Budget 2021 India Expectations – Rebuilt Indian Growth

India is struggling to recover from the economic devastation of the pandemic. All eyes are on the Budget 2021 India Expectations policy announcements of the upcoming India Budget 2021-22. The government has already taken several steps to minimize the financial damage in the country. Furthermore, a lot is required to be done by the government. Although a few sectors like eCommerce have shown growth in these difficult times, many sectors like real estate and tourism have taken a bad hit. These sectors are trying to recover from the pandemic and are looking for exceptional support from the government. While the finance minister has promised a “Budget like never before,” it does raise the budget 2021 India expectations of several stakeholders.

The budget 21 expectations In Budget 2021 India Expectations :

Maintaining Status Quo on Tax Rates Budget 2021 India Expectations

With the increase in deficits, one of the primary budget 2021 expectations is an income tax increase. Considering that the tax regime for individual taxpayers from last year, it is possible that the government will not alter the tax rates. Although, some additional taxes are likely to be on the budget.

There are chances for additional expenditure for vaccination drives. Since the lower-income groups have suffered the most from the pandemic, the extra spending is likely to fall under taxes for the higher income groups in the country.

Considering the recent changes in the stock market, gathering funds may require increased capital tax for security. For corporate tax funds, the rates were lowered to 15% for new investments and 22% for other global businesses and are not likely to change.

Considering the impact of the pandemic on the financial health of households and businesses, the government is likely to explore other options to bridge the financial gap to maintain the status quo of effective tax rates.

Disinvestment For Budget 2021 India Expectations

The India budget 2021-22 can also expect some measures to gather non-tax revenues for the government. Considering the non-tax revenue collection, the government is likely to push on disinvestment agendas. The rise in the Indian stock market is a good sign and can provide the perfect opportunity for the government to divest stakes in public sectors. The government can do it through measures like direct sales, consolidation, strategic sales, and much more. It may also be possible to generate funds without disturbing the typical lifestyle of the citizen or affecting businesses.

The impetus for Investments and Expenditure

The pandemic has affected the savings and consumption in the economy vividly. To improve consumption, the government is considering a one-time tax deduction for individual taxpayers regarding expenditures. The one-time tax deduction prospects are travel and stay in India, electronic purchases, white goods, and vehicles. Tax deduction in these sectors will provide impetus to the hospitality industry and boost for in-situ productions.

Considering the investment fronts, the government has considered tax deductions for individual investments in long term infrastructure bonds and projects. Furthermore, the government can make this deduction in respect to the current deduction available under section 80C of the Income-tax Act, 1961. The government can also look to incorporate separate provisions for the plans. The relief measures will ensure the sourcing of funds for long term infrastructural projects.

Increased Government Expenditures

The budget 2021 India date can probably increase government expenditures on urban and rural infrastructure. An increase in infrastructural activities has several benefits for feeder and allied sectors in the country.  It will not only help generate employment in the country but also rekindle rural and urban demand for skilled and semi-skilled workers. It is an extensive opportunity for India, where domestic markets have been a significant growth driver.

Moreover, the healthcare sector is likely to be a priority for infrastructural development post-Covid-19 pandemic. The pandemic has exposed all existing gaps in the sector. The government is bound to address them in the future. Improving the health sector will ensure the country’s ability to tackle any health crisis in future and mitigate it effectively.

Reduction for Medical Insurance

The government needs to address the lack of social security covers, healthcare costs, and limitations and quality of healthcare available. In India, the private healthcare sector plays a significant role and supports the Government healthcare sectors substantially. Therefore, there is a general requirement to strengthen both systems simultaneously.

The government may revise the income tax deductions for medical insurance payments for an individual and family to make more sustainable insurance efforts for the current economic condition.

Remote Working

The pandemic has drastically changed the way we work, and most of the Indian corporates have moved to “work from home” policies. Given the sudden change, it has become indispensable for employees to arrange the necessary infrastructure for their home offices. With the changing work styles, the employee tax provision drafted to deal with the normal work styles pre-pandemic needs substantial revision.

Currently, the reimbursement of such expenditures is taxable as salary. Typically, perquisites mean a benefit or an amenity provided by an employer to an employee. Under the dire circumstances, it is evident that these supports are not benefits but essentialities for an employer to continue the business. Accordingly, the government is likely to provide clear statements on such allowances not carrying any tax implications for the employee.

Moreover, Special Economic Zones are likely to receive flexibilities to ensure employers can decide on their workforce operations from offices or homes.

Other Announcements

While the FDI has continued to be resilient during the pandemic, some relaxation is part of the budget expectations. The relaxations are likely to be underway for FDI norms in critical sectors like insurance. Moreover, there may be more efforts to improve domestic investments. Lastly, clarity on various aspects of the New Labour Codes is also likely to come forward with a post-budget analysis.

Conclusion

There is no denying the Indian economy is facing challenging times. With the budget 21 date expectations, it might not be easy for the government to provide all the solutions. However, with the budget of 2021 favouring all stakeholder concerns, several reforms are expected to occur. The budget 2021 has the probability of being an exceptional budget that firmly puts the Indian economy back on a high growth trajectory.

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