Presenting the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman claimed that the Budget proposals for this financial year rest on 6 pillars — health and well-being, physical and financial capital and infrastructure, inclusive development for aspirational India, reinvigorating human capital, innovation and R&D, and ‘Minimum Government, Maximum Governance’.
Without making it too complicated for you, we will straight away dive into topics of importance. While the Budget for 2021-22 has multiple new ideas to get the economy to grow again, here are the top 7 changes that will closely impact your personal finance plans:
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1. A “Healthy” Budget
After the year of the pandemic, the government has concentrated much on building a healthcare focussed Budget for 2021. A new scheme called PM Atma Nirbhar Swasthya Bharat Yojana will be launched to develop primary, secondary and tertiary healthcare with a designated funding of ₹64,180 crores over 6 years.
For the well being of the citizens, Rs. 35,000 crore will be allocated in FY22 to further funds for vaccines against COVID-19. After the long wait for the COVID-19 vaccine during lockdowns, this announcement was met with great joy by all citizens.
2. Relief for Senior Citizens in filing Income Tax Returns
In an unprecedented move to offer relief to senior citizens, specifically those aged 75 or above, the government has announced that senior citizens who only have pension and interest income coming in don’t need to file Income Tax Returns (ITR). This move will be of much help particularly to retired public sector and government employees.
However, in case they earn dividend income or any other income, then they have to file their ITR. In addition to that, there are multiple other rules here as well. For example both pension income and interest income must be credited to your saving bank accounts. Also, the savings bank account should belong to specific banks that the government will let people know soon .
3. One for the roads
After much wait, the auto industry has finally been granted their wish. For a few years now, the auto industry has been demanding a proper vehicle scrappage policy. In yesterday’s budget, FM Sitharaman said that the government will introduce a voluntary vehicle scrapping policy to phase out old and unfit vehicles. This means that every vehicle will undergo fitness tests in automated fitness centres every 20 years (in case of personal vehicles)and every 15 years (in case of commercial vehicles).
Wondering how this impacts you? The impact of the new auto policy will be huge in the sense that this step will encourage fuel-efficient and environment-friendly vehicles, thereby reduce vehicular pollution and oil import bills. In addition to this, Metro services have been announced in 27 cities, plus additional allocations have been made for Kochi Metro, Chennai Metro Phase 2, Bengaluru Metro Phase 2A and B, Nashik and Nagpur Metros
4. Deposit insurance cover made better
FM Sitharaman promised that a better policy framework will be created by the government and the RBI for bank depositors to claim their deposit insurance cover in case their bank gets into trouble. It should be noted that in a big move last year, the government had decided to hike the deposit Insurance cover for bank depositors from Rs. 1 lakh to Rs. 5 lakh. Although so far, this resolution was only available to the depositor when the bank went into liquidation.
This new mechanism would help depositors even before the bank goes into liquidation to prevent the worst case scenario. Our verdict is that this is a great move to protect the rights of the customers from the kind of situation that have been witnessed in the recent past when the RBI had imposed moratorium on banks and limited access to deposits.
5. Good news for the middle class
A hint of relief can be seen in the face of people and investors alike, since the tax slabs and tax rates stayed the same as last year. There was no change in the capital gains tax on stocks as well which made investors happy. Not introducing the wealth tax was much appreciated as well.
Other than all this, the additional deduction of Rs. 1.5 lakhs which is currently available on interest paid on home loan will continue to be available next year which will especially be beneficial to the middle class.
6. Investing in different financial products becomes easy
There is deep distrust among people when it comes to investing. Part of it can be attributed to the past cases where investors have been duped out of their money. In order to appease investors and non-investors alike, the government has announced the idea to set up an investment charter.
This investment charter will diminish the mis-selling of financial products. This charter would apply to investors of all kinds of financial products. Though much has not been revealed, this charter is expected to decide the rights of investors, the grievance mechanism and more. This investment charter is also expected to improve the grievance resolution mechanism of all current financial products.
7. Social security benefit extended
One of the most adverse impacts of COVID-19 pandemic is that it led to several job losses. Most of the people who lost their jobs were tax-paying citizens. After suffering this setback, many of them had to take up freelancing assignments. And now, they have been given some relief in Budget 2021.
In yesterday’s Budget it has been announced that Social security benefits will be extended to gig and platform workers. E-commerce workers will now be included under Employees’ State Insurance Scheme (ESI), Employees’ Provident Fund (EPF) and the minimum wage rule. Women will be allowed to work in all categories in night shifts as well.