Finance Minister Nirmala Sitharaman’s claim of “a budget like never before” has set the stage for a historic announcement. On February 1, every businessman as well as a working professional will be glued to the television as the Union Budget for 2021-22 is presented. Here are a few steps expected to secure a place in the government’s vision towards the pre-pandemic economy: –
COVID-19 has almost assured government’s efforts towards increasing the number of health and life insurance policies. More schemes such as Corona Kavach and Corona Rakshak are expected to launch as economical premiums would encourage people to invest in policies. Furthermore, the government can reduce the 18% GST bracket on life insurances along with educational camps about the potential tax savings.
Lockdowns imposed due to COVID put MSME economic contribution in limelight. The government could sanction a liquid cash injection from RBI or empower Non-banking Financial Companies (NBFC’s) for improved credit options in order to revive faith and functioning in the sector. Furthermore, experts suggest the simplification of GST rules for small business entities in order to enable them for market loans and promote fair trade.
India’s stand on counter-terrorism has received international attention over the past year, be it China or Pakistan. It is expected that the government could set up a fund to transfer the remaining expenditure of Defence Ministry at the end of the financial year. Alternatively, Defence PSUs can be given a central role in order to raise money from the market. However, considering the need for an upgrade in military weapons and technology, the defence sector is likely to receive its own place in the budget.
Reduction on Capital Gains
Companies and individuals are liable to pay Capital Gains Tax on earned profits, which creates a double tax situation. This has been a prolonged hurdle in increasing foreign investment, managing ownership entity, and human resource for medium and large-scale organizations. Government is not expected to remove CG tax, but it could reduce the share to boost business contributions in the economy.