Alas, the most important stream of the year is out “Budget 2021” was one of the biggest market mover than all of the preceding budgets. So I think the major news was the fiscal deficit was around the 3x that was expected now taking this as the starting point let’s take this as our point of view. The budget was quite a middle ground because it neither gave out money to said societies nor in the name of covid disruption did it heavily tax the already affected middle class (which in my opinion I thought could have easily be done). In this write-up I will try to point out the major takeaways from financial POV.
- INTENT
It was pretty clear that the whole intent of the government by the way of budget was to say that now we are doing long term planning for the economy and this can be seen in the way of disinvestment on the two public banks and one general insurance government company. As well as its investment in infrastructure and heath care industries shows that they are not doing it for the sake of revenue collection but for capital asset formation.
- BUDGET X STOCK MARKET
Equity market statuses Sensex and Nifty 50 saw a bullish rally during the whole session and was around 5% up as compared to monday. Sensex surged 2,315 points to 48,600.61, while Nifty 50 ended at 14,281, up 646 points or 4.74 per cent. Barring Nifty Pharma, all the Nifty sectoral indices ended in the green led by Nifty Bank index, up 8.26 per cent, which hit record high intraday. In the broader market, BSE Midcap and Smallcap indices rose 2-3 per cent.
The reasons may be considered as follows:
i) No increases as such in LTCG AND STCG.
II) Such a strong budget points out toward a V shaped recovery if implemented properly.
iii) The right decision to increase the expenditure even though high fiscal deficit and diversifying the funds to industries like textile, health and housing.
iv) Simultaneous corrections and improving global markets (for example – European markets also rose after recovering from a very bad decline from October).
v) The government has recently formed a new Developmental Finance Institute (DFI) the previous Monday which was a good sign already nut during the budget our Finance minister also announced that the union would be capitalizing this institute with a healthy Rs 20000 crore which would allow it to leverage the debt amounting to about Rs 5 Lakh crores and this would create wave of new finance and liquidity in the current market.
vi) The privatization of two public banks also really helped the soaring of the nifty bank.
vii) Other big news came in the form of removal of cap of FDI in insurance sector from 41% to 79%.
this would really help the insurance and ULIP firms to function in the times of this pandemic.
viii) To be completely honest, the above reasons wouldn’t mean anything if there were any negative news as such as increase in direct taxes or change in investment rations or anything else so basically “NO BAD NEWS IS THE BEST NEWS”.
- BUDGET X PERSONAL FINANCE
As told earlier there was a lot of tax buoyancy and no increase in direct taxes and slab rates as well as LTCG AND STCG but there were still many changes introduced:
i)Dividend payment to real estate investment trusts or new infrastructure trusts will be exempt from TDS requirements.
ii)Advance tax liability on dividend income income will only arise after its declaration, as its amount cannot be estimated correctly for paying advance tax.
iii) There would be tax liable on the contributions made to PPF accounts if the deposits amount to more than 2.5 lakhs a year.
iv) As well as if your ULIP investments have premium greater than 2.5 lakhs then it would attract a taxbound. For understanding EPF’S interest was tax-free and there was no ltcg on ULIP.
v) Relief is being looked into for double taxation on NRI who return to country by categorizing them into lower income slabs.
vi) In a relief to senior citizens, those aged 75 or more and only have pension and interest income will not have to file income tax returns. But if you earn dividend income or any other income, then you have to file your income-tax returns, as usual.
vii) There is also an increase in CESS but as it was not announced during the budget it is hard to find how much more it is on agriculture and petrol.
-BY DEVANSH GANDHI
Devansh is a second-year undergrad student studying BBA LLB (Hons.) from SVKM NMIMS SoL in Mumbai, India. He is deeply interested in IPR and CrPc. Writing and researching are my main USP and I am keen on exploring new areas of Law. I also mentor 10k+ Law Aspirants. I tend to give my all to the task assigned to me and make my contribution to any organization significant.