Budget 2021 | Financialising India: Top 9 takeaways for Personal Finance

Finance Minister Nirmala Sitharaman on February 1 presented Budget 2021.

The Budget assumed great significance as the economy is recovering from the after-effects of the coronavirus pandemic.

Here are some of the key takeaways for the Aam Aadmi from this Budget:

1) No key changes in personal income tax slabs: After the pandemic led economic slowdown many were anticipating increase in tax rates or levying of Covid cess in this Budget. The good news tax rates have not gone up keeping the old slab rates intact, which means no additional tax burden on a common man.

2) Affordable housing deduction extended by 1 year: Under section 80EEA of the Income-tax Act, 1961 you can avail an extra deduction of Rs 1.5 lakh on interest income. This deduction for affordable housing has been extended by one year till 31st March 2022. Currently, the deadline for this is March 2021. This deduction on interest payment is available over and above the Rs 2 lakh on housing loan, provided certain conditions are fulfilled.

3) Capital gains to be pre-filled:  Now your ITR forms will come auto-populated with information relating to capital gains, dividend income, interest from bank and post office.  The move will save time and bring efficiency while filing ITR. Anish Shah, Associate Partner – Transaction Tax, BDO India, says, “Pre filled columns for dividend, capital gains income, interest from banks, post office etc. in the tax return will ensure accurate income disclosure by the assessee and will also save substantial time in preparing the tax return.”

4) No ITR for senior citizens: In a big relief to senior citizens, people who are 75 and above, do not need to file ITR if they have only pension and interest income.

5) Focus on Digital Payments: Rs 1,500 crore has been earmarked for financial incentive to promote digital payments. The Finance Minister has also proposed to introduce an investor charter as a right for investors in all financial products. Pritha Jha, Partner, Pioneer Legal, says, “There is a big push towards digital India in budget 2021. From faceless dispute resolution to introduction of AI, to include more compliance management online, to incentivising digital payments, digitisation appears to be top priority for the government.”

6) LIC to come with an IPO . Listing of the insurer will make it one of India’s biggest companies in terms of market capitalisation along with Reliance Industries, TCS and HDFC Bank.

7) Custom duty on gold and silver:  The custom duty on precious metals to be ratonalised to 7.5%. Currently gold and silver attracts 12.5% import duty.  FM said that since the duty was raised from 10% prices of precious metals have risen sharply, and to bring it to closer to previous levels we are rationalising the rates.

8) FDI limit increased for insurers: FDI in insurance being increased to 74% is a big change. The higher FDI can mean increased insurance penetration in the country with re-thinking  of strategies.

9) Voluntary vehicle scrapping policy announced. Personal vehicles would now undergo fitness test after 20 years while commercial vehicles would require it after completion of 15 years.