Card scheme through which beneficiaries can claim their rations anywhere in the country. Migrant workers in particular benefit from this scheme – those staying away from their families can partially claim their ration where they are stationed, while their family, in their native places, can claim the rest. I am happy to inform you that One Nation One Ration Card plan is under implementation by 32 states and UTs, reaching about 69 crores beneficiaries – that’s a total of 86% beneficiaries covered. The remaining 4 states and UTs will be integrated in the next few months

• To further extend our efforts towards the unorganised labour force migrant workers particularly, I propose to launch a portal that will collect relevant information on gig, building, and construction-workers among others. This will help formulate Health, Housing, Skill, Insurance, Credit, and food schemes for migrant workers

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• We will conclude a process that began 20 years ago, with the implementation of the 4 labour codes. For the first time globally, social security benefits will extend to gig and platform workers. Minimum wages will apply to all categories of workers, and they will all be covered by the Employees State Insurance Corporation. Women will be allowed to work in all categories and also in the night-shifts with adequate protection. At the same time, compliance burden on employers will be reduced with single registration and licensing, and online returns

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• Will the budget take the path forward?

• Will the situation in the rural sector improve? Are any other

measures required to improve the rural sector?

• Can agriculture support 43% of India’s population?

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Video 7

• Higher Education FM Speech – Para 118 to 120 • In Budget 2019-20, I had mentioned about the setting-up of Higher Education

Commission of India. We would be introducing Legislation this year to implement the same. It will be an umbrella body having 4 separate vehicles for standard-setting, accreditation, regulation, and funding.

• 119. Many of our cities have various research institutions, universities, and colleges supported by the Government of India. Hyderabad for example, has about 40 such major institutions. In 9 such cities, we will create formal umbrella structures so that these institutions can have better synergy, while also retaining their internal autonomy. A Glue Grant will be set aside for this purpose.

• 120. For accessible higher education in Ladakh, I propose to set up a Central University in Leh.

45 SIRC of ICAI 03/02/2021


46

• More than 15,000 schools will be qualitatively strengthened to include all components of the National Education Policy. They shall emerge as exemplar schools in their regions, handholding and mentoring other schools to achieve the ideals of the Policy.

• 100 new Sainik Schools will be set up in partnership with NGOs/ private schools/states

• In 2016, we had launched the National Apprenticeship Promotion Scheme. The Government proposes to amend the Apprenticeship Act with a view to further enhancing apprenticeship opportunities for our youth. We will realign the existing scheme of National Apprenticeship Training Scheme (NATS) for providing post-education apprenticeship, training of graduates and diploma holders in Engineering. Over `3,000 crores will be provided for this

SIRC of ICAI

Education and Skills

46 SIRC of ICAI 03/02/2021


47

PhD and

Postgraduates

- Agriculture innovation will be an essential factor in India's reorganization of sectoral workforces

- Medical sciences, as we re-engineer our healthcare delivery

- Low number in I.T. and Computers is troubling

© TV Mohandas Pai | © Nisha Holla

47

Source: AISHE

Field Ph.D. Postgraduate

Enrolled Graduated Enrolled Graduated

Agriculture 6,056 4,692 27,805 11,445

Commerce 5,351 1,560 4,50,333 1,56,407

Education 6,200 2,221 2,09,336 93,264

Engineering/Tech 41,869 7,160 1,82,187 74,076

IT and Computers 2,865 499 1,97,049 71,157

Medical Sciences 7,473 1,606 1,59,250 48,246

Science 44,702 10,023 5,87,592 2,30,833

Total 1,69,170 40,813 39,75,286 15,00,064



48

Base is Steadily

Growing

- Enrolment growing at 3.6% CAGR

- GER from 20.8 in 2011-12 to 26.3 in 2018-19

- 90.9 lakh graduates in 2018-19

SIRC of ICAI

48

Source: AISHE

Growth Parameter 2011-12 2018-19 7-yr CAGR

No. of Institutions 46,651 51,649 1.5%

No. of Universities 642 993 6.4%

Enrolment 2,91,84,331 3,73,99,388 3.6%

Gross Enrolment Ratio (GER)

20.8 26.3 -

Faculty/Teaching Staff 12,47,453 14,16,299 1.8%

No. of Graduates 73,61,050 90,91,898 3.1%

18-23 year population 14,03,17,069 14,20,78,501 0.2%


03/02/2021


49

India Must Invest in

Domain

Competency

- BA is most popular; but stagnating

- BSc, B.Com., MBBS enrolment is growing well

- BTech + BE reduction is worrisome

- B.Ed. growing very fast - may lead to over-capacity

SIRC of ICAI

49

Source:

AISHE

Graduates Total B.A.

(+ Hons) B.Sc.

(+ Hons) B.Com.

B.Tech. + B.E.

B.Ed. M.B.B.S Others

2018-19 90,91,898 23,28,093 11,65,095 9,65,856 8,18,979 5,08,332 51,283 32,54,260

Enrolment

2014-15 3,42,11,637 1,10,07,937 44,87,854 37,20,115 41,67,320 7,00,785 1,66,878 99,60,748

2018-19 3,73,99,388 1,09,89,083 52,63,262 40,30,325 37,69,959 12,23,858 2,67,197 1,18,55,704

5-yr CAGR 1.80% -0.03% 3.24% 1.61% -1.98% 11.80% 9.87% 3.54%


03/02/2021


50

Social Groups

Faring Well

- Affirmative action has yielded results

- Gen Merit enrolment

© TV Mohandas Pai | © Nisha Holla

50

Source: AISHE, Census, *

NSSO

Community Enrolment (lakh) Population % HE Enrolment

6-yr CAGR 2018-19 2018-19 (%) Census 2011

SC 55.67 14.9% 16.6% 6.3%

ST 20.68 5.5% 8.6% 7.8%

OBC 135.92 36.3% 40.9%* 6.3%

Muslims 19.59 5.2% 14.2% 7.7%

Other Minorities 8.68 2.3% 6.0% 7.5%

General Merit 133.45 35.7% 13.6% -0.5%

All 373.99 100.0% 100.0% 3.7%



51

• Are we adequately investing in higher education to meet our

future needs?

• Will India reap demographic benefit?

SIRC of ICAI


51 SIRC of ICAI 03/02/2021


52

Video 8

• Innovation and R&D FM Speech – Para 126 & 127 • In my Budget Speech of July 2019, I had announced the National Research Foundation.

We have now worked out the modalities and the NRF outlay will be of `50,000 crores, over 5 years. It will ensure that the overall research ecosystem of the country is strengthened with focus on identified national-priority thrust areas.

• 127. There has been a manifold increase in digital payments in the recent past. To give a further boost to digital transactions, I earmark `1,500 crores for a proposed scheme that will provide financial incentive to promote digital modes of payment.

52 SIRC of ICAI 03/02/2021


53

• We will undertake a new initiative – National Language Translation Mission (NTLM). This will enable the wealth of governance-and-policy related knowledge on the Internet being made available in major Indian languages

• We have introduced the National Commission for Allied Healthcare Professionals Bill in Parliament, with a view to ensure transparent and efficient regulation of the 56 allied healthcare professions. Additionally, to bring about transparency, efficiency and governance reforms in the nursing profession, The National Nursing and Midwifery Commission Bill will be introduced by the government for passing

SIRC of ICAI

Innovation and R&D

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54

• A Deep Ocean Mission with a budget outlay of more than Rs. 4,000 crs, over 5 years is being launched to cover deep ocean survey exploration and projects for the conservation of deep sea bio-diversity.

• As part of the Gaganyaan mission activities, four Indian astronauts are being trained on Generic Space Flight aspects, in Russia. The first unmanned launch is slated for December 2021.

• The New Space India Limited (NSIL), a PSU under the Department of Space will execute the PSLV-CS51 launch, carrying the Amazonia Satellite from Brazil, along with a few smaller Indian satellites.

SIRC of ICAI

Innovation and R&D

54 SIRC of ICAI 03/02/2021


55

India Vs China Contribution To Research

55 SIRC of ICAI 03/02/2021

India China

Govt Contribution to R&D personnel FTE* 36% 12%

Business Contribution to R&D personnel FTE 30% 78%

Govt Contribution to Total Research FTE 23% 20%

Business Contribution to Total Research FTE 34% 61%

* FTE: Full Time Equivalent


56

56 SIRC of ICAI 03/02/2021

Ranking of India & China 2020 2013

India China India China

Global Innovation Index 48 14 66 35

Innovation outputs performance 45 6 42 25

Innovation inputs performance 57 26 87 46

Knowledge & Technology outputs performance 27 7 37 2

Creative outputs performance 64 12 65 96

Institution's performance 61 62 102 113

Human Capital & Research Performance 60 21 105 36

Infrastructure Performance 75 36 89 44

Market Sophistication Performance 31 19 49 35

Business Sophistication Performance 55 15 94 33

India & China Global Innovation Index


57

Startups at a glance

Startups have raised

USD 50Bn since 2014

across 3700+ deals

250+ Accelerators &

Incubators

500+ Institutional

Investors

2000+ Active Investors

495 Acquisitions

50% of all active

startups are

concentrated in

Bengaluru,

Mumbai and

Delhi-NCR

Bengaluru saw 43.3% of the total deal value in

2018

Delhi

Mumbai

BLR

15%

15%

20%

% deals per city

Source: Yourstory, Inc42

Startups raised USD 11Bn (excl. Walmart’s investment in Flipkart) across

936 deals in 2018,

against USD 13.7Bn across 820 deals that was invested in 2017

Hyderabad

9%

Chennai

6%


58

58 SIRC of ICAI 03/02/2021

Patent Applications

China India

89%

11%

Resident

Non-Resident

36%

64%

Resident

Non-Resident

Trademark Applications

95%

5%

Resident

Non-Resident92%

8%

Resident

Non-Resident

In 2019


59

59 SIRC of ICAI 03/02/2021

Patent Applications filed by Residents and Non-Residents, 2019

Trademark Applications filed by Residents and Non-Residents, 2019


60

• Why is the private sector in India not investing enough in R&D and innovation as compared to other countries ?

SIRC of ICAI

Innovation and R&D

60 SIRC of ICAI 03/02/2021


61

Video 9 • Fiscal Deficit FM Speech – Para 141 • The fiscal deficit in RE 2020-21 is pegged at 9.5% of GDP. We have funded this through

Government borrowings, multilateral borrowings, Small Saving Funds and short term borrowings. We would need another ` 80,000 crores for which we would be approaching the markets in these 2 months. To ensure that the economy is given the required push, our BE estimates for expenditure in 2021-2022, are `34.83 lakh crores. This includes ` 5.54 lakh crores as capital expenditure, an increase of 34.5% over the BE figure of 2020-2021. The fiscal deficit in BE 2021-2022 is estimated to be 6.8% of GDP. The gross borrowing from the market for the next year would be around `12 lakh crores. We plan to continue with our path of fiscal consolidation and intend to reach a fiscal deficit level below 4.5% of GDP by 2025-2026 with a fairly steady decline over the period. We hope to achieve the consolidation by first, increasing the buoyancy of tax revenue through improved compliance, and secondly, by increased receipts from monetisation of assets, including Public Sector Enterprises and land. The Contingency Fund of India is being proposed to be augmented from `500 crores to `30,000 crores

through Finance Bill.

61 SIRC of ICAI 03/02/2021


62

Trends in Fiscal Deficit

62

(Rs. cr)


502,858 510,725 532,791 535,618 591,064 649,418

933,651

1,848,655

1,506,812

-

300,000

600,000

900,000

1,200,000

1,500,000

1,800,000

2,100,000

2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21(RE)

2021-22(BE)


63

Trends in Revenue and Fiscal Deficit

63

(% of GDP)


0.0

2.0

4.0

6.0

8.0

10.0

3.3 3.3

2.5 2.3 2.9

2.4 3.3

7.5

5.1

4.5 4.1 3.9 3.5 3.5

3.4 4.6

9.5

6.8 RevenueDeficit

Fiscal Deficit


64

Trends in Inflation (CPI)

64 SIRC of ICAI 03/02/2021

*Apr 20-Dec20 (Source: ES)

0

2

4

6

8

10

12

8.4

10.2 9.5

5.9

4.9 4.5 3.6

3.4

4.8

6.6


65

65 SIRC of ICAI 03/02/2021

India’s debt to GDP vs major economies


66

• To bring about transparency, efficiency and governance reforms in the nursing profession, the National Nursing and Midwifery Commission Bill will be introduced.

• To enable ease of doing business for those who deal with Government or CPSEs, and to carry out contracts, a Conciliation Mechanism is proposed to be set up and its use for quick resolution of contractual disputes is mandated. This will instil confidence in private investors and contractors.

• Proposal to provide Rs. 1,000 crs for the welfare of Tea workers, especially women and their children in Assam and West Bengal. A special scheme to be devised for the same.

Fiscal Position

• As a result of the pandemic, RE expenditure for 2020-21 are Rs. 34.50 lakh crs against BE expenditure of Rs. 30.42 lakh crs. The capital expenditure, estimated in RE is Rs. 4.39 lakh crs in 2020-21 as against Rs. 4.12 lakh crs in BE 2020-21.

• Provided, on 15th Finance Commission’s recommendation, Rs. 1.18 lakh crs as Revenue Deficit Grant to 17 states in 2021-2022, as against Rs.74,340 crs to 14 States in 2020-2021.

SIRC of ICAI Minimum Government, Maximum Governance

66 SIRC of ICAI 03/02/2021


67

Is the Budget Credible?

67 SIRC of ICAI 03/02/2021

Rs cr 2017-18 2018-19 2019-20 2020-21 2021-22

BE Actual BE Actuals BE Actuals BE RE BE

Receipts 22,00,336 21,37,882 23,99,147 23,16,433 27,35,290 26,81,360 30,95,233 34,67,663 34,11,853

Gross Tax Revenues

19,11,579 19,15,494 22,71,241 20,80,465 24,61,195 20,10,059 24,23,020 19,00,280 22,17,059

Non Tax Revenue

2,88,757 1,92,744 2,45,089 2,35,704 3,13,179 3,27,157 3,85,017 2,10,653 2,43,028

Expenditure

21,46,735 21,41,973 24,42,213 23,15,113 27,86,349 26,86,330 30,42,230 34,50,305 34,83,236

Subsidies 2,40,339 1,91,210 2,64,336 1,96,769 3,01,694 228,341 227,794 595,355 335,361

Nominal GDP growth rate %

11% 10.5% 7.8% -4.3% 14.4%


68

Is the Budget Credible?

68 SIRC of ICAI 03/02/2021

2017-18 2018-19 2019-20 2020-21 2021-22

Budgeted Tax Revenue on actual tax revenue

11% 19% 18% 21% 17%

Actual Tax Revenue on Budgeted Tax revenue

17% 9% -11% -23%

Total Actual Receipts on Total BE receipts

97% 97% 98%

Actual Subsidy on BE Subsidy

80% 74% 76%

In growth %


69

• Will the slippage in fiscal deficit increase inflation?

• Will the FM be able to prudently manage fiscal deficit in FY 2021-22?

• In the last 2 years, the govt has not met high tax targets. Do you think they will met the targets this year?

SIRC of ICAI

Fiscal Management

69 SIRC of ICAI 03/02/2021


70

Source: Budget 2021-22

*Excludes draw-down of cash balance

INR cr

Budget at a glance

70 SIRC of ICAI 03/02/2021

2019-2020

Actuals

2020-21

(BE)

2020-21

(RE)

2021-22

(BE)

Total Receipts* 26,81,360 30,95,233 34,67,663 34,11,853

Non-Scheme Expenditure 16,19,686 18,70,511 17,98,715 20,50,228

Scheme Expenditure 10,66,644 11,71,720 16,51,590 14,33,008

Total Expenditure 26,86,330 30,42,230 34,50,305 34,83,236

Revenue Deficit 6,66,545 6,09,219 14,55,989 11,40,576

Fiscal Deficit 9,33,651 7,96,337 18,48,655 15,06,812

Primary Deficit 3,21,581 88,134 11,55,755 6,97,111


71


*Includes draw-down of cash balance

**Based on projected GDP for BE 2021-22 at INR 2,22,87,379 Cr

INR cr

Budget at a glance

71 SIRC of ICAI 03/02/2021

2019-20

Actuals

2020-21

(BE)

2020-21

(RE)

2021-22

(BE)

Gross Tax revenue 20,10,059 24,23,020 19,00,280 22,17,059

Revenue Receipts – A 16,84,059 20,20,926 15,55,153 17,88,424

Tax Revenue (net to Centre) 13,56,902 16,35,909 13,44,501 15,45,397

Non-tax revenue 3,27,157 3,85,017 2,10,653 2,43,028

Capital Receipts - B 10,02,270 10,21,304 18,95,152 16,94,811

Recoveries of Loans 18,316 14,967 14,497 13,000

Other Receipts 50,304 2,10,000 32,000 1,75,000

Borrowings / other Liabilities * 9,33,650 7,96,337 18,48,655 15,06,811

Total Receipts (A + B) 26,86,329 30,42,230 34,50,305 34,83,235

Gross Tax to GDP ratio 9.83% 10.77% 9.75% 9.95%**


72


*Includes draw-down of cash balance

INR cr

Tax revenues for the past four years

Gross tax revenue for 2020-21 BE was at 21% but stood at -5% on revised estimates! Gross tax revenue for 2021-22 BE is estimated at 17%

72 SIRC of ICAI 03/02/2021

2018-2019 2019-2020 2020-2021

(RE)

2021-2022

(BE)

Gross Tax revenue 20,80,465 20,10,059 19,00,280 22,17,059

Growth in gross tax revenue (%) 8.41% -3.38% -5.46% 16.67%

Revenue Receipts 15,52,916 16,84,059 15,55,154 17,88,425

Tax Revenue (net to Centre) 13,17,211 1,356,902 13,44,501 15,45,397

Non-tax revenue 2,35,705 3,27,157 2,10,653 2,43,028

Capital Receipts 7,62,197 9,97,300 19,12,510 16,23,428

Recoveries of Loans 18,052 18,316 14,497 13,000

Other Receipts 94,727 50,304 32,000 1,75,000

Borrowings / other Liabilities 6,49,418 9,28,680 18,66,013 14,35,428

Total Receipts* 23,15,113 26,81,359 34,67,664 34,11,853


73

Tax revenue

TAX REVENUE RECEIPTS 2019-20

Actuals

2020-21 (BE) 2020-21 (RE) 2021-22 (BE)

Gross Tax Revenue 20,10,062 24,23,020 19,00,280 22,17,059

Corporation tax 5,56,876 6,81,000 4,46,000 5,47,000

Income tax 4,92,654 6,38,000 4,59,000 5,61,000

Wealth tax 20 - - -

Customs 1,09,283 1,38,000 1,12,000 1,36,000

Excise 2,40,615 2,67,000 361,000 3,35,000

Service tax 6,029 1,020 1,400 1,000

GST 5,98,750 6,90,500 5,15,100 6,30,000

Taxes on Union Territories 5,835 7,500 5,780 7,059

Direct Tax 10,49,550 13,19,000 9,05,000 11,08,000

Indirect Tax 9,60,512 11,04,020 9,95,280 11,09,059

Direct tax to GDP ratio 5.1% 5.9% 4.6% 5.0%

Indirect tax to GDP ratio 4.7% 4.9% 5.1% 5.0%

INR cr

73 SIRC of ICAI 03/02/2021


74

Direct Tax collection (past 10 yrs)

Year Centre (gross) -

Direct Taxes

States - Direct

Taxes Total Direct Taxes

2019-20 13,35,000 1,71,912 15,06,912

2018-19 12,00,000 1,47,687 13,47,687

2017-18 10,02,037 1,14,257 11,16,295

2016-17 8,49,713 1,09,914 9,59,627

2015-16 7,41,944 88,175 8,30,120

2014-15 6,95,743 1,07,695 8,03,439

2013-14 6,38,541 88,231 7,26,773

2012-13 5,58,658 92,568 6,51,226

2011-12 4,93,946 77,299 5,71,246

2010-11 4,45,994 62,725 5,08,719

2009-10 3,77,487 47,387 4,24,874

INR cr

74 SIRC of ICAI 03/02/2021


75

Video 10 • Reduction in Time for Income Tax

Proceedings FM Speech – Para 153 & 154 • Honourable Speaker, presently, an assessment can be re-opened up to 6 years and in

serious tax fraud cases for up to 10 years. As a result, taxpayers have to remain under uncertainty for a long time.

• I therefore propose to reduce this time-limit for re-opening of assessment to 3 years from the present 6 years. In serious tax evasion cases too, only where there is evidence of concealment of income of `50 lakh or more in a year, can the assessment be re-opened up to 10 years. Even this reopening can be done only after the approval of the Principal Chief Commissioner, the highest level of the Income Tax Department.

75 SIRC of ICAI 03/02/2021


76

• Senior citizens who only have pension and interest income will be exempt from filing their income tax returns. The paying bank will deduct the necessary tax on their income.

• Time-limit for re-opening of assessment will be reduced to 3 years from the present 6 years. In serious tax evasion cases, only where there is evidence of concealment of income of Rs. 50 lakh or more in a year, assessment will be re-opened up to 10 years. This reopening can be done only after the approval of the Principal Chief Commissioner, the highest level of the Income Tax Department.

• To further reduce litigation for small taxpayers, a Dispute Resolution Committee will be set up, which will be faceless to ensure efficiency, transparency and accountability. Anyone with a taxable income up to Rs. 50 lakh and disputed income up to Rs. 10 lakh will be eligible to approach the Committee.

• A National Faceless Income Tax Appellate Tribunal Centre will be established. All communication between the Tribunal and the appellant shall be electronic. Where personal hearing is needed, it shall be done through video-conferencing.

• Tax audit exemption threshold Increased from Rs. 5 crs to Rs. 10 crs subject to certain conditions

SIRC of ICAI

Direct Tax Proposals

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77

• The additional deduction of interest of Rs. 1.5 lakh for loan taken to purchase an affordable house is extended to loans taken up till 31st March 2022.

• Tax holiday for affordable housing projects extended for one more year – till 31st March, 2022.

• To further ease filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office,etc. will also be pre-filled.

• Late deposit of employee’s contribution towards PF, superannuation and other social security funds by the employer will not be allowed as deduction to the employer.

• In order to incentivise start-ups in the country, I propose to extend

• Start-ups to be eligible to claim tax holiday for one more year – till 31st March, 2022.

• Capital gains exemption for investment in start-ups also extended by by one more year - till 31st March, 2022.

SIRC of ICAI


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• One person company – how does companies act and income tax act relate

• New scheme of Dispute resolutions – Board for advance ruling, dispute resolution committee, settlement commission replacement by board - Against the arbitration clause in BEPS action plan

• Faceless Tribunal – whether it is possible ?

• Are overall tax collections realistic ?

SIRC of ICAI


78 SIRC of ICAI 03/02/2021


79

Video 11 • GST FM Speech – Para 174 • The fiscal deficit in RE 2020-21

• Before I come to my Indirect Tax proposals, I would like to appraise the House on GST. The GST is now four years old, and we have taken several measures to further simplify it. Some of the measures include:

• i. nil return through SMS,

• ii. quarterly return and monthly payment for small taxpayers,

• iii. electronic invoice system,

• iv. validated input tax statement,

• v. pre-filled editable GST return, and

• vi. staggering of returns filing.

The capacity of GSTN system has also been enhanced. We have also deployed deep analytics and Artificial Intelligence to identify tax evaders and fake billers and launched special drives against them.

79 SIRC of ICAI 03/02/2021


80

Custom Duty Rationalization

• Duty structure overhauled, eliminating 80 outdated exemptions. To review more than 400 old exemptions this year.

• From 1st October 2021, a revised customs duty structure will be put in place, free of distortions. Any new customs duty exemption henceforth will have validity up to the 31st March following two years from the date of its issue.

• For greater domestic value addition of domestic electronic manufacturing, a few exemptions on parts of chargers and sub-parts of mobiles are withdrawn. Further, some parts of mobiles will move from ‘nil’ rate to a moderate 2.5%.

• Reducing Customs duty uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels. To provide relief to metal re-cyclers, mostly MSMEs, customs duty on steel scrap will be exempt up to 31st March, 2022. Further, ADD and CVD on certain steel products are revoked. To provide relief to copper recyclers, duty on copper scrap is reduced from 5% to 2.5%.

• custom duty on gold and silver to be rationalised.

• To encourage domestic production of solar cells and solar panels, duty on solar invertors to be raised from 5% to 20%, and on solar lanterns from 5% to 15%.

SIRC of ICAI

Indirect Tax Proposals

80 SIRC of ICAI 03/02/2021


81

• There is an immediate need to improve agricultural infrastructure so that we produce more, while also conserving and processing agricultural output efficiently. This will ensure enhanced remuneration for our farmers.

• To earmark resources for this purpose, an Agriculture Infrastructure and Development Cess (AIDC) is proposed on a small number of items. However, while applying this cess, we have taken care not to put additional burden on consumers on most items.

• To benefit farmers, customs duty on cotton increased from nil to 10% and on raw silk and silk yarn from 10% to 15%. End-use based concession on denatured ethyl alcohol withdrawn. Currently, rates are being uniformly calibrated to 15% on items like maize bran, rice bran oil cake, and animal feed additives.

• Rationalizing exemption on import of duty-free items as an incentive to exporters of garments, leather, and handicraft items. Exemption on imports of certain kind of leathers is withdrawn as they are domestically produced in good quantity and quality, mostly by MSMEs.

SIRC of ICAI


81 SIRC of ICAI 03/02/2021


82

• A King/Ruler is the one who creates and acquires wealth, protects and distributes it for common good – Will FM achieve this?

• Will manufacturing in India improve by the protectionism through hikes in custom duty

• Is GST helping in “ease of doing business? Will the GST Buoyancy help in meeting the fiscal deficit target?

SIRC of ICAI


82 SIRC of ICAI 03/02/2021


83

• Is this an optimistic budget and are the goals realistic?

• Does this budget enable “Ease of Living” to all citizens and “Ease of doing business” to enterprises?

Conclusion

83 SIRC of ICAI 03/02/2021


84

THANK YOU


85

• Under the Treasury Single Account (TSA) System autonomous bodies directly draw funds from the Government’s account at the time of actual expenditure, saving interest costs. We will extend the TSA System for universal application from 2021-22

• On the recommendation of the Fifteenth Finance Commission, we have undertaken a detailed exercise to rationalise and bring down the number of Centrally Sponsored Schemes. This will enable consolidation of outlays for better impact

• The Government is committed to the development of Multi-State Cooperatives and will provide all support to them. To further streamline the ‘Ease of Doing Business’ for Cooperatives, I propose to set up a separate Administrative Structure for them

SIRC of ICAI

Disinvestment and strategic sale

85 SIRC of ICAI 03/02/2021


86

• To fast forward the disinvestment policy, I am asking NITI to work out on the next list of Central Public Sector companies that would be taken up for strategic disinvestment

• To similarly incentivize States to take to disinvestment of their Public Sector Companies, we will work out an incentive package of Central Funds for States

• Idle assets will not contribute to AtmaNirbhar Bharat. The non-core assets largely consist of surplus land with government Ministries/Departments and Public Sector Enterprises. Monetizing of land can either be by way of direct sale or concession or by similar means. This requires special abilities and for this purpose, I propose to use a Special Purpose Vehicle in the form of a company that would carry out this activity

• In order to ensure timely completion of closure of sick or loss making CPSEs, we will introduce a revised mechanism that will ensure timely closure of such units

• I have estimated ` 1,75,000 crores as receipts from disinvestment in BE 2021-22

SIRC of ICAI

Disinvestment and strategic sale

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• Direct Tax Vivad Se Vishwas Scheme gave taxpayers an opportunity to settle long pending disputes and be relieved of further strain on their time and resources. Response from the taxpayers has been the best ever as over 1 lakh ten thousand taxpayers have already opted to settle tax disputes of over Rs 85,000 crores under this Scheme

• To reduce litigation for small taxpayers, to constitute a Dispute Resolution Committee, which will be faceless to ensure efficiency, transparency and accountability. Anyone with a taxable income up to Rs 50 lakh and disputed income up to Rs 10 lakh shall be eligible to approach the Committee

• The next level of income tax appeal is the Income Tax Appellate Tribunal. Proposal to make this Tribunal faceless by establishing a National Faceless Income Tax Appellate Tribunal Centre. All communication between the Tribunal and the appellant shall be electronic. Where personal hearing is needed, it shall be done through video-conferencing

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• Para 156,157, 159, 160, 161, 162, 164, 165, 166, 168, 169, 170, 172, 173

• Non-Resident Indians returning to India, having issues with respect to their accrued incomes in their foreign retirement accounts due to a mismatch in taxation periods. They also face difficulties in getting credit for Indian taxes in foreign jurisdictions. Proposal to notify rules for removing their hardship of double taxation

• Currently, if turnover exceeds Rs 1 crore, accounts to be audited. Increased the limit for tax audit to Rs 5 crore for those who carry out 95% of their transactions digitally. To further incentivise digital transactions and reduce compliance burden, proposal to increase this limit for tax audit for such persons from Rs 5 crore to Rs 10 crore

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• Para 156,157, 159, 160, 161, 162, 164, 165, 166, 168, 169, 170, 172, 173

• Abolition of the Dividend Distribution Tax (DDT) to incentivise investment whereby Dividend was made taxable in the hands of shareholders. To make dividend payment to REIT/ InvIT exempt from TDS. As Dividend income cannot be estimated correctly by the shareholders for paying advance tax, advance tax liability on dividend income shall arise only after the declaration/payment of dividend. Also, for Foreign Portfolio Investors, to enable deduction of tax on dividend income at lower treaty rate

• In order to allow funding of infrastructure by issue of Zero Coupon Bonds, to make notified Infrastructure Debt Funds eligible to raise funds by issuing tax efficient Zero Coupon Bonds

• To extend the eligibility of deduction by one more year, to 31st March 2022. Additional deduction of Rs 1.5 lakh shall therefore be available for loans taken up till 31st March 2022, for the purchase of an affordable house

SIRC of ICAI

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• Para 156,157, 159, 160, 161, 162, 164, 165, 166, 168, 169, 170, 172, 173

• To keep up the supply of affordable houses, affordable housing projects can avail a tax holiday for one more year – till 31st March, 2022

• Government is committed to make the International Financial Services Centre (IFSC) in GIFT City a global financial hub. To include, among others, tax holiday for capital gains for aircraft leasing companies, tax exemption for aircraft lease rentals paid to foreign lessors; tax incentive for relocating foreign funds in the IFSC; and to allow tax exemption to the investment division of foreign banks located in IFSC

• To ease compliance for the taxpayer, details of salary income, tax payments, TDS, etc. already come pre-filled in income tax returns. To further ease filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also be pre-filled

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• Para 156,157, 159, 160, 161, 162, 164, 165, 166, 168, 169, 170, 172, 173

• Reduce compliance burden on small charitable trusts running educational institutions and hospitals. So far, there is a blanket exemption to such entities, whose annual receipt does not exceed Rs 1 crore. I now propose to increase this amount to Rs 5 crore

• In order to ensure that employees’ contributions are deposited on time, late deposit of employee’s contribution by the employer will not be allowed as deduction to the employer

• In order to incentivise start-ups in the country, to extend the eligibility for claiming tax holiday for start-ups by one more year – till 31st March, 2022. Further, in order to incentivise funding of the start-ups, I propose to extend the capital gains exemption for investment in start-ups by one more year - till 31st March, 2022

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