Budget 2021 And How It Affects Me

Like last year, here is a quick overview of how the 2021 budget affects me. This is not an analysis or highlights of the budget. I am sure you can find many articles on those topics. This post is more specifically on how the budget affects my financial planning. To tell you the truth, there is nothing in the budget for me and that is a good thing! No news is good news isn’t it?


Going into the budget speech many were worried if there will be additional cess and taxes to help government recoup revenue losses due to COVID-19. None of that really happened. The government decided to increase spending but without increasing the direct taxes. There are some indirect taxes but not much really. There are some disinvestment plans by the end of the next financial year which should bring some money into the kitty.


The news

One of the things I hate to do in the days running up to the budget is to read news. It is filled with forecasts, expectations and plain old crap that no one really cares about. If I open the business section of Google News, every other topic is along the lines of “Real estate investors hope for something in budget”. You can replace “Real estate investors hope for” with the following other things

  • Start-ups expect
  • SME businesses hope for
  • Salaried employees want
  • Fintech sector expects
  • PSB want
  • Common man hopes for

Anyway I digress. The point is that there is no point speculating about the future. So I have very less news to read during the few days before budget :).


What I found important

The budget speech had a lot to offer, but almost none of them apply to me neither am I interested. Some tidbits that I found interesting are the following.

Prefilled ITR

One of the interesting changes that I am super excited about is the prefilled ITR forms. Supposedly the Income Tax Return (ITR) forms will be filled with data on our capital gains from mutual funds, shares, dividend income and interest received from banks. If the government can do it right, this will reduce a lot of effort on my part. If you recall I had to write a script (code) to fill the tons of data that the last financial year ITR required.

Automobiles

The government proposed a voluntary vehicle scrapping policy. So going forward private vehicles older than 20 years will have to go through fitness certification. Although there isn’t much information, it seems like if the vehicles fail fitness test or if the person wants to, the vehicle can be scrapped.


The benefits of the policy will lead to recycling of waste metal, improved safety, reduction in air pollution etc. More details are supposed to come out in 15 days. Looking forward to it. My car is about 14 years old now. So nothing to worry yet, but would be interesting if there are going to be any benefits to scrapping it. For example a discount for an electric car in exchange for it ;).


Solar equipment

The import duty on solar inverters is going to increase from 5% to 20%. This may affect my solar panels project in future. Again this is going to be in a distant future so many things might change by that time. But this move might be good for the local suppliers.


Disinvestments

There are supposed to be privatisation of two banks and one general insurance company. Less government control is always good for investors in these companies. I just hope they can really execute on their plans.


Cess on petrol

The only thing that I did not really like is the agri infrastructure cess on petrol and diesel. The price of the fuel is already going up like crazy. I think petrol will reach Rs. 100/liter soon if they keep doing this.


Those were all the interesting parts in the budget for me. Don’t get me wrong, there are a lot of other important announcements that help our economy. Just that they did not catch my eye.

Conclusion

Overall it was a good budget. The government did not introduce any COVID tax as many feared. There were no changes to personal tax. No wealth tax, super-rich tax, STT or LTCG tax. All good. The stock market reacted quite favorably. Sensex was up some 5% yesterday and is up 2% today as I write this post. Make what you want of it.



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