Finance Minister Nirmala Sitharaman presented the Union Budget 2021- 22 in the Parliament, on 1st February 2021. The budget laid more emphasis on the infrastructure and healthcare sectors. Along with significant changes in the taxation process, the FM also announced the scrapping of income tax for senior citizens under certain conditions; no other significant change was made to the income tax. Among the other measures, reduction in the period of tax assessments and new rules of double taxation for NRIs were also introduced. Start-ups get an extension in their tax holiday for an additional year. She also announced that the advance tax liability on dividend income should arise after the declaration of payment on the dividend.
In her Speech, FM announced that, as per the Revised Estimates, India’s fiscal deficit is set to jump to 9.5 per cent of the Gross Domestic Product (GDP) in 2020-21, with Financial Year 2022 Fiscal deficit target at 6.8 per cent. This is higher than 3.5 per cent of the GDP that was projected in the Budget Estimates. A collapse in government revenues during the COVID-19 pandemic has led to a sharp rise in the deficit and market borrowing.
The Capital Expenditure provided for FY22 is up 34.5 per cent, at Rs 5.54 lakh crore. Rs 44,000 crore, coming under capital expenditure will be given to the Department of Economic Affairs in FY22. The Capital Expenditure for FY21 is seen at Rs. 4.39 lakh crore.
The government’s direct taxes are left unchanged but has taken steps indirect tax incentives to ease compliance for taxpayers. This was proposed so that the advance tax liability on dividend income would arise only after the dividend payment. The Budget also looked at pre-filled tax forms concerning tax payment, salary income and TDS.
Senior Citizens and Small Taxpayers
No tax filing is required for senior citizens above 75, with only pension, interest income. For the small taxpayers, a dispute resolution committee is being planned. Anyone who has a taxable income of up to Rs. 50 lakh, disputed income of up to Rs 10 lakh is eligible to approach the dispute resolution committee.
Cess on Liquor and Fuel
It was announced that Agriculture Infrastructure and Development Cess is imposed on several items, including fuel and liquor. Still, the Finance Minister also added that there would be no additional burden on the consumer. The Budget imposed a Rs. 2.5 per litre Agri infra cess on petrol, Rs 4 on diesel and 100% on alcoholic beverages.
Faceless Resolution Committee
The Budget also proposes in setting up of a faceless dispute resolution committee for the individual taxpayers, making the Income Tax Appellate Tribunal faceless and also constituting the dispute resolution committee for small taxpayers.
The Vision of Atmanirbhar Bharat
The Finance Minister has outlined six pillars of proposals to the strengthen the visions of Atmanirbharta, mainly health and well-being, inclusive development, capital and infrastructure, strengthen human capital, innovation and research & development and maximum governance and minimum government.
The allocation for healthcare in this budget has increased substantially. Main areas of focus will be preventive and curative healthcare, along with well-being. The allocation is expected to be around Rs. 2,23,846 crores, a 137% rise from the budget of the previous year. Rs 35,000 crore has been allocated for the Covid-19 vaccination expenditure in FY22.
According to the Finance Minister, the government sees the fiscal deficit at 6.8% for FY22. Rs.1.75 lakh crore is aimed to be brought in through divestments in 2021-22. Central Public Sector Enterprises will eventually be privatising din all but four sectors.
The Budget 2021 has also given a renewed push to disinvestment and assets monetisation as the government is striving for capital creation. The monetisation of land will be taken up, and an SPV will be launched for carrying out this activity.
Agricultural Produce Market Committee
Nirmala Sitharaman announced that 1000 more agriculture product marketing committees or mandis would be linked to the e-national agriculture market (e-NAM). Subtly, she gives out the message that the government has no intention of dismantling the APMC system.
The Finance Minister has said that the government will borrow Rs. 80,000 crores in the remaining two months for meeting the FY21 expenditure and is also expected to borrow Rs. 12 lakh crores, approximately, in FY22.
It was announced that there are plans to privatise 2 PSU banks and one general insurance company in FY22. The Government will also bring in the long-awaited LIC IPO in FY22; it also plans to complete the divestments of BPCL, CONCOR and SCI in 2021-22.
Development Financial Institution
The Government is set to bring in a Development Financial Institution (DFI) and Rs. 20,000 crores will be provided to capitalise the same. It is aimed to have an ending portfolio of Rs. 5 lakh crores in 3 years. A National Monetisation Pipeline for brownfield projects is to be launched. Nirmala Sitharaman also announced that with NHAI and PGCIL have sponsored one InvIT each. She also added that vehicles would have to go under a fitness test after 20 years for PVs, 15 years for CVs and announced that a voluntary vehicle scrapping policy is being introduced.
Allocation for Companies
The Government plans to allot Rs 20,000 crore for bank recapitalisation of PSBs. It is also proposed to revise definition under the Companies Act, 2013 for the small companies by increasing their capitalisation threshold.
Minimum wages will now be applied to workers in all categories, and women will be allowed to work in all categories with adequate protection.
The Finance Minister said that projects for building 8,500 km of highways would be executed by March 2022. She also said that poll-bound, West Bengal will see highway projects worth Rs. 25,000 crores.
There has been a rise in the basic customs duties on importing the sub-parts of mobile phones and battery chargers from nil to 2.5% in FY21- 22. The impact on the prices will be known once the details are clear.
India aims to set up seven textile industries over three years under the scheme of mega-investment textile parks which was announced in this year’s Budget. These are expected to be set up over 1000 acres of land having world-class infrastructure, with plug and play facilities. This will be an addition to the Rs 10, 683 crore production linked incentive (PLI) scheme for the technical textiles and human-made fibres.
For the next fiscal year, a total of Rs 39.67 has been allocated to the Lokpal. The Budget said that this allocation is for the establishment and construction-related charged expenditure for the Lokpal.
A proposal to review more than 400 old exemptions to customs duty and from 1st October 2021 and revised customs duty structure will be put in place, free on any distortion. Govt plans on reducing customs uniformly to 7.5% on products of non-alloy, alloy and chrome steel, exempting duty on steel scrap till March 2022. To provide relief to copper recyclers, the government will be reducing duty on copper scrap to 2.5 %; earlier it was 5%.
Nirmala Sitharaman said that tax return filers increased to 6.48 crores in 2020 from 3.31 cores in 2014.
Extension of Tax Holiday
The government is expected to extend the eligibility of erstwhile tax on home loans. Affordable housing projects have availed a tax holiday for one more year. The fiancé Minister has also raised extension of tax holiday for star ups for another year, a tax exemption for relocating funds to IFSC and also a tax holiday for aircraft leasing business.
The government is to notify rules to eliminate the double tax for NRIs on foreign retirement funds.
First Digital Census
The Government has allocated Rs 3,726 crore for the forthcoming Census and has called it ‘The First Digital Census’.
Deep Ocean Mission
With an allocation of Rs 4,000 crore for over the next four years, India plans to launch Deep Ocean Mission.
Mergers and Acquisitions
The Government has withdrawn the tax benefit for mergers and acquit ions that would result in a marginal increase in the cost of transactions. It also said that no depreciation would be allowed on Goodwill.
Incorporation of One- person Companies
The govt plans to permit incorporation of one-person companies with no restriction on paid-up capital and turnover. The Finance Minister added that Non-resident Indians also would be allowed to include one-person companies in India.
Allocation for MSME
It is proposed that there will be a doubling of the MSME allocation, keeping aside Rs 15,700 crores for medium and small enterprises.
One Nation, One Ration Card
69 crore beneficiaries (86% beneficiaries) were covered under the One-Nation, One-Ration card implemented by 32 states and union territories.
The government on Monday said the free cooking gas LPG scheme, Ujjwala are going to be extended to at least one crore more beneficiaries. She further said city gas distribution network of providing CNG to automobiles and piped cooking gas to households will be expanded to 100 more districts.
Distribution of Electricity
Nirmala Sitharaman announced that the government would enable electricity connections portability to consumers by introducing competition within the power distribution space and kickstart a Rs 3 lakh crore reforms scheme for state power distribution companies.
An allocation of Rs 1,10,055 crores is to be made for the Railways sector. Out of this Rs 1.07 lakh crore is for the capital expenditure in FY22. The eastern and western dedicated freight corridors will be commissioned by June 2022; it had been announced. She also announced plans for East Coast corridor, east-west corridor, north-south corridors. 100% electrification of broad-gauge routes are going to be completed by December 2023.
The Budget set agriculture credit target of Rs 16.5 lakh crore for FY22, and can further increase provision to a rural infra development fund to Rs 40,000 crore from earlier Rs 30,000 crore. Sitharaman said the govt. Is committed to the welfare of farmers, pointing at how 1.54 crore farmers benefited from MSP in paddy and wheat in FY21. Furthermore, underlined that Rs 75,060 crore was paid to farmers for wheat in FY21 versus Rs 62,802 crore in FY20.
Nirmala Sitharaman proposed consolidating provisions of the Sebi Act, Depositories Act, Securities Contracts Regulation Act, and therefore the Government Securities Act. The government aims to amend the Insurance Act to permit higher FDI, increasing FDI limit in insurance to 74% from 49% and allowing foreign ownership.
Addressing the country after the Budget, Prime Minister Narendra Modi said that it speaks of “all-round development.” “From Covid-related reforms to Atmanirbhar resolve, we’ve moved ahead with this mantra in Budget 2021. It’s a lively and not a reactive budget,” he added, congratulating the Finance Ministry team.
This was Sitharaman’s third budget under the National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi. During a significant departure from the tradition, this year’s Budget wasn’t printed and was only made available during a digital format.
How SEBI’s New Margin Rule Is Affecting Retail Traders?
Securities and Exchange Board of India has introduced new margin rules for traders. Traders and Brokers are not happy with the new regulations because they will have to invest a large amount of cash in fulfilling margin requirements for trade.
SEBI had introduced the new margin rule in the year 2020 for intraday traders. It is being implemented in a phased manner. Traders were supposed to maintain 25 per cent of the peak margin in the first phase; the margin was raised by 50 per cent in the second phase. In the third phase, as per the new margin rule, intraday traders will have to pay a 100 per cent upfront margin. According to new norms, the margin requirements will be calculated four times during every trading session because the money margin must be greater than the need.
As per the new rule, brokers must collect margin from investors for any purchase or sale, and if they fail to do so, they will have to pay the penalty. Thus, brokers will not receive power of attorney. Brokers cannot use power of attorney for pledging anymore.
Those investors who want to make use of margin will have to create margin pledges separately. As per the new rule, investors will have to pay at least a 30 per cent margin upfront to avail a margin loan. Shares brought today cannot be sold tomorrow. Funds from shares sold today cannot be used for new trades on the same day.
The market experts said that there must be proper adjustments for implementing new rules, or it may create chaos, trouble and disturbance to the market participants. The CEO and founder of Zerodha broking firm, Nithin Kamath tweeted that, “the day when the new rules came into effect was the dreaded day for brokers, exchanges, intraday traders”.
Traders Are Not Happy:
Changes in rules have evoked strong reactions from traders because they will have to invest a large amount of cash in fulfilling margin requirements for trades as per new margin rules. Even the trading in futures and options will become more expensive. Traders are disappointed because they will have to pay up more money to bet in stock markets. As per new margin rules, Traders are also liable for the penalty if the rules are not followed during the trading session. If a trader wants to buy Nifty worth Rs 10 lakh, he will have to pay a 20 per cent margin of around 2 lakh. If the margin of the trader does not meet the need, he will be penalized. Traders will have to pay the minimum amount for opening the Multilateral Trading facility account, and they have to maintain a minor balance at all times.
Why Gas SEBI Introduced A New Margin Rule?
SEBI has introduced new rules to protect retail investors from purchasing difficulty. The intended goal of SEBI behind new margin rules is to bring down the difficult market situation and avoid huge fluctuation in stock markets during extreme stress. The new margin rules are likely to bring transparency to the market; it is expected to strengthen the market’s safety.
Maya Global Education Society Acquires GIAP Journals
Gyandhara International Academic Publications (GIAP Journals), headquarter at Mira Road, Thane, Maharashtra, has been completely acquired by Maya Global Education Society (MGES), Prayagraj, India, with effect from 25th August 2021. Maya Global Education Society is an emerging confluence of academicians to cater to challenges in the educational and research domain in the post-pandemic world. Its headquarter is at Prayagraj, India.
According to our trusted sources value of this acquisition is around 50,000 USD. MGES claimed that their core activity is developing an online research-based education and training system that will reach all parts of the society irrespective of their economic status.
MGES aims to delve into the following activities:
* Training to academicians on tools and systems to improve students’ engagement in an online environment.
* Training to early researchers on research tools, software, and methodology.
* Training to early professionals and graduates to meet the skills demand of Industrial Revolution 4.0 (based on World Economic Forum suggestions).
* Publication of open access research journals and books (Recently acquired GIAP Journals).
* Distribution of scholarly content to Universities and higher education institutions.
GIAP cofounder and CEO Mrs. Rajni told us in an exclusive interview that the journey of GIAP was like a dream come true. It started in 2012 with loans on personal jewelry. After serving in the academic fraternity for the last 9 years, it was a timely decision for all journals and books to grow under the able guidance of pure academicians and researchers.
Kitex’s Stock Surged 46% In A Week Post Tussle With Kerala Government
The stock of Kitex Garments, the world’s second-largest manufacturer of kids’ garments, based in Kerala, saw a secular uptrend recently, after the company’s announcement that it will relocate to Telangana following a squabble with the Kerala government. The group withdrew a 3,500-crore investment project from Kerala and is planning to move to Telangana with a 1000 crore worth investment project.
Sabu M Jacob, the chairperson and managing director of the Kitex Group, stated his morality forbids him from ever investing a single rupee in Kerala, his native state. The comment brings the confrontation between the Kerala government and the homegrown firm to a close.
What is at the root of the clash?
Kitex has been subjected to repeated inspections by various Kerala government authorities in recent weeks, with group chairperson Sabu Jacob publicly accusing Pinarayi Vijayan’s Left administration of hounding the firm.
The inspections, Jacob said, were intended to “harass” businesses like him and “push him into a corner.” The authorities who came down to examine the firm, he claimed, seemed as though they were on the lookout for thieves and criminals.
P Rajeev, the state’s Industries Minister, emphasized that the government had not conducted any Suo Motu inspections of the firm. While the industries department did not conduct any searches, he said the health and labour agencies did so in response to orders from the Kerala High Court and the National Human Rights Commission based on individual complaints. The accusations are allegedly related to the company’s treatment of employees and the contamination of a nearby river due to wastewater discharge.
A Congress MP and a Congress MLA, and a female employee filed charges against the organization. The charges ranged from polluting a local waterway to harassing employees and violating minimum wage laws.
The Kerala government has denied targeting Kitex on purpose. The inspections were carried out in response to complaints and directives from courts and the state’s human rights commission; according to state industries minister P. Rajeev, he said his government stands for “responsible investment”, and the state would be a hub for such investments in a few years. He added, “The LDF Govt. ensures that sustainable and innovative industries thrive here,”
Thank you @hvgoenka for allaying the apprehensions over Kerala's EoDB. Your honesty is much appreciated. Kerala has been one of the most investor friendly States in India and will continue to be so. The LDF Govt. ensures that sustainable and innovative industries thrive here. https://t.co/6zQO0AUFIG
— Pinarayi Vijayan (@vijayanpinarayi) July 4, 2021
What was the aftermath of the inspections?
Even though the final findings of the official inspections are still pending, Jacob escalated his feud with the government by announcing that he was cancelling investments worth Rs 3,500 crores that were announced during the ASCEND conference in January 2020. By 2025, the investments were intended at establishing an apparel park and industrial parks along the proposed economic corridor in Kochi, Thiruvananthapuram, and Palakkad, resulting in the creation of thousands of employment opportunities.
Without identifying anyone in the state administration, Jacob said that the state lacked a business-friendly environment. While he did not want to relinquish the intended investments in Kerala, he said he was compelled to do so due to political and bureaucratic persecution. He said that although other states in the country were gradually improving their economic environment, Kerala was still 50 years behind.
Jacob and a few Kitex officials went to Hyderabad last week on a private plane supplied by the Telangana government, where they met with a team led by the state’s Industries Minister, KT Rama Rao. The business revealed intentions to spend Rs 1,000 crore in an apparel park at the Kakatiya Mega Textile Park in Warangal after two days of negotiations.
The political consequences of the experiment
Jacob, the founder of the Kitex Group, is an industrialist who has also dabbled in politics. Jacob launched Twenty 20, a one-of-a-kind political experiment that won seats in panchayat elections in 2015 and then built on that success in the 2020 elections by winning seats in new panchayats.
This corporate-driven panchayat model has resulted in a lot of growth in tiny villages, putting both the Congress and the Communist Party of India in danger (Marxist).
Kerala’s rating in terms of ease of doing business
Kerala ranks worse than many other states and union territories when it comes to the ease of doing business. Based on improvements that states were asked to adopt in 2019, it was placed 28th out of 36 states and UTs in the ease of doing business rankings.
Kerala was judged to have failed to implement some labour reforms, such as single-window clearance and measures to ensure simple information flow and transparency.
Following the Kitex withdrawal, however, several groups that had thrived in the state for years came out openly in favour of the state administration.
RPG Enterprise’s chairperson Harsh Goenka publicly tweeted in support of the administration. He stated, “We are the largest employers in Kerala. We find the local government very supportive,”
We are the largest employers in Kerala. We find the local government very supportive.
— Harsh Goenka (@hvgoenka) July 1, 2021
Where does the company stand in the share market?
With the decision to invest in Telangana, Kitex’s shares were once again trapped in the upper circuit. On Wednesday, the stock soared almost 10%, reaching a record high of Rs 204.05.
Within a week, the stock price of the children’s clothing company rose by almost 85 percent. The stock price increased from Rs 110.05 to Rs 204.05, reaching its highest level in three years. The company’s market capitalization increased to Rs 1,357 crore from Rs 732 crore as a result of this.
Because it controls 55 percent of the firm, the promoter entity, which includes Kitex Managing Director Sabu Jacob, profited Rs 347 crore. Sabu Jacob’s entire share value increased to Rs 754 crore.
Meanwhile, the BSE pressed Kitex for an explanation for the sharp increase in share prices, which the firm attributed to a Rs 1,000 crore investment plan in Telangana.
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