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Managing
Money
UNION
BUDGET
Union Budget 2021 Highlights
Managing
Money
` FY21 fiscal deficit at 9.5%, target at Direct tax slabs remain unchanged; FY22 capital expenditure at `5.54 lakh Cr.
6.8% for FY22 and plan to bring it ` surcharge increased up 34.5% (Vs FY21 BE) and and revenue
` down to 4.5% by 2025-26
`
expenditure at 29.29 Lakhs Crore
` `
The gross borrowing from the market next `
Revenue deficit grant of `1,18,452 crore year is expected to be `12 lakh core and FY22 divestment target at
for 17 States additional Market borrowing of `80,000 crore `1.75 lakh Cr
`
to fund the FY21
FY22 allocation for railways at `1.10 lakh Total outlay of `2.23 lakh cr for Fitness tests for 20-years-old personal
cr & `18,000 cr for buses; target of 100% healthcare and `35,000 crore for vehicles and 15-years-old commercial
electrification by 2023 Covid-19 vaccine vehicles under pollution control initiative
Infrastructure boost with 11,000km Focus on clean water, air and oceans MSME allocation to be doubled.
national highway project in pipeline, under Jal Jivan Mission, Urban Clean Government to set aside `15,700
expansion of gas distribution network India Mission, Deep Ocean Mission crore in FY22
Agri infra cess levied at `2.5 per liter on
Government to amend Insurance petrol and `4 per liter on diesel but basic Senior citizens above the age of 75
Act to allow higher FDI excise duty and Special Additional Excise need not file IT return
Duty rates on the same reduced
UNI N BUDGET 16 Pillars of Union Budget 2021
Managing
Money
Health & Physical Innovation Inclusive Minimum Human
Well being infrastructure & R&D Growth government Capital
and
maximum
governance
6
UNI N BUDGET 2`
Fiscal Deficit `
Managing
Money
Govt estimates FY21 fiscal deficit
` at 9.5%, targets at 6.8% for FY22
Additional Market borrowing of Rs. 30.42 lakh crore budget estimate of
Rs. 80,000 crore to fund the FY21 fiscal total expenditure risen to the
deficit revised estimate of Rs 34.50 lakh crore
The gross borrowing from the market FY Capital expenditure for FY 2021-22 is
21-22 is expected to be Rs. 12 lakh core and estimated at Rs. 5.5 lakh crore and
net borrowing of Rs. 9.24 lakh crore revenue expenditure at 29.29 lakhs crore
Aim to bring the fiscal deficit below Revenue deficit grant of Rs. 1,18,452
4.5 % of the GDP by 2025-26 crore for 17 States
Contingency Fund to be increased to
Rs. 30,000 crore
UNI N BUDGET 3``
Disinvestment Target of 1.75 Lakh Crore
Managing
Money
`
`
Government has
approved policy Disinvestment of To Sell Non-Core
for disinvestment BPCL, Concor, Excess Land of All
in all non-strategic BEML, Nilanchal CPSEs
and strategic Ispat, Air India,
Pawan Hans, IDBI
sectors LIC
`
TITLE TEXT
Bank & 2 more
PSUBs to take
Proposed to take place in FY22 LIC IPO Likely
up 2 PSU banks
in FY22
and one General
Insurance
company for
disinvestment in
the year 2021-22
UNI N BUDGET 4Infrastructure
Rs 1.41 lakh crore for Urban Clean India
Rs. 2,000 Crore wo h projects in PPP
Mission
mode for po s
Boost to non-conventional energy sector
and gas pipeline project in J&K Initiative of Hydrogen energy mission
675 km of highway works announced in
675
KM
West Bengal at a cost of Rs 25,000 crore Rs. 3.05 lakh crore outlay for power
sector
Highways projects in Tamil Nadu, Kerala,
Gas distribution network expansion with
West Bengal and Assam
the inclusion of 100 cities over the next
Aim to complete 11,000km of national
11,000
KM
highway infrastructure in this year Facilitation of a world-class fintech hub
in Gi city
UNI N BUDGET 5Transpo ation
Managing
Money
Rs 1.15 lakh crore for Railways and Rs. 18,000 Kochi Metro, Chennai Metro Phase 2,
crore for public buses Bengaluru Phase 2A and B, Nashik and
Nagpur Metros get an additional allocation.
100% electrification will be completed by
National Rail Plan created to bring a
2023
future-ready Railway system by 2030
702 km of conventional metro is operational Expansion of metro networks and
and another 1,016 of metro and RRTS is augmentation of city bus services to raise
under construction in 27 cities the share of public transpo in urban areas
MetroLite and MetroNeo to be introduced
Deployment of innovative PPP models to
2
1
in Tier 2 cities and peripheral areas of Tier 1
cities. enable private players to provide and
operate over 20,000 buses.
UNI N BUDGET 6Financial Services `
Managing
Money
` `
`
FDI in insurance hiked ` `
`
Further infusion of
Rs. 20,000 crore for
to 74% from 49%
public sector banks
Asset Reconstruction
Company and Asset
Management Company
to help banks tackle
bad loans
UNI N BUDGET 7Gig industry & Migrant Workers
Managing
Money
Launch of 'One Nation, One Ration Introduction of four new labour
Card (ON, OR) to help migrant codes to ensure Social security
workers provision of gig and pla orm workers.
ON, OR plan under implementation
by 32 states and union territories Women workers will be allowed in the
reaching about 59 crore beneficiaries. night shi with adequate protection.
To facilitate credit flows for Standup
Launch of a portal to maintain India scheme for SCs, STs and women,
information on gig workers and Propose to reduce the margin capital
construction workers required for loans from 25% to 15%.
UNI N BUDGET 8Sta ups, Innovators & MSME
Managing
Money
Tax incentives for start-ups, including The eligibility for claiming tax holiday for
an extension in capital gains ` start-ups extended by one more year to
exemption by one year March 2022
Incentivise incorporation of Allocation of Rs. 1,500-crore to spur `
one- person companies (OPCs)
`
digital payments
Rs. 3 lakh crore Emergency Credit Line Easing Compliance requirements of
` Guarantee Scheme (ECLGS) for Small Companies NRIs allowed to
MSMEs
NRI
set-up OPCs.
Launching MCA Version 3.0 – E-Scrutiny;
E-Adjudication and Compliance Decriminalisation of LLP Act, 2008
management to be simplified.
Tribunals to be rationalised
UNI N BUDGET 9Agriculture
Managing
Money
Over Rs. 75,000 crore paid Increase in agriculture credit
to wheat farmers in 2020-21,
`
target to Rs. 16.5 lakh crore
Rs. 43.36 lakh benefited
Integration of 1,000 more
MSP MSP procurement to
`
Mandis with the electronic
continue at a steady pace
national market
The total amount paid to paddy
farmers surged to Rs. 1.72 lakh
crore in 2020-21
UNI N BUDGET 10Health & Wellbeing
Managing
Money
Total budget outlay of 2.23 Lakh Crore - An increase of 137% from last year
Rs 35,000 crore for Covid-19 Objective to prevent over 50,000
vaccine child deaths annually
Aatmanirbhar Health Yojna with
outlay of Rs 64,180 Cr over the next 6 Focus on primary, secondary and
years, in addition to National Health te iary healthcare
Mission
Set up of 17,000 rural and 11,000 Integrated public health labs to be
urban health and wellness centres set up in each district
Rs 2,217 crore outlay for 42 urban New scrappage policy: Check up of
centers to tackle air pollution 20-yearsold personal vehicles and
15-years-old commercial vehicles
Outlay of Rs 2.87 lakh crore for Jal
Jeevan Mission
UNI N BUDGET 11Human Capital
Managing
Money
National education policy: Social security benefits to be
Strengthening of over 15,000 extended to gig and pla orm
schools workers for the first time
Special scheme for welfare of
women and children in Assam and Ujjwala scheme to cover 1 crore
Bengal along with `1,000 crore for more beneficiaries
tea workers
UNI N BUDGET 12Tax
Managing
Money
Tax Slabs With Tax Slabs Without
Exemption Exemption
Nil Nil
0 - 2.5 L Tax slabs remain unchanged
2.5L - 5L 5%* 5% An additional cess of 4% for
health and education is
applicable to the income
ge
5L-7.5L 20% 10%
tax (plus surcharge)
an
eR
7.5L - 10L 20% 15% Surcharge Rates:
om
Inc
Income of Rs 50 lakh - 1 crore: 10%
10L-12.5L 30% 20%
Income of Rs 1 crore - 2 crore: 15%
30% 25% Income of Rs 2 crore - 5 crore: 25%
12.5L-15L
Income of Rs 5 crore and more: 37%
30% 30%
Above 15L
UNI N BUDGET 13Tax
Managing
Money
Highlights:
pt
TDS exemption for dividend payments on
em
Efforts to ease tax compliance burden
Ex
ReITs and InVITs
Income tax filing exemption for senior Ease of IT returns filing: Details of capital gains
citizens earning pension and interest income and interest will be pre-filled
6 Years
Time limit for reopening assessment reduced Late deposit by employers in PF will not be
from 6 years to 3 years allowed as deduction to employer
3 Years
Announcement of faceless dispute resolution Steps to eliminate double taxation for NRIs on
panel foreign retirement funds
ULIPS
` Capital gains ULIPs to be taxed as mutual Contribution to PF by employees above 2.5 lacs
funds and interest earned on the same will be taxable
UNI N BUDGET 14Tax
Managing
Money
Highlights:
5 Crore
March
Tax audit limit increased from `5 crore to 31
2022
Tax holiday for Start-Ups extended to 31st
10 Crore `10 crore March, 2022
` Capital Gains exemption on investment in Tax holiday for affordable housing extended
startups also extended to 31st March, 2022. for migrant workers till March 31, 2022
Relief for charitable trusts running Hospitals Tax Holiday for Capital Gains for Aircraft
and Educational Institutions increased from `1 Leasing Companies and Tax Exemption to
crore to `5 crore Lease paid to Foreign Persons
Additional Interest deduction (Sec 80EEA) of `1.5 lakhs to be extended for loans taken till 31st March, 2022.
UNI N BUDGET 15Indirect Tax
India to rationalize customs duty on gold, silver
Custom Duty
Solar lanterns cut to 5% Copper scrap cut to 2.5%
Increased to 10% for co on Increased to 15% for auto pa s and silk
Duty on steel scrap exempted till March 22
UNI N BUDGET 16Equity Market Outlook
Managing
Money
Overall, the budget has provided for higher government
spending without an increase in personal and corporate taxes Big boost on capital expenditure for FY 22.
or cess. coupled with reforms and greater privatisation thrust.
This will support economic recovery, create earning upgrades For funding, significant institutional setup planned to
in FY22 and thus support India’s premium valuations. execute and monitor monetisation of assets owned by PSUs
or government undertaking.
Though there is a likelihood of slightly higher interest rates as a Three key reforms for financial markets: single securities
result, it can get offset by superior earnings momentum especially market code, improve liquidity in bond markets and increase
if the budget is successful in reviving the investment cycle in FDI limit to 74%.
Big push on privatisation - 2 PSU banks and 1 general insurance
No changes in capital gains structure is also a sentiment positive. company also likely to be privatised. More PSUs to be added to
the list of privatisation and land monetisation also on the cards.
Overall, positive for cyclical recovery in earnings at the Setting up of ARC to buy stressed assets will enable faster
expense of higher fiscal deficit. resolution at the NCL
UNI N BUDGET 17Equities portfolio related
Managing
Money
Budget’s focus on growth is positive for cyclicals, industrials,
The fact that there were no changes in taxes coupled with a capital goods and Banking. Our portfolios are well positioned.
boost for growth made it a double joy for equity markets. Broad based economic recovery led by investment cycle will
also be positive or the mid and small caps.
Cement weight and recent additions of banks in certain portfolios Infrastructure and manufacturing revival will be key theme
which were significantly underweight earlier have helped. for 2021 given the thrust on this sector in the budget.
UNI N BUDGET 18Fixed Income Market Outlook `
Managing
Money
RBI has time and again, re-iterated
The focus of the budget on capital The total Gross borrowing for the its commitment to accomodative
expenditure is commendable as next financial year is Rs 12.05 crs monetary policy stance and
infrastructure requirement has high and net borrowing is Rs 9.25 crores preference to keep the ten year
multiplier effect in the economy and for the next financial year. The yields below 6 % levels. Bond yields
can kickstart the economy into government is also expected to movement will now be dictated by
higher trajectory. The idea of a bad borrow additional Rs 80000 Crores RBI actions or inactions. The 10 year
bank and divestment of two in the current financial year. The bond yields have already moved to
nationalised banks and one Gross borrowing programme will 6.05 % from 5.90 % before the
insurance companies is positive for create pressure on yields and the budget announcement. Given the
the market and as per the finance ten year yields is expected to move high borrowing requirement, it is
ministry this is an ongoing exercise. to 6.25 % -6.50 % range if we don’t imperative that RBI intervenes in the
have decisive RBI intervention. G sec market to control yields.
UNI N BUDGET 19Fixed Income Portfolio related `
`
We have entered in the current month We expect rates to be stable in the
with most debt schemes pre dominantly short and medium end of the yield
invested in short to medium end of the curve as liquidity in the system
yield curve and thus the impact of continues to be comfortable above Rs 5
upward movement in yields across the Lakh crores. We have been running
yield curve on portfolios have been lower. shorter duration in our portfolios and
that should help fixed income
investors. Investors need to be prudent
and invest only in short maturity funds.
UNI N BUDGET 20House views on MF industry `
Managing
Money
Exemption of TDS on dividend payments to REITs and InvITs is a positive step
This will further increase attractiveness and will also deepen the category.
The measure to set up a body to buy bonds upto investment grade is a good step
`
in helping deepening and market making in Corporate bond market. It is a very
positive step for MFs.
The advantage that ULIPs had over equity mutual funds (MFs) will no longer be
there as Budget 2021 has brought the gains made from ULIPs with premium over
`2.5 lakh on par with equity mutual funds. So gain from such ULIPs is treated as
capital gain just like equity MFs and will be taxed accordingly.
UNI N BUDGET 21House views on IFSC
Managing
Money
Tax exemption for Setting up of AIF for Funds which are focused
investment division for disposal of stressed in running special
foreign banks are steps in assets is an excellent situations will benefit
the right direction to move from such opportunities.
creating an vibrant
ecosystem.
UNI N BUDGET 22Disclaimer
Managing
Money
To the best of our knowledge, the information contained herein is accurate and reliable as of the date of
publication; however, we do not assume any liability whatsoever for the accuracy and completeness of
the above information. Any action taken by you on the basis of the information contained herein is your
responsibility alone and Tata Asset Management will not be liable in any manner for the consequences
of such action taken by you.
Mutual fund investments are subject to market risks, read all scheme related documents carefully.
UNI N BUDGET 23Managing
Money
Thank You
UNI N BUDGET 24You can also read
