The Union Budget for 2021 was a much-awaited and keenly looked forward to – both by the corporate INC and the common man.
The country’s economy has been at a difficult juncture and dealt with a massive blow as the Covid -19 pandemic gained momentum and spread like wildfire.
Industries across the board struggled with the pandemic’s impact even as the common man dealt with a double blow, uncertain of how the future would shape out for him.
Hence the expectations from the union budget, akin to walking on a tight rope, as both the stakes and the expectations were high.
As Finance Minister Nirmala Sitharaman presented her budget on Monday, the markets saw the best budget day reaction in 22 years, and Sensex gained 5%, as it zoomed 2315 points and ended at 48.600.
This is undoubtedly a sign that the budget has been well received by the corporate Inc, but what does the budget have for ordinary people like you and me?
Given the challenging times faced by the common man and the economic circumstances in the aftermath of the Covid -19 pandemic, the common salaried man had certain expectations from this years budget –
1. An increase in the basic exemption limit from Rs 2.5 lakh to Rs 5 Lakh
2. Salaried Taxpayers expected relief from the government by way of increasing the standard deduction limit from the current Rs 50,000 PA to at least Rs 75,000 PA. (This as the basic costs have increased, WFH has led to a substantial jump in electricity and other utility bills)
3. The current Rs 1.5 lakh PA under section 80C, to be enhanced to Rs 3 Lakh PA, such that relief is provided to the wider population, boost savings and investments in the country. Also to encourage spendings on education – Tuition fee of schools, colleges, and other educational institutions.
4. An increase in the limit of NPS Investments, from Rs 50,000 to 100,000 Lakh.
However, the above expectations of the common man have not been entertained per se; here’s decoding some of the key highlights and takeaways for the Union Budget 2021 –
1. Is there a tax Relief for the middle class?
There are no changes in the tax slab this year; the tax slabs announced last year under the new tax regime with its existing rates come into effect from AY 2021 – 22.
The only good news here is for the aged, those who are above the age of 75 do not have to file their income tax returns if their income consists only of pension and interest.
The filings will also become less taxing; the government has taken steps indirect tax incentives to ease compliance for taxpayers.
Also, for small taxpayers, a dispute resolution committee is being planned.
However, interest earned by the Provident Fund contributions in a year, above Rs 2.5 Lakh or more in a financial year, cannot seek tax exemption on interest earned from the next financial year, will now be taxed at the normal rates.
2. Unemployment a major concern, as millions lost their jobs during the lockdown; what has the government planned to address this issue?
While the government has not immediately dealt with this issue in the union budget, it has, however, mentioned that it would be creating more than 1.4 lakh jobs by March 2021 in various central government departments.
But herein is the catch; it includes the jobs created even before the Covid -19 pandemic and includes those created from March 2019.
It has also announced the incorporation of one-person companies with no restriction on paid – up capital and turnover.
3. Cess on Petrol and Diesel
It is almost as if the government wants the people to stay home and curb commuting; it has introduced an agriculture infrastructure and development cess of Rs. 2.5 per liter on petrol and Rs. 4 per liter on diesel.
While the FM has ensured that the consumer will not be burdened by the same, it does not address the already high costs of both.
4.Immediately available Deposit Insurance
The depositors had been highly inconvenienced when banks Yes Bank and Punjab and Maharashtra Co-operative Banks went bust, and the RBI placed withdrawal limitations.
The Union budget 2021 has announced that the depositors will be allowed immediate access to deposit insurance up to Rs. 5 lakh in such a condition.
5. Gold and Silver become cheaper.
If in case one belongs to the privileged group, whose job is secured, well then Gold and Silver being cheaper could give you a reason to celebrate. For others struggling with job loss, reduced salaries, and making ends meet – a reduction in Gold and Silver prices would not mean much.
6. Extension of Date for Home Loan deduction
One can now claim an additional deduction of Rs 1.5 Lakh (Over the existing deduction of Rs 2 L) up to 31 st March 2022 in relation to interest on loans to buy a house.
Earlier it was set at March 31, 2021; however, there are certain conditions set to this, including that the loan must have been taken between April 1, 2021 and March 31, 2022.
7. Public Transport
A new scheme has been launched to support public transport and expansion of public bus transport services. Also, Tier-II cities and border areas of tier – I cities, metro rail systems will be introduced.
Hence, while the corporate Inc may have reasons to celebrate and give a touché to the Union Budget, nothing significant has been introduced to reduce the burden in reality for the salaried middle class.
The salaried middle class and those who are struggling with income loss, those who have lost their jobs, an increase in utility bills due to WFH, paying off tuition fee whether school, colleges or other educational institutions, medical bills, high cost of petrol and diesel and an increasing inflation rate – it might indeed become more formidable in the coming days.