UNION BUDGET 2021-22 MOVING FORWARD WITH RESILIENCE - PWC

 
UNION BUDGET 2021-22 MOVING FORWARD WITH RESILIENCE - PWC
Union Budget 2021-22
      Moving forward with resilience

      Union Budget 2021-22
      Union Budget 2021-22
      Union Budget 2021-22
PwC   Union Budget 2021- 22   Mov ing f orward with resilience
UNION BUDGET 2021-22 MOVING FORWARD WITH RESILIENCE - PWC
Contents
                                Foreword                         Economic performance

                              Budget highlights                  Glossary

      Union Budget 2021-22
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PwC   Union Budget 2021- 22   Mov ing f orward with resilience
UNION BUDGET 2021-22 MOVING FORWARD WITH RESILIENCE - PWC
Section 01

Foreword
UNION BUDGET 2021-22 MOVING FORWARD WITH RESILIENCE - PWC
Foreword
                                                   • Against the backdrop of an unprecedented global pandemic and an economic shutdown, the Finance Minister shouldered the
                                                       daunting task of reviving an already drudging economy. For our country to become a truly AtmaNirbhar Bharat and the fastest
                                                       growing economy we need an unwavering commitment from the Government and its people alike amidst a rapidly changing socio-
                                                       economic and political environment
                                                   •   The Finance Minister while presenting a wholistic budget built upon six pillars (i) Health and Wellbeing (ii) Physical and Financial
                                                       Capital, and Infrastructure (iii) Inclusive Development for Aspirational India (iv) Reinvigorating Human Capital (v) Innovation, and
                                                       Research and Development (vi) Minimum Government and Maximum Governance. With an ambitious intent on developing a
                                                       robust infrastructure, the Finance Minister has sowed the seeds of boosting investor confidence, good governance and facilitating
                                                       ease of doing business
Bhavin Shah                                        •   With an undercurrent of economic revival, the Budget proposals for the financial services sector are centered on infrastructure
Partner and Deals                                      development and attracting foreign investments. With the objective of making India self-reliant, the Government continues to work
Tax Leader                                             towards rationalising IFSC tax regime. Proposed exemptions for relocation to IFSC and incentives to aircraft leasing entities in
                                                       IFSC gives India a fighting chance when compared to established offshore fund jurisdictions
                                                   •   Continuing with the theme to provide much needed impetus to infrastructure development, the Budget proposals provide
                                                       relaxations to the conditions for tax exemptions to SWF and PF as well as extension of tax holiday for affordable housing projects.
                                                       Once can expect to see traction in the real estate sector with the increase in the Safe Harbor limit and incentives to home buyers
                                                   •   Relaxation of investment limits in Insurance sector could see an influx of foreign investments in insurance space. Confirming
                                                       availability of treaty benefits for withholding tax on payments to FPI will surely help in demonstrating this Government’s intention of
                                                       ease of doing business
                                                   •   Widening the definition of slump sale to bring all transfers under its preview and restricting the availability of depreciation on
                                                       goodwill could prove to be a double blow to transaction space in India impacting valuations. The Government’s unwavering ques t to
                                                       overhaul the country’s income-tax litigation mechanism by deployment of advanced technology continues to gain traction in this
                                                       Budget. With an aim of consolidating multiple regulations, the introduction of a new Securities Markets Code would prove to be a
                                                       welcome step in facilitating ease of doing business
                                                   •   In summary, the policy proposals, regulatory announcements and tax amendments impacting financial services sector space would
                                                       support the Government’s plan for robust infrastructure development and fast-track India’s trajectory as the world’s fastest growing
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Section 02

Economic
performance
Global economy                                                                    Headwinds

 • Global growth estimated to decline by 3.5% in 2020 but expected to rise by      • Rising input cost and oil prices likely to result in inflation, which could make
   5.5% in 2021                                                                      India Inc. uncompetitive
 • Advanced economies likely to grow by 4.3% in 2021 on the back of early          • Rising yields coupled with rising NPAs could impact borrowings costs and
   roll out of vaccines                                                              create liquidity constraints
 • Emerging economies are expected to grow by 6.3% in 2021 on the back of          • Taper tantrums upon reversal of global monetary policy
   a contracted base

 Indian economy                                                                    Figure 1: GDP growth rates

 • India’s GDP growth for FY21 is estimated to decline by 7.7%, hit by the
   global pandemic and the lockdown                                                                                                                                     11.5%
 • Private consumption estimated to contract by 9.5% in FY21 based on
                                                                                                   5.5%                                               6.3%
   income loss, mobility restrictions, and supply constraints                                                              4.3%        3.6%                  4.2%
                                                                                    2.8%
 • Government consumption estimated to rise by 5.8% due to increased                                        1.6%

   expenditure as part of pandemic relief packages.
 • Investment estimated to decline by 14.5% due to economic uncertainty and                                                                   -2.4%
                                                                                           -3.5%
   delay in implementation of capital projects                                                                     -4.9%
                                                                                                                                                                    -8.0%
 Outlook                                                                              World output        Advanced Economies              EMDEs                     India

                                                                                                           2019      2020 (Estimate)     2021 (Projection)
 • Consumption indicators, including FMCG, auto sales and GST collection
   indicate a faster demand recovery in Q3
 • Continued momentum post-pandemic in health, pharma, telecom and                 Source: World Economic Outlook, Jan 2021, IMF (Note- Data for India is
   technology (e-commerce, fintech, ed-tech, etc.) owing to significant shift in   presented on a fiscal year basis, remaining are on calendar year basis)
   consumption patterns
 • The pandemic has led to preference for digital services and adoption of
   digitalisation in many companies
 • GDP is estimated to grow at 11% in FY22 owing to robust growth in
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   consumption        and investment and lower base effect
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Figure 2 – Annual growth of GDP & demand components at constant prices                                                                    Figure 3: Growth rate for sectoral gross value added

 15%                                                                                                                                10%     10%
             8.0%             8.3%
                                                                                                                                                                                                                7.2% 7.2%
                                                 6.8%               6.5%                                                            8%                                                       6.3%
 10%                                                                                                                                                                     5.3%
                                                                                      4.0%                                          6%       5%            4.3%
                                                                                                                                                    2.6%          3.4%
  5%                                                                                                                                4%

                                                                                             5.4%
                                                                                                                                                                                                    1.0%

                                                                 7.6%
                                                                        9.9%
                                                                               6.3%

                                                                                                                             5.8%
                                                                                      5.5%

                                                                                                    7.9%
                                                                                                                                    2%       0%
  0%

                                                                                                            -9.5%
                                                                                                                    -14.5%
                                                                                                                                    0%
                                                                                                                                                                            -2.40%
  -5%
                                                                                                                                    -2%     -5%

 -10%                                                                                                                               -4%

                                                                                                                                    -6%    -10%                                                                         -8.8%
                                                                                                                                                                                 -9.4%
 -15%
                                                                                                                                    -8%
                                                                                                                -7.7%                                                                                  -12.6%
 -20%                                                                                                                               -10%   -15%
             FY16             FY17              FY18                FY19              FY20 (RE)            FY21 (AE)                                 Agriculture         Manufacturing       Construction         Services

               Private Consumption                 Investment                     Govt. Consumption                           GDP                                        FY19    FY20 (RE)   FY21 (AE)

 Source: Data until FY20 is taken from the first revised estimates of GDP                                                                  Source: Data until FY20 is taken from the first revised estimates of GDP
 (dated 29 Jan 2021); Growth rates for FY21 are taken from the first advanced                                                              (dated 29 Jan 2021); Growth rates for FY21 are taken from the first advanced
 estimates of GDP (dated 7 Jan 2021)                                                                                                       estimates of GDP (dated 7 Jan 2021)

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Capital markets

 • During April-December 2020, 33 companies (PY 49) raised money through
   public issue
 • Capital raised through public issues increased to INR 310.87bn during April-
   December 2020, an increase of 183.9% over the corresponding period of
   the previous financial year
 • Net FPI inflows during April-December 2020 stood at INR 2.1 trillion
 • FDI of US$30bn raised during the first six months of 2020-21

 Banking sector

 • Credit growth (YoY) of banks declined to 5.1% in October 2020 from 14.8%
   in February 2019, and subsequently, accelerated to 6.7% in January 2021
 • Resolution of stressed assets had to take a backseat because of the
   suspension of the initiation of fresh insolvency proceedings for defaults
   arising on or after 25 March 2020 until 25 March 2021
 • Credit growth (YoY) of NBFCs was close to 3% in June 2020, which
   subsequently contracted in September 2020 to (-) 6.6% (YoY)

 Asset management:

 • Net inflow of INR 2.76 trillion (PY INR 1.82 trillion) in mutual funds industry
   during April-December 2020 as compared to April-December 2019
 • Net AUM of all mutual funds increased by 16.9% to INR 31.02 trillion at the
   end of 31 December 2020

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Section 03

Budget
highlights
Private equity / AIFs
Key policy announcements

 • Pooled investment vehicles (includes mutual funds, AIFs, collective investment schemes, REITs and InvITs) to be eligible to borrow and issue debt securities in
   accordance with the applicable SEBI Regulations
 • Units or instruments issued by pooled investment vehicle proposed to be included in the definition of ‘securities’ under SCRA

             Key direct tax proposals

 • TDS at 0.1% (on amounts exceeding INR 5m) applicable on purchase of goods (likely to include shares and securities) from residents, if the sales, gross receipts
   or turnover from the business carried on by the purchaser exceeds INR 100m in the preceding FY
   − The above amendment is with effect from 1 July 2021
 • Dividend income earned by foreign companies not subject to MAT (if applicable)
 • Capital gains tax introduced for partnership firms/ LLPs/ AOPs on dissolution/ re-constitution, where distributions are made to partners/ members in excess of their
   capital balance owing to the revaluation of assets or recording of self-generated assets
 • No depreciation to be allowed on goodwill
   − Amount paid for acquiring goodwill to be allowed as deduction on sale
 • Slump exchange covered within the meaning of slump sale
 • Definition of ‘liable to tax’ introduced – includes a case where an exemption has been provided subsequent to the imposition of tax liability – relevant to determine
   eligibility to certain tax treaties

             Experts speak

 • Similar to the TCS provisions, TDS is likely to apply on the purchase of shares and securities from residents – will result in additional compliance requirements for
   the buyer. Clarification awaited on whether TDS should apply for transactions traded through recognised stock exchanges.
 • Not
    Unionconsidering
          Budget 2021-22 goodwill as a depreciable asset has overturned the Supreme Court’s ruling in the case of Smifs Securities Limited
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IFSC
Key policy announcements

 • FinTech hub to be set up in GIFT-IFSC

             Key direct tax proposals

 Tax regime for relocation of offshore fund to IFSC
 • Relocation of Offshore Fund to a Resultant Fund in IFSC to be tax neutral for Offshore Fund, Resultant Fund and its shareholders/ unitholders
 • NR investors of the Resultant Fund exempt on gains from future sale, if the Offshore Fund was otherwise exempt on such gains before relocation
 • Cost of acquisition and period of holding of previous owner available to the Resultant Fund
 • Change in shareholding of Indian company - No impact on carry forward of losses
 Non-deliverable forward contracts executed by IBUs
 • Income of non-resident on transfer of non-deliverable forward contracts entered into with an OBU of IFSC to be exempt from tax, provided such OBU
   commences operations before 31 March 2024
 Tax holiday benefits
 • Tax holiday benefits to IFSC units to include units permitted or registered under IFSC Authority Act, 2019
 Safe harbour regime for IFSC
 •    Notification to be issued to relax/ modify conditions for safe harbour regime for an eligible fund and IFSC fund manager comm encing operations before
      31 March 2024

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IBUs
 • Tax regime for investment division of an OBU located in IFSC, where the OBU commences operations before 31 March 2024 to be as follows:

 Nature of income                                                               Proposed income-tax rate
 Capital gains on equity shares                                                 10%++ for LTCG, 15%++ / 30%++ for STCG
 Capital gains on debt/ derivatives                                             Exempt
 Dividends and interest income (except for interest under section 194LD)        10%++
 Business income from a securitisation trust                                    Exempt

 Aircraft leasing
 •   Capital gains on the transfer of aircraft or aircraft engine leased by an IFSC unit to a domestic company eligible for 100% deduction, if the unit has commenced
     operations before 31 March 2024
 •   Income by way of royalty on account of lease rentals paid to foreign entities exempt from tax if the unit has commenced operations before 31 March 2024

             Experts speak

 The promising tax proposals pertaining to the IFSC will further push the Government’s agenda of ‘AatmaNirbhar Bharat’. This move can be a true game changer for
 the Indian fund management industry and global aircraft leasing entities

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Real estate and
infrastructure
Key policy announcements

 InvIT and REITs                                                                  DFI
 • Legislative amendment proposed for debt financing by FPI in InvIT and REIT     • DFI to be set up for long-term debt financing in the infrastructure sector with an
                                                                                    initial capital of INR 200bn
 Asset monetisation                                                               • Lending portfolio targeted to be INR 5,000bn by three years
 • National Monetisation Pipeline for brownfield infrastructure assets to be
   launched                                                                       Urban infrastructure
 • DFC assets to be monetised by Railways for operations and maintenance          • Deployment of PPP model in public bus transport services
 • Airports to be monetised for operations and management                         • Expansion of metro rail network through ‘MetroLite’ and ‘MetroNeo’ for Tier-2
 • Several core infrastructure assets to be monetised including toll roads,         and peripheral areas of Tier-1 cities
   transmission assets, pipeline assets, sports stadium, etc., which are owned by
   the Government/ PSUs                                                           Power
                                                                                  • Framework to give consumers the choice of more than one DISCOMS to
 Roads and highways                                                                 improve performance
 • 8,500 kms of road projects to be awarded by March 2022                         • Result-linked power distribution scheme to be launched to provide assistance to
 • Economic corridors being planned in Tamil Nadu, Kerala, Assam and West           DISCOMS for infrastructure creation
   Bengal
                                                                                  Ports
 Railways                                                                         • Seven projects worth INR 20bn to be offered by major ports on PPP model in
 • Western and Eastern DFC to be commissioned by June 2022, resulting in            FY 2021-22
   reduced logistics cost

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Key direct tax proposals

 SWF/ PF                                                                         • Payment to creditors or depositors for borrowings taken for purposes other than
 • SWF/ PF exemption on certain incomes earned from specified Indian               investment in India to not contravene the conditions on private inurement and
   infrastructure businesses modified/ extended to include investment in           assets going to Government on dissolution for SWFs - similar changes should
   – AIFs having minimum 50% investments in notified infrastructure                be brought about for PFs through amendment in the Rules
                                                                                 • Condition on ‘not liable to tax’ relaxed to include where PFs liable to tax but
        businesses or in InvITs;
                                                                                   specifically exempted from tax on income in their home country
   – Indian holding companies set up on/ after 1 April 2021 having minimum
       75% investments in notified infrastructure businesses; and
                                                                                 InvIT and REIT
   – NBFC – IDF/ IFC with at least 90% lending to companies/ entities in
                                                                                 • No TDS on dividend paid by SPVs to InvIT/ REIT with effect from 1 April 2020,
       notified infrastructure businesses                                           in line with the exemption provision
 • Mechanism to be prescribed for proportionate exemption on income from
   investments made in AIF/ India Hold Co/ NBFCs holding less than 100%
                                                                                 Infrastructure debt fund
   investment in notified infrastructure businesses
                                                                                 • Definition of zero coupon bonds to include such bonds issued by the
                                                                                    Infrastructure Debt Fund
 Changes in eligibility norms for SWFs/ PFs
                                                                                 • No TDS on income paid on such bonds
 • Direct or indirect leverage for the purpose of making such investment in
   India not permitted
                                                                                 Safe harbour provisions for transactions of residential units
 • Condition relating to commercial activity removed for SWFs – similar
   changes should be brought about for PFs through amendment in Rules            • Safe harbour limit of 10% is proposed to be increased to 20% in case of
 • SWFs/ PFs not permitted to participate in the day-to-day operations of the      primary sale of residential units - difference between the stamp duty value
   investee entity. Monitoring mechanism including right to appoint directors/     and consideration received
   executive directors to be allowed                                               ⎼ Consideration received or accruing does not exceed INR 20m
                                                                                   ⎼ Sale is between 12 November 2020 to 30 June 2021
                                                                                 • Similar benefit proposed to be extended on deemed income in the hands
                                                                                   of buyer
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Key direct tax proposals

 Reinvestment of capital gains on residential property - investment in
 start-up
 • Deduction for reinvestment of capital gains in equity shares of an eligible
   start-up proposed to be extended until 31 March 2022

 Tax holiday on affordable housing projects
 • Tax holiday is proposed to be extended to real estate developers engaged
   in the business of developing and building notified rental housing projects
 • Period for obtaining project approval for affordable housing and notified
   rental housing is proposed to be extended to 31 March 2022

 Interest on loans for purchasing affordable house
 • Timelines for enhanced interest deduction (INR 0.15m) for loans sanctioned
    by financial institutions towards purchase of first affordable house extended
    by one year to 31 March 2022

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Experts speak

 • The changes brought about in the eligibility conditions and relaxation of
   investment conditions should provide much needed clarity and boost
   investments from SWFs/ PFs. However, some further relaxations around
   investments in holding company set up prior to 1 April 2021 or investments
   by an AIF in such holding companies could have provided an impetus to
   such investments
 • The industry was expecting measures to boost demand. Largely, the status
   quo has been maintained in the real estate sector. The proposal to
   rationalise safe harbour provisions will help alleviate some of the burden on
   developers (for clearing unsold inventory) and aspiring home buyers.
   Streamlining of TDS provisions on dividend paid to REIT/ InvITs would help
   in reducing potential cash traps
 • With the Government’s focus on the infrastructure sector coupled with the
   asset monetisation plan, the infrastructure sector is likely to see significant
   transaction activity over the next few years. Additionally, several measures
   are proposed for project financing, including the introduction of an
   infrastructure debt fund, which are likely to boost the infrastructure sector

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Start-up and VCs
Key policy announcements

 Incentivising the incorporation of one person companies
 • No restriction on paid-up capital and turnover
 • NRIs allowed to incorporate one person companies in India
 • Permitted to convert into any other type of company at any time
 • Limit of residency for shareholders reduced to 120 days (currently 182 days)

             Key direct tax proposals

 •    Tax holiday extended for startups incorporated up to 31 March 2022 (currently, 31 March 2021)
 •    Capital gains exemption on transfer of residential property invested in eligible startups extended to 31 March 2022 (currently, 31 March 2021)

             Experts speak

 • Continued support to the start-up ecosystem by extending sunset clause for various benefits and minimising compliance burden for small and medium enterprises

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Banking, capital markets,
NBFC, ARC, FPI
Key policy announcements

 • A rationalised Securities Markets Code to be introduced to consolidate the SEBI Act, 1992, Depositories Act, 1996, SCRA and Government Securities Act, 2007
 • PSBs to be recapitalised up to INR 200bn to strengthen their financial capacity
 • Depositors to be able to access funds up to the deposit insurance cover where the bank is temporarily unable to fulfil its obligations
 • Disinvestment/ privatisation of IDBI and two other PSBs
 • SEBI to be notified as a regulator of gold exchanges
 • Warehousing Development and Regulatory Authority to be strengthened to set up a commodity market eco-system
 • Introduction of an investor charter as a right of all financial investors across all financial products
 • Separate framework proposed for setting up an ARC and AMC to take over/ manage stressed debts and offer them to potential investors, including AIFs
 • Debt recovery under SARFAESI Act for NBFCs extended to secured loans exceeding INR 2m (currently INR 5m)
 • Banks and financial institutions can invoke SARFAESI to recover debts borrowed by pooled investment vehicles
 • For NBFCs, a body to participate in corporate bond market and boost liquidity in the secondary market proposed

             Key direct tax proposals

 TDS by specified banks on income of a specified senior citizen
 • Specified senior citizen earning only pension and interest income not required to file tax return where tax has been deducted at source
 • Such taxes to be withheld by specified banks (to be notified) considering the final tax liability on total income (after deductions and rebate)
 Transition of a primary co-operative bank into a banking company
 • Transition of a co-operative bank to a banking company to be tax neutral in the hands of the co-operative bank and its shareholders
 TDS on income paid to FPI (with effect from 1 April 2021)
 • TDS on dividends, interest, etc., earned by an FPI at the applicable treaty rates or 20%, whichever is lower
 • Tax rate under the treaty to apply subject to furnishing a TRC
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Experts speak

 • Creating an institutional framework to support the corporate bond market
   would provide more confidence to institutional and retail investors, thereby,
   increasing liquidity
 • Operational tax compliance requirements for banks continue to grow
 • Setting up a new ARC-AMC could overhaul the framework for stressed assets
   resolution
 • TDS on income earned by FPIs at tax treaty rates remove cash trap leakages
   that arose due to the change in market practice after the PILCOM ruling

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Insurance
Key policy announcements

 • FDI limit in insurance companies to be increased to 74% (from 49%). Foreign ownership and control allowed with safeguards
   − Majority of directors and key management persons to be resident Indian; at least 50% of directors to be independent
      − Specified percentage of profits to be retained as general reserve
 • Government to list LIC and divest stake in one general insurance company in 2021-22; legislative amendments to be introduced

             Key direct tax proposals

 •     No exemption available for ULIPs issued on or after 1 February 2021 where premiums payable for any year during the policy term exceeds INR 0.25m (limit to be
       tested across ULIPs held by the same policyholder)
 •     Exemption to continue for ULIPs on death of policyholder
 •     Amounts received from above ULIPs taxable as 'Capital Gains’ in year of receipt. Method of calculating such gains to be prescribed
 •     Definition of 'equity-oriented fund’ to include above ULIPs. Consequently, capital gains on such ULIPs taxable at (i) 10%++ for LTCG; and (ii) 15%++ for STCG

             Experts speak

 • Increase in FDI limit should boost foreign investment in the insurance sector
 • Direct tax amendments seek to eliminate the tax arbitrage between ULIPs (being predominantly held as investment, as opposed to an insurance product) and
      equity oriented mutual funds. The proposal may materially reduce the attractiveness of ULIPs as an investment product

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Other direct tax
proposals
Key Policy Announcements

 Litigation
 Assessment proceedings – Reduced timelines (with effective from AY 2021-22)

 Particulars                                                     Proposed amendment
 Issue of intimation                                             9 months from end of the FY in which the return is furnished (reduced from 12 months)
 Issue of notice initiating assessment                           3 months from the end of the FY in which the return is furnished (reduced from 6 months)
 Completion of assessment                                        9 months from the end of the AY (reduced from 12 months)

 Overhaul of reassessment proceedings                                               Others
 • Time limit to issue notice reduced to three years (from four or six years)       • ITAT proceedings to be faceless
   − Ten year time limit if the AO is in possession of evidence that reveals income
                                                                                    • Constitution of DRC for small and medium taxpayers:
      escaping assessment >= INR 5m
                                                                                      − Eligible cases: (a) Income returned is
Key direct tax proposals

 Rationalisation of the provisions of equalisation levy (with effect from 1            Enhanced TDS/ TCS rates for non-filing of tax return (with effect from 1 July
 April 2020)                                                                           2021)
 • Scope of equalisation levy expanded to include acceptance of offer for sale,        • Higher rate of TDS (5%, two times of the specified TDS rate or two times the
   placing/ acceptance of purchase order, payment of consideration, supply of            rate in force; whichever is higher) to apply in certain cases where the recipient
   goods/ provision of services partly or wholly                                         has not filed income-tax return in the last two previous years and TDS or TCS in
 • Equalisation levy to be charged on consideration for sale of goods/ services,         his case exceeds INR 0.05m in each year
   irrespective of whether the e-commerce operator owns such goods/ provides           • Similar provisions proposed in relation to TCS
   such services
 • Equalisation levy to not apply if consideration taxable as ‘royalty’ or ‘fees for
                                                                                  Other amendments
   technical services’                                                            • Delay in deposit of employees contribution towards EPF/ ESI/ Superannuation
 • Transactions subjected to equalisation levy not taxable                          fund within the prescribed due date taxable in the hands of employer.
                                                                                  • The threshold for the trigger of tax audit to increase to INR 100m from existing
 Restructuring of PSC                                                               INR 50m for entities having 95% or more digital transactions
 • Reconstruction and splitting up of a PSC deemed to be demerger provided the • Advance tax on dividend on receipt basis. No relaxation on deemed dividend
   resulting company is a PSC on appointed date and fulfils conditions to be
   prescribed
 • Brought forward losses and depreciation of a PSC to be carried forward on
   amalgamation with another PSC - for an erstwhile PSC, carry forward allowed if
   certain conditions are fulfilled

 Individual taxation related amendments
 • Accrued interest on employee’s contributions on or after 1 April 2021 to EPF
   exceeding INR 0.25m per annum taxable
 • Tax exemption for specified expenditure incurred (during the period 12 October
   2020 to 31 March 2021) in lieu of leave travel concession – now enacted
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Experts speak

 • The Government’s quest to overhaul the litigation mechanism by deploying
   advanced technology continues to gain traction. By capitalising on the
   information collected, analysed and disseminated by the tax department,
   the entire reassessment proceedings have been reimagined. The ten year
   time limit for reopening will require the taxpayers to tread cautiously
 • With the last fact-finding authority, the ITAT, also being covered under the
   faceless regime, the manner of presentation of facts and drafting of written
   submissions at the assessment and appellate levels continue to gain
   importance

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Section 04

Glossary
Abbreviation                  Particulars                                           Abbreviation   Particulars
 AAR                           Authority of Advance Ruling                           ESI            Employee State Insurance
 Act                           Income-tax Act, 1961                                  FDI            Foreign Direct Investment
 AIFs                          Alternative Investment Funds                          FMV            Fair Market Value
 AMCs                          Asset Management Companies                            FPI            Financial Portfolio Investor
 AO                            Assessing Officer                                     FY             Financial Year
 AOP                           Association of Persions                               GDP            Gross Domestic Product
 ARC(s)                        Asset Reconstruction Company                          GDR            Global Depository Receipts
 AY                            Assessment Year                                       GIFT IFSC      Gujarat International Finance Tec City IFSC
 C&AG                          Comptroller and Auditor General of India              IBU            IFSC Banking Unit
 CBDT                          Central Board of Direct Taxes                         IDBI           Industrial Development Bank of India
 CCIT                          Chief Commissioner of Income-tax                      IDF            Infrastructure Debt Fund
 CG                            Central Government                                    IFC            Infrastructure Finance Company
 DFC                           Dedicated Freight Corridor                            IFSC           International Finance Service Centre

 DFI                           Development Financial institution                     INR            Indian Rupee

 DISCOM                        Distribution Companies                                InvIT(s)       Infrastructure Investment Trust(s)

 DRC                           Dispute Resolution Committee                          ITAT           Income-tax Appellate Tribunal

                               Double taxation avoidance agreement entered into by   LIC            Life Insurance Corporation of India
 DTAA
                               Government of India                                   LLP            Limited Liability Partnership
 EPF                           Employees' Provident Fund                             LTCG           Long-term Capital Gains

       Union Budget 2021-22
       Union Budget 2021-22
       Union Budget 2021-22
PwC    Union Budget 2021- 22   Mov ing f orward with resilience                                                                                   32
Abbreviation                 Particulars                                             Abbreviation   Particulars
 MAT                          Minimum Alternate Tax                                   SWF(s)         Sovereign Wealth Fund(s)
 MSME(s)                      Medium, Small and Micro Enterprises                     TCS            Tax Collected at Source
 NBFC(s)                      Non-Banking Financial Company                           TDS            Tax deducted at Source
 NR                           Non-Resident                                            TRC            Tax Residency Certificate
 NRI                          Non - Resident India                                    ULIP           Unit Linked Insurance Policy
 OBU                          Offshore Bankng Unit                                    VC             Venture Capital
 PF(s)                        Pension Fund(s)                                         ++             Plus applicable surcharge and cess
 PGCIL                        Power Grid Corporation of India Limited
 PPP                          Public Private Partnership
 PSB                          Public Sector Banks
 PSC                          Public Sector Company
 PSU                          Public Sector Undertaking
 REIT(s)                      Real Estate Investment Trust(s)
 SARFAESI                     Securitisation and Reconstruction of Financial Assets
                              and Enforcement of Securities Interest Act, 2002
 SCRA                         Securities Contracts (Regulation) Act, 1956
 SEBI                         Securities Exchange Board of India
 SPV                          Special Purpose Vehicle
 STCG                         Short-term Capital Gains

      Union Budget 2021-22
      Union Budget 2021-22
      Union Budget 2021-22
PwC   Union Budget 2021- 22   Mov ing f orward with resilience                                                                            33
About PwC
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 155 countries with over 284,000 people who are
committed to delivering quality in assurance, advisory and tax services. PwC refers to the PwC network and/or one or more of its member firms, each of which is
a separate legal entity.
Please see www.pwc.com/structure for further details.
Find out more about PwC India and tell us what matters to you by visiting us at www.pwc.in.
© 2021 PwC. All rights reserved.

Data Classification: DC0 (Public)
In this document, PwC refers to PricewaterhouseCoopers Private Limited (a limited liability company in India having Corporate Identity Number or CIN :
U74140WB1983PTC036093), which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity.
© 2021 PricewaterhouseCoopers Private Limited. All rights reserved.
PD/January 2021 – M&C
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