India’s 2021 Budget

Article

India’s 2021 Budget

What's in it for foreign portfolio investors?

The 2021 Union Budget of India is a growth-oriented budget in which the Government has focussed on measures to accelerate the country’s economic growth while keeping the tax rates unchanged.

Certain amendments have been made to provide tax certainty, enable treaty relief at source, reduce tax litigation, and reduce the statute of limitation.

These amendments are encouraging and could help to improve the country’s taxation framework.

Executive Summary

Presented by the Minister of Finance Nirmala Sitharaman on 1 February, the 2021 Union Budget of India did not announce increased tax rates nor, was a ‘COVID-19 cess’ introduced. Sensing the need of the hour, the Government focused instead on measures to spur economic growth, undertake reforms, provide tax certainty, and reduce litigation. Many proposals to increase public spending in infrastructure and healthcare were included. Yet, it is interesting to note, the resources needed for such increased spending is not to be raised from additional taxes but from the monetization of certain infrastructure assets and strategic disinvestment of public sector enterprises. Some other bold steps included privatization of two public sector banks and a general insurance company, the planned IPO of Life Insurance Corporation of India, and the establishment of asset reconstruction/asset management companies to take over stressed assets from public sector banks. Certain tax amendments have also been made to provide relief to foreign portfolio investors (FPIs).

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Performance magazine issue 35, May 2021

Performance is a triannual digest, dedicated to investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients.

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