An overview of what has changed and what has not
No significant personal income tax changes or revisions were announced in Budget 2021. However, a few key expectations were spot on in the policy document.
- Senior citizens (above 75 years) with only pension and interest income will no longer have to file their income tax returns
- Rules to be framed to remove the double taxation burden on NRIs
- To simplify the process of I-T returns filing, details on capital gains from listed entities, bank interest, dividends, will now come pre-filled in tax filing forms.
- The Rs 1.5 lakh tax deduction on payment of interest for an affordable housing loan, available under Section 80EEA, has been extended by a year till 31st March 2022
Introduction: The wait is finally over as Finance Minister on 1st February presented the Union Budget 2021-22. And the budget went paperless this year, in line with the government's vision of a 'Digital India'. We witnessed a shift from the British-era budget briefcase to the traditional 'Bahi Khata' last season and now to a tablet that FM Sitharaman was carrying today. Additionally, the government rolled the Union Budget mobile app where users can access all budget-related documents. And here are the income tax changes the Union Budget has in store for India's .
Announcements on the taxation front: Some of the key changes announced by FM Sitharaman on the direct taxation front are as follows:
Relief for senior citizens: Taxpayers over 75 years of age, with only pension and interest income, will no longer be required to file their income tax returns. The respective banks will deduct the necessary taxes.
Relaxations for non-resident Indians (NRIs): NRIs will now be spared the burden of double taxation on retirement accounts under the new income tax rules of the Union Budget 2021.
Interest on EPF: The interest earned on employee PF contributions above Rs 2.5 lakh per year will now become taxable.
Taxation of dividend income: The advance tax liability on dividend income shall arise only after companies declare/pay a dividend.
Making tax filing easier: For all those who dread doing their taxes, the process will now become more straightforward as details on capital gains from listed entities, bank interest, dividends, will now come pre-filled in the tax filing forms.
Easing tax-related litigation burden: A faceless dispute resolution committee is to be set up to reduce the trouble of litigation for small taxpayers. Anyone with a taxable income up to Rs 50 lakh and a disputed income of up to Rs 10 lakh will be eligible to approach the committee. The time allowed to reopen tax investigation cases will be reduced to 3 years from the current 6 years. Only in severe tax evasion cases where there is evidence of concealment of income of Rs 50 lakh or more in a year, can the cases be reopened for up to 10 years.
Affordable housing tax holiday: Affordable housing projects can now avail a tax holiday for another year until 31st March 2022. The additional interest deduction of up to Rs 1.5 lakh, available under Section 80EEA, is set to be extended for loans taken until 31st March 2022.
Conclusion: The suspense has finally come to an end as the government laid out the plan for the coming fiscal year. How these announcements affect individual taxpayers and the economy at large, remains to be seen. What do you think about Budget 2021?
*Disclaimer: The article is for information purpose only and not an analysis or opinion of DBS Bank.