To Buy: 1800-258-5899 (9 am to 6 pm)

|

customerservice@canarahsbclife.in

|

Locate Branch

Login

Union Budget and National Pension Scheme

Union Budget and National Pension Scheme

Union Budget 2021 | National Pension Scheme
Get A Call Back
Share :

February of 2021 saw the release of the union budget under the guidance of Finance Minister Nirmala Sitharam. The theme of the budget received a lukewarm reaction from the general public due to several reasons. The unofficial theme of the budget was to increase the possibility of becoming more self-reliant and self-sustaining.

The basis of the union budget 2021 rests on six pillars. These pillars are the categories that would see development in the coming financial year. The pillars are:

1. Developing the quality of sanitation for better health and wellbeing.

2. Increase in the financial and physical capital as well as infrastructure.

3. Inclusive development for aspirational India

4. Enhancing the human capital

5. Encouragement of research and development.

6. Cutting down on unnecessary government costs but increasing the government's presence in areas of development.

Major aspects of the union budget 2021

1. Sanitation and healthcare

The government has vastly increased the amount that they will spend on developing different sectors of the economy. This was not a surprise as the economy has seen a plateaued growth due to the recent pandemic.

New additions in the Healthcare sector includes:

  • The Atma Nirbhar Scheme will undergo implementation in the three tiers of the healthcare sector.
  • Better health care units in entry points like airports, land ports, and even seaports. Around 32 airports and 16 seaports and land ports will receive better emergency medical services.
  • Mission Poshan 2.0 is to be carried out in 112 districts in need of better nourishment options.
  • Development of Public Health Units in 17 places.
  • They also aim to increase the accessibility of clean water to urban areas through the Jal Jeevan Mission.
  • Rs. 35,000 crores will be given towards the distribution and manufacture of the COVID-19 vaccine.

2. Infrastructure

The budget aims to develop alternative sources of transport like railways and seaports to reduce the burden on the land.

  • Hydrogen Energy Mission will see its launch in this Financial year.
  • 1.41 lakh kilometers of transmission wire was added, giving electricity to another 2.8 crore households. The construction of power lines also saw an increase in power generation to about 139 Gigawatts.
  • Provision to increase the development of railroad transport by 2030.
  • They also plan to increase the modal share in freight from 27 percent to 45 percent in the coming years.
  • A plan is in place to carry out the complete electrification of the railroad.
  • PPP (Public-Private Partnership) mode will find use in exporting goods from major ports. Around Rs. 2000 crore will go towards the seven projects.
  • Around one crore more people will receive subsidies under the Ujjwala scheme.
  • The Vehicle scrapping policy will take effect in the coming financial year. This policy requires vehicles to undergo emissions tests every 20 years for personal vehicles. At the same time, tests will have to be taken every 15 years for commercial vehicles.

3. Tax reforms

  • There will be an additional deduction of Rs. 1.5 lakh for house loans that are taken up before the 31st of March 2022.
  • Provisions have been set to increase the tax holidays for startups by one year more.
  • To encourage the increase in digital transactions, the government has increased the limit for a tax audit. This is eligible for the individuals who carry out 95% of their transactions digitally.
  • Duty on various indigenous products like palm oil and grams to undergo reduction.
  • In addition to this, renewable sources of energy like solar panels and solar lanterns will also receive a reduction in customs duty.

4. Fiscal fituations

With the recent events of the pandemic, many states have been going into debt. Keeping this in mind, the union budget aims to assist the states during this time.

  • The ceiling for net borrowing is up to 4% of GSDP (Gross State domestic profit) for this financial year.
  • Additionally, there can be an increase in the net borrowing by about 0.5% of the GSDP, depending on certain conditions.
  • Around Rs. 1,18,425 Crores will go towards creating a revenue deficit fund for 17 states.
  • At present, the Fiscal deficit is around 9.5%. However, it is projected to drop down to 6.8% in 2021-22.

5. Education and human capital

  • There will be a change in the welfare schemes for scheduled classes and tribes after the matric examination.
  • Introduction of 100 new Sainik schools.
  • Increase in rural education with the construction of 750 new Ekalavya schools.
  • Increasing the opportunities to learn new skills.
  • Tie-ups with international universities present in Japan and UAE for better skill development.
  • Finally, there are also provisions to revamp the National Apprenticeship Training Scheme for graduates.

6. Research and development

  • The National Research Foundation will receive Rs. 50,000 Crore to carry out various research projects for the next five years.
  • The National Translation Department will also receive backing to carry out their functioning online for better accessibility.
  • The research to be carried out in the deep sea through the Deep Ocean Mission. The aim of this mission is to conserve the biodiversity of the deep sea.

7. Agricultural development

  • APMC's (Agricultural Produce Market Committee) will receive an Agriculture Infrastructure fund in order to better the existing infrastructure.
  • The government looks to integrate 1000 more Mandis into the e-NAM portal. This will allow an easier flow of goods through the APMC network.
  • The Green Scheme Operation will now include 22 perishable products.
  • There will be a development in the fisheries along the South Indian Coasts.
  • Tamil Nadu will see the construction of a Multipurpose Seaweed Park.

Changes in the union budget 2021 have also been reflected in the Indian Government's National Pension Scheme.

National Pension Scheme: Overview

The National Pension Scheme is a retirement scheme that allows an individual to invest in a pension plan so as to have money once they retire. One can create an NPS account at the Canara HSBC Oriental Bank Of Commerce Life Insurance as well. Under this scheme, an individual can open either a Tier I or a Tier II account.

A Tier I account does not allow the depositor to withdraw money until retirement, while the Tier II ones allow withdrawals at any time. With a stipulated base payment of Rs 500 or Rs 1000 respectively, an individual can open an account.

The benefit of opening an NPS at a young age is that it allows one to invest in a fund that can provide for them in the future. There is also a tax deduction that comes with starting this account. The amount to undergo deduction can go up to Rs 1.5 lakhs.

In addition to this, there is an additional tax deduction of around Rs 50,000 for investing in this account. However, these were the features of the National Pension Scheme in the 2020-2021 financial year.

NPS Tiers I and II: Features and benefits

Now, according to the NPS rules, Tier I accounts will receive tax deductions. These tax deductions come under section 80C. Therefore, one can reduce their payable tax after creating this kind of account. Tier II does not possess any such tax incentives. However, one will have to make a Tier I account first and can then convert it into a tier II.

In order to avail of tax benefits from this account, one will have to wait through a lock-in period of three years. This is applicable only to central government staff. The tax benefits that an employee receives are the tax deductions under section 80C as seen in Tier I accounts. However, for private-sector employees, this is not the case. Private sector employees who open Tier-II accounts will not attain any tax deductions.

Tax deductions from Tier I accounts

If an employer invests in an employees' NPS account, then they can attain a tax deduction of 10% of the salary. This is under the regulation of Section 80CCD(2) of the Income Tax law. This is the same with an employee that invests in their own NPS account as well.

Changes taking place with the new budget

The new union budget 2021 comes with a few changes regarding the tax filing system. Before the most recent Union Budget, an individual would have to personally approach a point of presence or POP in order to avail of any tax benefits. Therefore, it would have been hard for more senior individuals to do this. However, the new budget took this into consideration and came up with an easier solution.

Individuals who are above the age of 75 years will receive an exemption from filing returns on their income tax. The exemption is applicable only to the individuals receiving a pension under the National Pension scheme. The bank will automatically deduct the necessary tax on their income. Therefore, the process of payment of taxes for senior citizens becomes much easier.

With these changes due to the union budget, investments with NPS have become streamlined, especially for senior citizens. This scheme can help you create financial security for retirement days while also helping you save on tax.

×

Get a Call Back

Do you want us to call back Please fill the form below

Get a Call Back

Annual Income (In Lacs)

Call BackCall Back Pay PremiumPay Premium