A few provisions of the budget 2021 are important for the common man. We list a few changes here that retail investors should be aware of.
The budget 2021 has been on expected lines with growth being the sole focus of it. For a common man, no tweak in the taxes was the biggest relief. The government also adopted a few other relief measures for the benefit of the common man.
For senior citizens :
The government has extended a massive relief to senior citizens above the age of 75 years. This group of citizens, who only have a pension and interest income is exempted from filing their income tax returns.
But, it is not clear whether the dividend income, as well as equity returns, will be exempted from tax or not. The budget fine print is likely to provide greater clarity.
The government has extended the timeline for availing the deduction on interest under the PMAY scheme. The deadline is extended by one year till March 2022 from March 2021.
Under the Pradhan Mantri Awas Yojana (PMAY), the government provides credit-linked subsidy up to Rs 2.67 lakh to first-time homebuyers with income between Rs 3-6 lakh.
For Depositors :
The finance minister announced the revision of the existing structure of deposit insurance cover. A better policy framework will help the bank depositors to claim the deposit insurance cover if their banks get into trouble.
Last year's Budget had hiked the deposit Insurance cover for bank depositors from Rs 1 lakh to Rs 5 lakh. However, its benefits are available to depositors only when banks go into liquidation. During the several banking crises last year, a large number of customers were unable to withdraw their deposits.
We saw that depositors were given limited access to their deposits with RBI imposing a moratorium on banks. The revised structure would protect the bank customers if a similar situation arises in the future.
For bullion market:
The government has reduced the import duty on gold and silver to 7.5% from 12.5% in the Union budget for 2021-22. This will make gold and silver cheaper for retail consumers and help jewellery exports become more competitive in global markets.
The duty on gold dore bars, or impure gold, has also been reduced to 6.9% from 11.85% and that on silver dore bars to 6.1% from 11%. It will help the bullion refining industry. Also, reduced duties would result in lowering the smuggling of these precious metals.
A new charter for investors:
The budget has proposed to set up an investment charter to reduce the misselling of financial products. This charter would pertain to investors of all products across the financial sector.
This charter is expected to lay down the rights of investors, the grievance mechanism in case they have a complaint, and so on. The charter is also expected to make all current financial products’ grievance resolution mechanisms more robust.
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