With the unprecedented year that's gone by, the expectations for the union budget were set high.
The nation set its eyes on the Finance Minister as she took the mic to announce the government's plans for the Fiscal Year 2022.
The budget announcement began by highlighting India's Vision of Aatma Nirbhar Bharat and the steps that'll be taken to achieve that vision. While presenting the financial roadmap, FM stated this financial year rests on 6 pillars:
Health & Well-being inclusive Development of Human CapitalInnovation and R&DPhysical & Financial capital and infrastructureMinimum government, maximum governance
These pillars strengthen the nation-first approach of the government.
The budget manifested notable points that would be crucial for micro, small and medium enterprises. Here are the key highlights from the most awaited union budget of the millennium:
Government allocation for MSMEs doubled to Rs 15,700 crores in FY 2022The definition of small companies under the Companies Act, 2013 now revised by increasing their threshold for capitalization to not exceeding Rs 50 lakh to not exceeding Rs 2 crore and turnover not exceeding Rs 2 crore to not exceeding Rs 20 crore.
Reduction of margin money requirement for startups was also announced-Reduced to 15% from 25%The government also allowed the establishment of one-man companies in the union budget 2021:
No restriction on paid-up capital and turnover to incentivize incorporation of one-person companies conversion of the one-person company to any other kind, reducing residency limit from 182 days to 120 days allow non-resident Indians to incorporate one-person companies in India
For the ease of doing business, FM announced multi-state co-operatives as well as a swift resolution of contractual disputes for businesses dealing with govt or central PSEs.To further support the labor force in the industry, the union budget stated minimum wages for labors of all categories. It also allowed women to provide labor in all domains of work with adequate protection. A few modifications were also made in the Taxation arena:
Dividend payment for REIT and InVIT exempted from the tax increase in the threshold for tax audits to Rs. 5 crores (for those transacting 95% digitally)Compliance burden of small trusts whose annual receipts do not exceed Rs. 5 crores eased
The Finance Minister also made a proposal to review more than 400 old exemptions in customs. The new customs duty structure will be as follows:
ADD and CVD on certain steel products revokedDuties on copper scrap reduced to 2.5%Some parts of mobiles to move from NIL to 2.5% rateDuty on copper scrap cut down to 2.5%Duty on steel scrap exempted for a specified period
Other capital policies presented at the union budget 2021, FDI limit increased from 49% to 74%PLI scheme announced for 13 manufacturing sectors
A brief summary of the fiscal expenditure and deficit targets:
FY21 gross expenditure-Rs 34.5 lakh croreFY21 capital expenditure -Rs 4.39 lakh croreFY21 fiscal deficit-9.5% of GDPFY22 fiscal deficit target-6.8% of GDPFY22 gross expenditure - Rs 34.83 lakh croreFY22 capital expenditure-5.54 lakh crore market borrowing in FY22-12 lakh crore