Union Budget 2021-22

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Union Budget 2021-22 Analysis (PDFs)

Our in-depth analysis helps you understand how Union Budget 2021-22 proposals will impact you.


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Union Budget 2021-22: Key Highlights

Job creation through private and public investment

Job creation through private and public investment by way of an infrastructure boost; set-up of textile parks, fishing hubs and a financial services hub; an increase in the FDI limit in the insurance sector; allowing one person companies to help start-ups; and allowing women in all categories of jobs and shifts.

Major boost to health and well-being

Major boost to health and well-being with a 137% increase in Budget allocation for the sectors, launch of PM Aatmanirbhar Swasth Bharat Yojana and Mission Poshan 2.0, allocation of INR 350 billion for COVID-19 vaccines, and expansion of the health information portal to connect all public health labs across all states and union territories.

Support to MSMEs by doubling allocation for the Ministry of MSME

Support to MSMEs by doubling allocation for the Ministry of Micro, Small and Medium Enterprises to INR 157 billion.

Improving access to credit

Improving access to credit through setting up of a new asset reconstruction company and asset management company to take over stressed assets of banks, setting up of a Development Finance Institution to finance infrastructure projects and equity infusion of INR 200 billion for public sector banks.

Improving ease of doing business

Improving ease of doing business by setting up of a conciliatory mechanism for quick resolution of contractual disputes, strengthening of the NCLT system, adoption of e-courts, setting up of an alternative mechanism of debt resolution, decriminalising of the Limited Liability Partnership (LLP) Act, setting up of a faceless dispute resolution mechanism for small taxpayers and increase in the threshold for tax audit from INR 50 million to INR 100 million.

Budget insights: Union Budget 2021-22

Highlights of Union Budget 2021-22 announcements in Infrastructure and Logistics

  • Capital recycling for investing in new infrastructure by monetising operating public infrastructure assets to be done though a ‘National Monetization Pipeline’ of potential brownfield infrastructure assets and monitoring progress – across roads, pipelines, warehouses, airports, transmission, railways and stadiums.
  • Railways – SonnagarGomoh section (263.7 km) of Eastern Dedicated Freight Corridor in PPP mode in 2021–22 followed by Gomoh-Dankuni section of 274.3 km.
  • INR 18,000 crore to support augmentation of public bus transport services to enable PPP for financing, acquiring, operating and maintaining over 20,000 buses.
  • Subsidy support of INR 1,624 crores over five years to Indian flagged ships to compete in global tenders floated by ministries and Central Public Sector Enterprises.
  • All non-strategic Central Public Sector Enterprises to be privatised. Only a few Central Public Sector Enterprises to remain. 


  • The significant increase in spend allocation (35% over FY20) should see more projects being prepared and rolled out. More importantly, it should incentivise execution by setting aside ~10% (INR 44,000 crore) for additional funding to projects/programmes/departments showing good progress, thereby enabling competition for speedy execution.
  • The intention to speed up monetisation of brownfield infrastructure assets by creating a National Monetisation Pipeline will send the right signals to private investors.
  • Setting up of the ARC and AMC to address bad assets while recapitalising lending intuitions and creating a new development finance institution can help trigger lending for infra sectors.

Highlights of Union Budget 2021-22 announcements in Healthcare

  • The New PM Atmanirbhar Swasth Bharat Yojana is to be launched with an outlay of INR 64,180 crore over six years. This is to build capacities in primary, secondary and tertiary care. This is in addition to the amount budgeted for the National Health Mission
  • An additional INR 35,000 crore has been allocated for COVID-19 vaccines. The Government is committed to spend more on this front if needed. India has two vaccines against Covid-19 and two more are on the way.
  • The Government proposes to introduce the National Nursing and Midwifery Bill as well as the National Commission for Allied and Healthcare Professionals Bill.
  • The Supplementary Nutrition Programme and the Poshan Abhiyan are to be merged into Mission Poshan 2.0 to strengthen the nutritional content, delivery, outreach, and outcome of nutrition programmes.
  • Innovation and R&D is another important pillar of the budget. A total of INR 50,000 crore has been allocated over five years to strengthen the research ecosystem


  • India is rolling out the world’s second largest vaccination programme and has made budgetary provisions for the same, with commitment to spending more if required.
  • This Budget is a step in the right direction to meet the goal of 2.5% of GDP spend on healthcare by the Government.
  • PLI push will make India integral part of the global supply chain and create job opportunities. It will also attract global players in the Indian pharma and medical devices manufacturing.

Highlights of Union Budget 2021-22 announcements in the Oil & Gas

  • Asset monetisation of pipeline infrastructure – GAIL, IOCL, HPCL.
  • The Ujjwala scheme, which has benefited 8 crore households, will be extended to cover 1 crore more beneficiaries.
  • 100 more districts are to be added to the City Gas Distribution network.
  • An independent gas Transport System Operator will be set up for facilitation and coordination of booking of common carrier capacity in all natural gas pipelines on a non-discriminatory open access basis.
  • It is proposed to launch a Hydrogen Energy Mission in FY 2021–22 for generating hydrogen from green power sources


  • Gas transportation capacity will get unlocked with an independent Transmission System Operator (TSO), and more so with digitalisation of booking. More licensing in City Gas Distribution (CGD) will make way for gas to be the bridge to a greener economy.
  • Green hydrogen is the energy carrier of the future. The new Energy Mission sets out a critical agenda to bring about the transformation. Capital infusion in Solar Energy Corporation and IREDA will also help in generating renewable power for the hydrogen agenda.
  • Health concerns among rural women have been addressed by the Ujwala LPG scheme. The coverage of remaining households is an impactful social initiative.

Union Budget 2021-22 - announcements in Financial Services

  • Development Finance Institution (DFI) to be set up with INR 20,000 crore to raise INR 5 lakh crore funding for infrastructure projects.
  • A unified securities market code to be created to include the SEBI Act, Govt Securities Act and Depositors Act.
  • Investment grade bond fund purchase framework to be established to invest in corporate bonds during stressed times.
  • FDI in insurance to be increased to 74% with protection through a majority of board and management of Indian origin, 50% of board members being independent and retention of a percentage of profits. This will need a separate Parliament nod to amend the Insurance Act, 2015, which fixed it at 49% with no foreign control.
  • Recapitalisation of PSBs to the extent of INR 20,000 crores


  • Development Finance Institution brings back infrastructure lending companies of the past with the hope that it would have broader and easier access to private capital. This could boost the infrastructure space and employment in the country.
  • Credit access impact was not as extensive as expected in the Budget. With prior actions taken during the lockdown, only a few additional norms for easing the Stand-Up India scheme and MSME funding were announced.
  • An increase of FDI in insurance should bring in more capital from existing players and attract several new insurers who were unwilling to come in without control. However, regulatory considerations like IFRS17 accounting principles, deferred acquisition costs and Solvency II measures have to be addressed at the policy level to bring India at par with the world and encourage FDI.
  • Strategic disinvestment of the PSU company can mean more large FDI into the country as well as an increase in the country’s underwriting capacity.

Union Budget 2021-22 - announcements in Power & Mining

  • INR 3,05,984 crore has been provided over five years for power sector reform and restructuring – assistance for infra creation, smart metering, feeder segregation, upgradation of systems, etc., tied to financial improvement.
  • A Comprehensive National Hydrogen Energy Mission is to be launched in 2021–22 for generating hydrogen from green power sources.
  • A framework enabling electricity consumers to choose between service providers in electricity distribution has been announced.
  • To support the promotion of renewable energy, INR 1000 crore has been allocated to the Solar Energy Corporation of India (SECI) and INR 1500 crore to Indian Renewable Energy Development Agency Limited (IREDA).
  • There is a push for indigenisation – custom duties on solar inverters have been increased from 5% to 20% and on solar lanterns, from 5% to 15%.


  • The framework for electricity consumers to choose service providers will encourage public and private utility monopolies to enhance operational efficiency and attract start-ups/new age companies/talent.
  • The large investment outlay for distribution upgradation and automation has the potential to enhance network performance and customer satisfaction, manage renewable integration, and improve sector financials.
  • Plans around hydrogen and promoting renewable and battery technologies will promote energy security, help in meeting our climate change commitments and indigenise manufacturing.
  • As per the Government’s vision for Aatmanirbhar India, the PLI scheme is expected to incentivise global and domestic manufacturers to engage in high-volume, high-value production hereby increasing self-reliance and also, increasing exports.

Highlights of Union Budget 2021-22 announcements in Automotive sector

  • The voluntary vehicle scrappage policy along with mandatory vehicle fitness tests will aid personal and commercial vehicle demand.
  • Augmentation of public bus transport by about 20,000 buses is a positive for bus manufacturers.
  • The customs duty rate has been increased on certain auto parts (such as ignition wiring sets, safety glass, parts of signalling equipment). This is in line with the Government’s Aatmanirbhar Bharat initiative to promote localisation in auto spare parts manufacturing.
  • Enhanced outlay for infrastructure – railways, metro rail, rural – development projects will benefit the commercial vehicle, construction equipment and tractor segment.


  • While the industry was hoping for GST reduction or accelerated depreciation on vehicles, no additional increase in taxation is a relief to the industry.
  • The continued focus on building rural and agricultural infrastructure and prioritising agriculture credit growth will have a long-term positive impact on the rural demand for passenger, small and light commercial vehicles.

Union Budget 2021-22: Personal tax updates

  • Tax exemption for specified expenditure incurred (during the period October 12, 2020 to March 31, 2021) in lieu of Leave Travel Concession – now enacted
  • Accrued interest on employee’s contributions on or after April 1, 2021 to EPF exceeding INR 250,000 taxable
  • No exemption under Section 10(10D) for ULIP – Policy issued after 1 Feb 2021 and annual premium exceeds INR 250,000
  • Relief in filing of tax return for Resident senior citizens (75 years or above) having income from pension and interest from same specified bank - tax on such income is deducted by bank
  • Tax relief on income accrued from overseas retirement benefit account – Rules to be prescribed 
  • Advance tax on dividend on receipt basis

Union Budget 2021-22: Indirect tax analysis


  • Union Budget 2021-22 showed a clear policy focus on ensuring ease of compliance for small taxpayers and technology-based initiatives for larger players to streamline compliance. Capacity augmentation for undertaking electronic compliances, e-invoicing by taxpayers (for which the 3rd installment for taxpayers in the INR 50m-1b bracket is expected from April 1, 2021) and AI based initiatives to identify frauds and evasion is on the forefront
  • GST audit process has been simplified to be based on self-certification  

Customs duty

  • This Budget has taken a broad-based review of exemptions to be undertaken over the next 6 months via a consultative process. In line with the rationalisation process undertaken last year to remove outdated exemptions, a new customs duty regime on such exempted items, etc., will come into force with effect from October 1, 2021.
  • The focus of the Government will be to continue to remove anomalies and challenges in the indirect tax regime – especially the inverted duty structure - which impedes the Make in India policy. For this purpose, rationalisation of the customs duty rates on key raw materials and inputs/ components will continue
  • Bill of Entry (BOE) on imports would henceforth need to be filed at least a day before the arrival of the vessel, which would require a level of process change   
  • Defined timelines and process for investigations in Anti-Dumping Duty (ADD) and Countervailing Duty (SCV) to be prescribed to ease and expedite the assessment process 

Union Budget 2021-22: Corporate tax updates

  1. In a positive move, Union Budget 2021-22 proposes to reduce the time limit for reopening past assessments to 3 years from existing 6 years (except in case of serious evasion). This reflects Government's confidence in businesses and tax-payers and would reduce the undue stress and anxiety for the latter.
  2. Furthering the commitment to move towards a more transparent tax system, which is also tech friendly, Union Budget now proposes a Faceless Income Tax Appellate Tribunal Centre, where all communication on tax cases shall be digital, including virtual hearings, if needed.
  3. Buoyed by the positive response to Vivad se Vishwas scheme, Union Budget proposes a similar Dispute Resolution Committee for small tax-payers with less than INR 50 Lakhs of annual income and disputes of upto INR 10 Lakhs.
  4. To reduce the burden of tax compliance, threshold for requirement of tax audit increased to INR 10 crores from INR 5 crores for companies that do its substantial business digitally. 
  5. Union Budget proposes to correct the anomaly in provisions related to computation of advance tax on dividends received by taxpayers. Advance tax liability to arise on dividends only after declaration of dividends.
  6. As a step to ease the process of preparation and filing of tax returns, forms shall come pre-filled with more data like gains and dividends on listed securities, interest from Post Offices, etc.
  7. Time Limit for getting affordable housing projects approved, for claiming the tax exemption, extended till March 31, 2022.

Our experts share their insights on the Union Budget 2021-22 announcements for their respective sectors.

Sanjeev Krishan

Sanjeev Krishan

Chairperson, PwC in India

The FM has done a prudent job of prioritising spending to address immediate needs and mid to long term goals across critical areas. Privatisation, substantial increase in FDI in the insurance sector as well as other announcements around asset monetisation, INVITs/REITs are progressive measures that will definitely have a far-reaching positive impact on creating a conducive ecosystem for business and help address some legacy issues. The FM had an unenviable job of striking a balance on the fiscal deficit front without altering tax rates to fuel economic growth and must be complimented for having achieved it. The thrust on digital, affordable housing, inclusive growth, ease of doing business, innovation and R&D are steps towards making India future ready. However, operational detailing and seamless execution will be critical.
Arnab Basu

Arnab Basu

Partner & Leader – Advisory, PwC India

India’s first digital budget is symbolic of the government’s resolve towards a truly Digital India. Announcements around the digital census, creating an enabling eco-system to further a ‘Digital First Mindset’ in education, adding impetus to fintech, etc. are positive moves that can add momentum to the pace of digital adoption in a post pandemic world.
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