This Budget was the much-needed nudge for the businesses to take off. The budget 2021-2022 rest on 6 pillars.
i. Health and Wellbeing
ii. Physical & Financial Capital, and Infrastructure
iii. Inclusive Development for Aspirational India
iv. Reinvigorating Human Capital
v. Innovation and R&D
vi. Minimum Government and Maximum Governance.
Finance Minister has proposed many changes and new frameworks that could prove to be beneficial for the businesses to bloom.
Production Linked Incentive scheme (PLI) – Introduced in 13 sectors, is an initiative by government to incentivize and boost domestic manufacturing, also it is aimed to attract large investments from foreign into India.
Mega Investment Textiles Parks (MITRA) – with the huge potential for Export, it is a welcome step taken by government which will promote ‘entrepreneurship’ especially in smaller cities.
National Infrastructure Pipeline (NIP), Development Financial Institution – Better infrastructure ensure ‘ease of doing business’ setting up Real Estate Investment Trust (REITs) and Infrastructure Investment Trust (InVITs) will invite foreign investment in Infrastructure.
Physical & Financial Capital, and Infrastructure
Investment in Roads and Highways Infrastructure through BharatMala Project, Railway Infrastructure through Dedicated Freight Corridors such as Western Dedicated Freight Corridor (DFC) and Eastern DFC will bring down the logistic costs for businesses. Similarly, Ports, Shipping, Waterways infrastructure improvement will reduce the cost of logistics to 30% when compared to the road transport.
Fin-Tech hub at the GIFT-IFSC – To provide world class International Financial Services in GIFT City in order to support the business environment.
Investor charter – FM has proposed to grant a charter to the investors, this will instill confidence among investors through protecting their rights. Government has gone a step further to reduce the burden of compliance for investors, FM has proposed to consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalized single Securities Markets Code.
Asset Reconstruction & Management company – A long-standing demand by FICCI to set up National Asset Management Company has been fulfilled by proposed formation of Asset Reconstruction & Management company. This will be a ‘shot in the arm’ for the Banking system.
Redefining ‘Small Companies’– According to this new definition.
Small Companies Paid up capital Turnover
Earlier not exceeding 50 Lakh not exceeding2 Crore
Revised not exceeding 2 Crore not exceeding20 Crore
It will benefit more than two lakh companies in easing their compliance requirements and will directly benefit Start-ups and Innovators.
One Person Companies (OPCs)
1) Government has lifted restrictions on Paid up capital and Turnover on OPCs.
2) Allowed them to convert anytime into any other type of company.
3) Reduced the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days.
4) Allowed Non-Resident Indians (NRIs) to incorporate OPCs in India.
Faster Dispute Settlement
To ensure faster resolution of cases, FM told that the NCLT framework will be strengthened, e-Court system shall be implemented. Dispute resolution has actually been a pressing problem which seemed to have been taken care of with these frameworks proposed by FM.
Proposed launching of data analytics, artificial intelligence, machine learning driven MCA21 Version 3.0 will have additional modules for e-scrutiny, e-Adjudication, e-Consultation and Compliance Management.
Multi-State Cooperatives – FM has proposed to set up a separate Administrative Structure to streamline the ‘Ease of Doing Business’ for Cooperatives.
Implementation of the 4 Labour codes– Government tried to reduce compliance burden on employers with single registration and licensing, and online returns.
Innovation and R&D – announcing National Research Foundation is in line with the recommendations of Economic Survey 2021-2022. This area needs more Private investment than government and hopefully in the near future we see, Indian businesses doing the heavy lifting in R&D.
Conciliation Mechanism – Advocated by FM for quick resolution of contractual disputes for those who deal with Government or CPSEs, and carry out contracts.
Other Pro-business measures
Exemption from Audit – The turnover limit for exemption from tax audit has now been increased from5 crore to10 crore.
Relief for Dividend– Dividend payment to REIT/ InvIT has been exempted from TDS. To provide ease of compliance.
Tax incentives to IFSC– Tax holiday for capital gains for aircraft leasing companies, tax exemption for aircraft lease rentals paid to foreign lessors; tax incentive for relocating foreign funds in the IFSC; and to allow tax exemption to the investment division of foreign banks located in IFSC.
Incentives for Start-ups– Tax holiday for start-ups till 31st March, 2022. Capital gains exemption for investment in start-ups extended till 31st March, 2022.
According to FICCI president, this budget is growth-oriented and lays a strong foundation for Atmanirbhar Bharat and on paper this budget look very nice but it is the implementation that will decide the future of business in India.