Throughout the year, the Government has shown remarkable restraint in dealing with finances under pressure of unprecedented Covid times. This has translated to the Budget proposals too. Raising of resources to meet expenses on account of spending pressure would have been fiscally unhealthy and dented the finances in a long time.
Instead, the FM has focussed to ease out the pain points of compliance. The amendments proposed in the companies Act, like definition of small company, one-person company are well in time and will promote entrepreneurship. The proposed fin-tech hub in GIFT City is a move recognising the prominence of India in FinTech worldwide. This will spur growth large number of start-ups in India. The ease of compliance through overhaul of tax administration and customs administration will further increase ease of doing business. The irritants in the form of advance tax computation on dividend, capital gains liability of Alternative Investment Funds and retirement fund withdrawals are removed. The investment by FIIs and FPIs in India market is eased through clear definition of some of the terms in tax laws.
The small businesses have a lot to cheer with compliance burden going down substantially. There won’t be need of tax audit till turnover of Rs.10 crores provided 95% of transactions are digital. This will benefit small business as well as FinTech ecosystem in India.
The tax deduction of ₹1.5 lacs for affordable home buyer has been extended by a year and deduction is also provided to affordable rental housing project. This will benefit both, the migrant workers and small home buyers and promote real estate sector.
The PSBs are re-capitalized to the extent of only ₹20,000 crores which is a remarkable restraint when banks are battered by Covid slowdown.
On the expenditure side, the Government has focussed on carrying on existing infrastructure projects with launching of ports at 7 locations. However, most of the projects are on PPP basis and will not affect government expenses much.
Overall, the approach has been ‘ease of compliance’ on revenue side and ‘consolidation of existing’ on expenditure side. They have avoided adventures on both sides. This is correct, since in uncertain and volatile times, adventures may turn out to be mis-adventures.