{"id":5498,"date":"2021-02-01T18:28:45","date_gmt":"2021-02-01T12:58:45","guid":{"rendered":"https:\/\/razorpay.com\/blog\/?p=5498"},"modified":"2025-03-04T18:39:52","modified_gmt":"2025-03-04T13:09:52","slug":"budget-2021-key-points-takeaways","status":"publish","type":"post","link":"https:\/\/razorpay.com\/blog\/budget-2021-key-points-takeaways\/","title":{"rendered":"Union Budget 2021: Key Highlights &#038; Announcements"},"content":{"rendered":"<p><span style=\"font-weight: 400;\"><strong>Budget 2021 Highlights<\/strong>: Our Honorable Finance Minister, Nirmala Sitharaman has unveiled the first post-pandemic Budget of India. The Union Budget 2021 aims to boost income for businesses, in a bid to revive economic growth that has slumped to the lowest levels since the COVID-19 outbreak.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To strengthen the Atmanirbhar Bharat Abhiyaan, the government proposed 6 pillars &#8211; health and wellbeing, capital and infrastructure, inclusive development, reinvigorating human capital, innovation and R&amp;D, and minimum government &amp; maximum governance.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The 2021 Budget emphasised primarily on healthcare and infrastructure sectors. Also, a host of substantial announcements were made on the disinvestment &amp; foreign investment front.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While no significant income tax changes were made in the Budget 2021, the government did announce measures for small businesses and startups.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Read on to know the key highlights of the Union Budget 2021 proposed on 1st February.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Healthcare<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Since the pandemic hit close to 10% of the population, the highest-ever allocation to the healthcare sector was much needed. The government allocated Rs 35,000 crore for COVID-19 vaccination expenditure in FY 2021-22. The spending will focus on preventive &amp; curative healthcare and well-being of the Indian population.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Startups &amp; MSMEs<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Small businesses and startups are important pillars of the Indian economy. Since they were badly affected because of the pandemic, much awaited reforms were needed in these sectors. Here are the highlights of Budget 2021.\u00a0<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Startups (including OPCs)<\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Government to allow incorporation of One Person Companies (OPCs) with no restrictions on paid-up capital and turnover<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">OPC can convert into any other type of company at any time<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The residency limit reduced for an Indian citizen to set up an OPC from 182 days to 120 days<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Allowing Non-Resident Indians (NRIs) to incorporate OPCs in India<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Extension of tax holiday for startups by one year up to 31st March 2022<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Capital gains exemption for investment in startups extended till 31st March 2022<\/span><\/li>\n<\/ul>\n<h3><span style=\"font-weight: 400;\">MSMEs<\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">FM proposed doubling of <a href=\"https:\/\/razorpay.com\/learn\/new-msme-definition-turnover-2020\/\" target=\"_blank\" rel=\"noopener noreferrer\">MSME<\/a> allocation at Rs 15,700 crore for medium and small enterprises in FY 2021-22<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Change the definition of \u201csmall company\u201d under the Companies Act 2013 by increasing their threshold for paid-up capital, from &#8216;not exceeding 50 lakh, to not exceeding 2 crore&#8217; and turnover from &#8216;not exceeding 2 crore&#8217; to &#8216;not exceeding 20 crore&#8217;<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Foreign Investments<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Many experts speculated that Budget 2021 will enable foreign investments in India. Here are some of the key takeaways.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">New rules to be notified for the elimination of double tax for NRIs on foreign retirement funds<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Foreign investors will be allowed to invest in insurance companies<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Infrastructure Debt Funds (IDFs) made eligible to raise funds by issuing Zero-Coupon Bonds (ZCBs)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Relaxation on some conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Deduction of tax on dividend income at lower treaty rate for Foreign Portfolio Investors (FPIs)<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Labour Welfare<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">During the Budget, FM also made a few announcements that are in favour of employees &amp; gig workers. Here are some highlights of Budget 2021.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Late deposit of employee\u2019s <a href=\"https:\/\/razorpay.com\/learn\/employee-provident-fund-epf-scheme\/\" target=\"_blank\" rel=\"noopener noreferrer\">PF<\/a> contribution by the employer not to be allowed as a deduction to the employer<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Social security benefits will extend to gig and platform workers. Minimum wages will apply to all categories of workers, and they will all be covered by the Employees State Insurance Corporation<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Compliance burden on employers will be reduced with a single registration and licensing, and online returns portal<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Direct tax changes\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">While the Budget 2021 had no major amendments to individual taxation, here are some key changes announced for businesses in Budget 2021.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Advance tax <a href=\"https:\/\/razorpay.com\/learn\/what-is-liability-in-accounting\/\">liability<\/a> on dividend income shall arise only after payment of dividend<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">No tax filing for seniors above 75 years of age with pension and interest income only<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Anyone with a taxable income of up to Rs 50 lakh, disputed income of up to Rs 10 lakh is eligible to approach dispute resolution committee<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Tax exemption for relocating funds to <a href=\"https:\/\/razorpay.com\/blog\/decoding-ifsc-codes-meaning-importance\/\">IFSC<\/a><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Extension of tax holiday for startups under section 80-IAC by one more year up to 31st March 2022<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Tax audit threshold increased from Rs 5 crore to Rs 10 crore to promote digital payments\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Time limit reduced for reopening of assessment to 3 years from the present 6 years. In serious tax evasion cases, only where there is evidence of concealment of income of Rs 50 lakh or more in a year, can the assessment be reopened up to 10 years\u00a0<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Indirect tax changes<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Here are the changes made to indirect tax laws in Budget 2021.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Duty on steel screws and plastic builderware increased to 15%\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Prawn feed to attract customs duty of 15% from the earlier 5%\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Exemption on import of duty-free items rationalized to incentivize exporters of garments, leather, and handicraft items\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Exemption on imports of certain kind of leathers withdrawn\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Customs duty on finished synthetic gemstones raised to encourage domestic processing<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Duty on some parts of mobiles revised to 2.5% from \u2018nil\u2019 rate<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Customs duty reduced uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Duty on steel scrap exempted up to 31st March 2022<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Anti Dumping Duty (ADD) and Counter Veiling Duty (CVD) revoked on certain steel products<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Duty on copper scrap reduced from 5% to 2.5%<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Basic Customs Duty (BCD) on caprolactam, nylon chips, and nylon fibre &amp; yarn reduced to 5%<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Calibrated customs duty rates on chemicals to encourage domestic value addition and to remove inversions<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Duty on Naphtha reduced to 2.5%<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Duty on solar inverters raised from 5% to 20%, and on solar lanterns from 5% to <\/span>15% to encourage domestic production<\/li>\n<\/ul>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Customs duty on cotton increased from nil to 10%, and on raw silk and silk yarn from 10% to 15%.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Withdrawal of end-use based concession on denatured ethyl alcohol<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Agriculture Infrastructure and Development Cess (AIDC) on a small number of items to be introduced<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Turant Customs initiative<\/b><span style=\"font-weight: 400;\"> &#8211; a faceless, paperless, and contactless customs measure introduced to rationalize procedures and ease compliance\u00a0<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Other highlights of Budget 2021<\/span><\/h2>\n<h3><span style=\"font-weight: 400;\">Compliance<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The government to consolidate provisions of the SEBI Act, Depositories Act, Securities Contracts Regulation Act, and the Government Securities Act under one umbrella<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Insurance Act 1938 will allow higher FDI, increasing FDI limit in insurance from 49% to 74%\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">NCLT framework to strengthen, e-court systems to be established, alternate methods of debt resolution &amp; special framework for MSMEs to be introduced by the government<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Launch of data analytics, artificial intelligence, machine learning driven MCA21 Version 3.0 in FY 2021-22<\/span><\/li>\n<\/ul>\n<h3><span style=\"font-weight: 400;\">Disinvestment<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Strategic disinvestment of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The government announced the IPO of LIC in FY 2021-22\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">New policy for strategic disinvestment approved; CPSEs except in four strategic areas to be privatized<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">NITI Aayog to work out on the next list of CPSEs to be taken up for strategic disinvestment<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Incentivizing states for disinvestment of their Public Sector Companies (PSCs),<\/span> <span style=\"font-weight: 400;\">using central funds<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Special Purpose Vehicles (SPVs) in the form of a company to monetize idle land<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Introducing a revised mechanism for ensuring timely closure of sick or loss making CPSEs<\/span><\/li>\n<\/ul>\n<h3><span style=\"font-weight: 400;\">Vehicle scrappage policy<\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The government announced a voluntary vehicle scrapping policy; vehicles to undergo fitness tests after 20 years for private vehicles, 15 for commercial vehicles<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">To understand the impact of all these announcements on your business, join our post-budget analysis sessions with industry experts starting on <strong>2nd February 2021<\/strong>.\u00a0 Here\u2019s what you can expect.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The impact of the Budget on Indian startups &amp; MSMEs<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Detailed analysis of tax policy changes for businesses<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Answers for all-things-Budget, by industry experts<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">See you there!<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>While no major tax changes were made in the Budget 2021, the government announced measures for MSMEs &#038; startups.\u00a0Read on to the highlights of Budget 2021.<\/p>\n","protected":false},"author":42,"featured_media":5499,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[130],"tags":[129],"class_list":{"0":"post-5498","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-union-budget","8":"tag-union-budget-2021"},"_links":{"self":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/5498","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/users\/42"}],"replies":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/comments?post=5498"}],"version-history":[{"count":2,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/5498\/revisions"}],"predecessor-version":[{"id":21115,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/5498\/revisions\/21115"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media\/5499"}],"wp:attachment":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media?parent=5498"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/categories?post=5498"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/tags?post=5498"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}