Budget 2021 Analysis including Financials, Income Tax, GST, Excise and Customs Proposal

1. Head Office: 204, Mahalaya Complex, Off C.G.Road, Swastik cross roads, Navrangpura, Ahmedabad – 380009 URL:www.dhpa.in
February 01, 2021
Chartered Accountants
Ahmedabad - Mumbai
Budget 2021
Key Highlights
Budget
2021
Key Highlights

2. Head Office: 204, Mahalaya Complex, Off C.G.Road, Swastik cross roads, Navrangpura, Ahmedabad – 380009 URL:www.dhpa.in
Contents
2
1. Economic Performance & Budget Financials
2. Direct Taxes
3. Indirect Taxes
 Goods & Services Tax / Excise
 Customs
Prepared by Dhiren H Pandya & Associates LLP, for client service and internal use only.
This document summarizes the key indicator of Budget Performance and key proposals of the Finance Bill 2021
However, this publication is not intended to give legal, tax, accounting or other professional advice
Expert guidance may be sought before acting upon the proposals.

3. Head Office: 204, Mahalaya Complex, Off C.G.Road, Swastik cross roads, Navrangpura, Ahmedabad – 380009 URL:www.dhpa.in
3
Economic Performance
& Budget Financials

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Economic Performance
Key Indicators
a: Provisional Estimates b: First Advance Estimate c: Fourth AE for 2019-20 and First AE for 2020-21,
d: (April To November) 2020, e: (April – December) 2020, f: (April- September)2020, g: as on December 18,2020,
h: Provisional Actuals, i. Budget Estimates, j. End of December 2020, k: As on 8th January 2021.
Particulars 2017-18 2018-19 2019-20 2020-21
Growth in %
-GDP (factor cost, constant prices) 7.0 6.1 4.2a -7.7b
-Schedule Commercial Bank Credit
(Growth Rate)
10.0 13.3 6.1 6.1g
-Index of Industrial Production 4.4 3.8 -0.8 -15.5d
Imports (at c.i.f , in USD billion) 469.0 514.1 474.7 151.9f
Export (at f.o.b, in USD billion) 309.0 330.1 313.4 125.6f
Inflation in % (Average in terms of WPI) 3.0 4.3 1.7 -0.1e
Forex reserves (in USD billion) 424.4 411.9 475.6 586.1k
Net Foreign Investment (FDI/ FII/ FPI, in
USD billion)
52.4 30.1 44.6 31.4f
Exchange Rate(INR/USD) (annual
average) c
64.46 69.92 70.90 74.64j

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Budget Financials
Key Budget Financials (`
`
`
` in Crores)
Particulars
2019-20
(Actuals)
2020-21**
(B.E.)
2020-21**
(R.E.)
2021-22**
(B.E.)
1. Revenue Receipt 1684059 2020926 1555153 1788424
2.Capital Receipts1
1002271 1021304 1895152 1694812
3.Total Receipt (1+2) 2686330 3042230 3450305 3483236
4. Total Expenditure(5+6) 2686330 3042230 3450305 3483236
5. Revenue Expenditure 2350604 2630145 3011142 2929000
6. Capital Expenditure 335726 412085 439163 554236
7. Revenue Deficit(5-1)
As a percentage of GDP
666545
-3.3
609219
-2.7
1455989
-7.5
1140576
-5.1
8.Effective Revenue Deficit(7-Grants in
Aid for Creation of capital Assets)
As a percentage of GDP
480904
-2.4
402719
-1.8
1225613
-6.3
921464
-4.1
9.Fiscal Deficit{4-(1+Recoveries of Loan
+ Other receipts)}
As a percentage of GDP
933651
-4.6
796337
-3.5
1848655
-9.5
1506812
-6.8
10. Primary Deficit (9-Interest Payments)
As a Percentage of GDP
321581
-1.6
88134
-0.4
1155755
-5.9
697111
-3.1
B.E. Budget Estimate, R.E. Revised Estimate
**GDP for BE 2021-2022 has been projected at ` 22287379 crore assuming 14.4% growth over the estimated GDP of ` 19481975 crore for 2020-2021(RE) .
ii)Individual items in this document mat not sum up to the totals due to rounding off iii) Figures in parenthesis are as a percentages of GDP
1 Includes drawdown of cash Balance.

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Where the Rupee comes from & Where the rupee goes to
Budget Financials
Borrowings &
Other liabilities
36%
Corporation-tax
13%
Income-tax
14%
Customs service
tax 3%
Excise
8%
GST and Other
Taxes
15%
Non-tax Revenue
6%
Non-debt Capital
receipts
5%
Where the Rupee comes
State Shares of
Taxes & Duties
16%
Interest
19%
Subsidy
9%
Defence
8%
Centrally sponsered
scheme
9%
Central Sectors
13%
Fin Com & Other
11%
Other Expenditure
10%
Pension
5%
Where the Rupee Goes

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Key Policy Announcements
NBFC/Banking/Insurance
 The minimum loan size for NBFCs for debt recovery under SARFAESI
Act proposed to be reduced from existing level Rs.50 Lakhs to Rs.20
Lakh.
 Recapitalization of PSBs is proposed @ Rs. 20000 Crores.
 ARC Ltd./AMC would be set up to take over existing NPA
 Permissible FDI limit increase from present level of 49 % to 74% for
insurance companies.
Infrastructure
 DFI to be set up with lending portfolio of Rs. 5.00 Lacs crores in 3 year
time.

8. Head Office: 204, Mahalaya Complex, Off C.G.Road, Swastik cross roads, Navrangpura, Ahmedabad – 380009 URL:www.dhpa.in
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Key Policy Announcements
Disinvestment
 Proposal to have strategic disinvestment in BPCL, Air India, SCI,
Container Corporation Of India Ltd
 Privatization of 2 PSU Banks & 1 General Insurance Company
 LIC IPO in F.Y 2021-22
Capital market
 SEBI Act 1992, Depositories Act 1996, SCR Act 1956 and Government
Securities Act, 2007 to be consolidated into a Rationalized single
securities market code

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Direct Taxes

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Business & Professions
 Presumptive Taxation(44ADA):
 LLP excluded from this provision and benefit of Presumptive
cannot be availed
 Currently Presumptive Taxation permitted @ 50% of turnover for
professionals (upto turnover of 50 lacs)
 Tax Audit:
 Not applicable if Turnover upto 10 Crore ( existing 5 crore) and
following two conditions are satisfied:
 Cash Receipts <= 5% of total receipts; and
 Cash Payments <= 5% of total payments.

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Deduction
 Start Ups:
 3 consecutive years profits to be taken as deduction out of first 7
year (80IAC)
 Eligibility extended to 31st March, 2022
 Interest on House Loan :
 Interest on Residential House Property to be allowed as deduction
up to Rs.1.50 lacs, eligibility of loan extended till 31st march 2022
(in addition to interest under head House Property)
 Affordable Housing Projects:
 100% profits allowed as deduction (80IBA)
 Eligibility extended to 31st March, 2022

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Deductions/TCS
 Income of Offshore IFSC :
 Deduction available in case of transfer a aircraft leased by a
unit of IFSC to a domestic company if:
•Operation commenced on or before 31st day of 2024.
 TCS For Non-filers:
 TCS in respect of receipt from non-filers (Person who has
not filed IT return for previous 2 Assessment Years & TCS
exceeds Rs.50,000) to be collected at higher rates
 TCS @ higher of the following :
• Twice the rates specified in the relevant provisions
or
• The rate of 5%.

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Exemption
 Income from other sources
 Royalty earned by giving aircraft on hire to IFSC shall be exempt in
hands of receiver, if receiver is Non Resident
 Receipt of Educational Institution
 Threshold limit of receipt of such institution is increased to 5 Crore
from 1 Crore
 Where the educational institute is wholly/substantially finance by
government
 Receipt of Charitable Hospital
 Threshold limit of receipts of Hospital, is increased to 5 Crore
from 1 Crore

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Exemption
 Investment in AIFs by Sovereign Fund/Pension Fund:
 Dividend, Interest and Capital Gain exempt in hands if invested in
Alternative Investment Fund which has:
• 50% or more amount invested in REITs/INVITs (Earlier that
was 100% investments in REITs/INVITs)
 Trust:
 Income in form of contribution with specific direction is already
exempt
 However, the said contribution now needs to be invested in specified
form mentioned in section 11(5)
 Expenditure incurred from loan taken shall be allowed as application
of income in the year in which such loan taken is repaid

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Tax Deducted at Source
 TDS For Non-filers:
 TDS in respect of payment to non-filers (Person who has not filed
IT return for previous 2 Assessment Years and TDS exceed
Rs.50,000) to be deducted at higher rates
 TDS @ higher of the following :
• Twice the rates specified in the relevant provisions or
• The rate of 5%
 TDS on purchase of Goods:
 On payment made to seller @ 0.1%
 If value of purchases exceed Rs.50 lakhs in previous Year
 TDS applicable on amount exceeding Rs.50 lakhs
 Applicable if Assesse’s Turnover exceeds Rs.10 crores

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TDS / Capital Gain
 Unit Linked Insurance Policy :
 ULIPs issued on or after Feb,1 2021 will be taxable if :
• Policies issued on or after Feb,1 2021 AND
• Premium Payable by individual exceeds Rs 2.50 lacs
during any particular previous year
• Rs. 2.50 includes aggregate premium of all the policies
 Sum Received in case of Death of a person it will exempt.
 It will be taxable under long term Capital Gain under section
112 (A).
 TDS on Foreign Portfolio Investors:
 Currently TDS is deducted @ 20%
 If rate of DTAA is beneficial, Tax is proposed to be deducted at such
beneficial rate

17. Head Office: 204, Mahalaya Complex, Off C.G.Road, Swastik cross roads, Navrangpura, Ahmedabad – 380009 URL:www.dhpa.in
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Capital Gain
 Transaction not regarded as transfer:
 Transfer of Capital Asset/Shares on conversion of Primary
Co-Operative Bank to Banking Company not to be considered
as transfer
 Exemption on Capital Gain:
 On sale of Residential House Property if the Proceeds invested in
an Eligible Start ups (54GB)
 Eligibility extended till up to 31st march,2022
 Immovable Property:
 Stamp duty valuation shall to be treated as sales considerations
 Variation up to 20% allowed instead of 10% earlier
 Applicable in case of First time allotment
 Value of Property not exceeding Rs.2 crores

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Assessment Procedure
 Dispute Resolution Committee (DRC) :
 DRC to be constituted for settling the issues at initial stage for
small & medium tax payers
 Assesse eligible to approach DRC if returned income is Rs.50
lacs or less and the aggregate amount of variation proposed
in the specified order is Rs.10 lacs or less
 Reopening of Assessment
 Reopening period of assessment reduced from 6 years to 3
years
 Where evidence of concealment of income is present for
Rs.50 Lakhs or more, reopening can be made for 10 years
only with the approval of Principal CCIT

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Assessment Procedure / Advance Tax
 Appellate Tribunal :
 Faceless proceeding to the extent technological feasible, to be
introduced in income-tax Appellate tribunal
Particulars Existing Time Limit Proposed Time Limit
Intimation U/s 143(1) 1 Year from end of F.Y. in which
return was furnished.
9 Months from end of F.Y. in which
return was furnished.
Notice U/s 143(2) 6 Months from end of F.Y. in
which return was furnished.
3 Months from end of F.Y. in which
return was furnished.
 Assessment:
 Interest on Advance Tax :
 Interest on deferment/late payment of Advance Tax in respect of
Dividend Income is not applicable

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Income Tax Returns
 Senior Citizens – Relaxation from Return filing:
 Citizens of Age 75 years & above
 With only pension & interest income from specified banks not
required to file income tax return
 Bank to deduct TDS after reviewing the income
 Banks to be specified by Government
 Belated/Revised Return:
Return Existing Time Limit Proposed Time Limit
Revised Returns and
Belated Return
Relevant Assessment Year or
Completion of Assessment Year
Whichever is earlier
3 Months before Relevant
Assessment Year or
Completion of Assessment Year
Whichever is earlier

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GST and Excise

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GST – Key Changes
 Co-operatives/Clubs/Associations etc.:
 Ambiguity regarding transactions with Members/Constituents
removed
 Transaction with Members & Constituents included in “Supply” and
accordingly to be taxed
 Input Tax Credit:
 Credit can only be availed if Supplier has furnished details of
Invoice/Debit note in Statement of Outward supplies
 GST Audit:
 Mandatory GST Audit and certified Reconciliation Statement based
on Turnover criteria done away with
 However, self certified reconciliation to be submitted in Annual
Return

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GST – Zero Rated Supply
 SEZ / SEZ unit:
 Supply to SEZ/ SEZ units to fall under Zero Rated supply only if the
supply is for “Authorized Operations”
 Zero Rated Supply on Payment of Tax:
 Government given powers to notify persons who can make Zero
Rated Supply upon payment of IGST
 Foreign Remittance Mandatory:
 In case of Zero Rated Supply in case of supply without payment of
tax (under Bond/LoU) can continue to claim refund
 However, Foreign Exchange remittances to be received within time
limit prescribed under FEMA
 In case of non-realization deposit the refund with interest

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GST – Attachment / Appeal / Seizure
 Provisional Attachment of Property:
 Power to attach property of any person who has derived benefit
from certain transactions with taxable person given
 Currently property of only taxable person can be attached
 Appeal:
 In case of detention/seizure, appeal to be filed only after payment of
25% of penalty (in addition to 10% of disputed tax liability)
 Release of Goods from Detention/Seizure:
Existing Condition Proposed Condition
Owner of Goods comes
forward to pay Tax
Penalty – 100% of Tax Penalty – 200% of Tax
Owner of Goods does not
come forward to pay Tax
50% of Value of goods reduced
by Tax paid thereon
50% of Value of goods or 200%
of Tax (higher of the two)

25. Head Office: 204, Mahalaya Complex, Off C.G.Road, Swastik cross roads, Navrangpura, Ahmedabad – 380009 URL:www.dhpa.in
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ITEM BED (Rs/Ltr)
Existing
SAED (Rs/Ltr)
Existing
AIDC (Rs/Ltr)
Proposed
Petrol (unbranded) 1.4 11 2.5
Petrol (branded) 2.6 11 2.5
High speed diesel
(unbranded)
1.8 8 4
High speed diesel (branded) 4.2 8 4
Agriculture Infrastructure & Development Cess
 AIDC introduced on Import & Manufactured Petroleum
Products:
 Special Additional Excise Duty & Road and
Infrastructure Cess:
 Methanol Blended petrol (15% & 20% blend) exempted from SAED &
RIC

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Customs

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Custom
Agriculture infrastructure and development cess:
 New Cess is being imposed on imports of certain items at specified rate.
Simultaneously, BCD, AED, BED, SAD is being reduced on the items
being brought under new cess
Exemptions:
 All conditional exemptions to an end on 31st March falling
immediately two years after the date of such grant unless otherwise
specified or varied or rescinded

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Customs – Major Rate Changes
Chemical Existing (BCD) Proposed (BCD) Movement
Carbon Black 5% 7.5%
Gems & Jewelry Existing (BCD) Proposed (BCD) Movement
Cut and Polished
Synthetic stones
10% 15%
Textiles Existing (BCD) Proposed (BCD) Movement
Raw Silk (not thrown) 10% 15%
Raw Cotton Nil 5+5(AIDC) %
Nylon Fiber and Yarn 7.5% 5%

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Customs – Major Rate Changes
Gems and Jewellery Sector Existing (BCD) Proposed (BCD) Movement
Silver 12.5% 7.5+2.5(AIDC) %
Silver Dore 11% 6.1+2.5(AIDC) %
Gold 12.5% 7.5+2.5(AIDC) %
Gold Dore 11.85% 6.9+2.5(AIDC) %
Other precious metals like
Platinum, Palladium, etc.
12.5% 10%
Coin 12.5% 10%

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Customs – Major Rate Changes
IT, Electronics and Renewable Existing (BCD) Proposed (BCD) Movement
Specified insulated wires and
cables
7.5% 10 %
Inputs or parts for
manufacture cellular mobile
phone
- 2.5%
Inputs or parts for
manufacture cellular mobile
phone Charger or adapter
- 10%
Solar lanterns or solar lamps 5% 15%
Solar Inverters 5% 20%

31. Head Office: 204, Mahalaya Complex, Off C.G.Road, Swastik cross roads, Navrangpura, Ahmedabad – 380009 URL:www.dhpa.in
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Customs – Major Rate Changes
Capital Goods Existing (BCD) Proposed (BCD) Movement
Tunnel boring machines Nil 7.5%
Parts and components for
manufacture of tunnel
boring machines with actual-
user condition
Nil 2.5%

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Customs – Major Rate Changes
Chapter or Heading or
sub–heading or tariff
item
Description of Goods Rates
2929 10 90 Diphenylmethane 4, 4-diisocyanate (MDI) for
use in the manufacture of spandex yarn
7.5
32, 84 or 96
Ink cartridges, ribbon assembly, ribbon gear
assembly, ribbon gear carriage, for use in
printers for computers
5
2207 20 00 Denatured ethyl alcohol (ethanol) 5
Following items came into tax regime as exemption was withdrawn

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Budget Team
CA Dhiren H Pandya, Partner
Email: dhiren@dhpa.in
CA Varun Pandya, Partner
Email: varun@dhpa.in
CA Preyas Pandya,
(Partner)
CA Nirali Pandya,
(Partner)
CA Jay Gandhi
CA Khusbhu Vashwani Keyur Mulrajani CA Devang Panchal
Prateek Goplani KaranSingh Chauhan Zarna Vora
Bharat Bhagat Rignesh Parmar

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Ahmedabad Office:
204, Mahalaya Complex,
Near Hotel President,
Off. C.G.Road, Navrangpura,
Ahmedabad 380009
Phone: +91 79 26400005 /
+91 79 26426729
Mumbai Office:
C-5, Prem Kanku Apartments,
5th Floor, Navroji Cross Lane,
Ghatkopar, Mumbai 400086
Email : info@dhpa.in
URL : http://www.dhpa.in
: http://www.facebook.com/1dhpa