Budget 2021: What does it mean for the common man?

By admin | Feb 3, 2021

The finance minister presented the budget on Monday, 1st February 2021. As the nation still reels under huge numbers of unemployment and a dismal economy, many anticipated that the Budget 2021 would bring some relief to the masses.

However, there are many questions that the common man has as to what the Budget 2021 holds for you and me.

Is there any tax relief for the middle class?

How does the government plan on reviving the economy after the pandemic?

Is there any increase in expenditure in the public health sector due to Covid?

Are there any amendments been implemented towards the agricultural sector in light of the ongoing farmers’ protests?

Let us take a look at the major takeaways for the common man from FM’s Budget 2021:

No Tax Relief

  • Last year, the Finance Minister had announced a new tax regime that would run parallel to the existing rates, which would come into effect from AY 2021-22. Keeping this in mind there were no additional changes made to the tax slabs for this year. 
     
  • Pensioners over the age of 75 years, will be exempted from filing income tax returns if their pension income and interest income are the only sources of annual income.

Cess On Petrol, Diesel

  • An Agriculture Infrastructure and Development Cess (AIDC) has been newly imposed on petrol and diesel at Rs 2.5 and Rs 4 per litre. 
  • However, Sitharaman said other duties on both fuels will be adjusted so that the consumer does not bear any additional burden. For the common man, this assurance is welcome amidst the skyrocketing prices of petrol and diesel in the country.

Employment

  • The biggest issue at hand is the massive unemployment rate because of the Covid-19 pandemic. Sitharaman has announced that more than 1.4 lakh jobs will be created by March 2021 in various central government departments. 
  • However, this will also include the existing vacancies from March 2019, months before the pandemic wreaked havoc.

Extension Of Date For Home Loan Deduction

  • If you have a home loan, you can now claim - up to March 31, 2022 - an additional deduction of Rs 1.5 lakh (over an existing deduction of Rs 2 lakh) in relation to interest on home loans. 
     
  • While this may provide some respite to homeowners with loans there are some conditions to this, including that the loan must be taken between April 1, 2021, and March 31, 2022.

Interest On PF Contributions Over A Limit

  • People whose Provident Fund contribution is Rs 2.5 lakh or more in a financial year, cannot seek tax exemption on interest earned for the next financial year. 
  • At present, interest earned on PF is exempted from income tax.

Immediately Available Deposit Insurance

  • Last year we saw two major Indian banks - Yes Bank and Punjab and Maharashtra Co-operative Bank- made headlines after the RBI placed withdrawal limits on their accounts over financial irregularities. This led to many people suffering as their life’s savings were stuck in these banks. 
  • To avoid any inconvenience to the people, Sitharaman announced in the Budget 2021 that in such a situation depositors can now gain immediate access to deposit insurance of up to Rs 5 lakh. This process is said to be faster than earlier where it would take months for the customer to excess his/her money.

Reduced Import Duty On Gold, Silver

  • This year’s budget slashed import duties on gold and silver from 12.5 % to 7.5 % but imposed a 2.5 % cess on the imports. 
  • With a reduction in prices of precious metals, the government intends to attract more retail buyers and boost jewellery exports.

Metro In Tier-II Cities

  • To facilitate easy commute for urban residents, new technologies will be deployed to provide metro rail systems in Tier-II cities of India.
  • In addition, central funding will be provided to metro systems in Kochi, Bengaluru, Chennai, Nagpur, and Nashik. 
  • Also, a whopping amount of Rs 18,000 crore is allotted to support the expansion of public bus transport services across the country.

Health Expenditure

  • This comes as a piece of good news as we battle a pandemic. Expenditure on the health sector has been increased by 137%– from Rs 94,452 crore last year to an estimated Rs 2.24 lakh crore this year. 
  • This includes Rs 35,000 crore for COVID-19 vaccines and Rs 64,180 crore (over a period of six years) for improving healthcare across the country.

FDI in Insurance

  • The budget also allowed increased Foreign Direct Investment (FDI) in insurance, hiking the upper limit to 74%. With an increased FDI, the number and quality of insurance schemes for the public are set to improve.
  • The centre will also introduce an Initial Public Offer (IPO) for the Life Insurance Corporation in 2022. This is expected to raise funds for the government and allow the public to invest in LIC. 

We hope that this summary of the Budget 2021 gives you an insight into what AY 2021-22 holds for you. While the Budget 2021 does address some issues that have plighted the citizens of India, it’s all left up to the implementation of their policies by the central government for the common man to finally reap the rewards.

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