Finance Minister Nirmala Sitharaman did not announce major changes in the income tax rules in Budget 2021 but announced several changes that would ease compliance for taxpayers.
In Budget 2021, Finance Minister Nirmala Sitharaman announced some diversion in the income tax rules, which would help in easing compliance for taxpayers. Tax experts have welcomed the move. Asaruji Mandal, Partner, Tax and Regulatory Services, BDO India, said, "No increase in taxes and no Kovid cess. He said pre-filled tax returns with details of interest, capital gains, and dividends of bank and post office, Will help taxpayers capture income more accurately.
Taxpayers should know 10 changes announced in the budget in 2021:
1) To make compliance easier for the taxpayer, details of salary income, tax payment, TDS, etc. are already filled in the Income Tax Return. For ease of filing returns, details of capital gains, dividend income from listed securities, and interest from banks, post offices, etc. should also be pre-filled.
2) For ease of compliance, the government proposed to exempt dividend payments from TDS to REDS / InvIT. Further, since the amount of dividend income cannot be estimated correctly by shareholders to pay advance tax, the government proposed that advance tax liability on dividend income would arise only after declaration/payment of dividend. In the previous budget, the government abolished dividend distribution tax to encourage investment, and the dividend was made taxable in the hands of shareholders. Higher TDS for Non-filers of Income Tax Returns: In Budget 2021, a new section 206AB was proposed to be included in the Income Tax Act as a special provision providing higher rates for TDS for non-filers of the Income Tax Act.
3) To reduce the compliance of senior citizens, the government exempted persons above the age of 75 from filing income tax returns (ITRs), subject to certain conditions: In cases where senior citizens earn pension income and interest income. are doing. The government will notify some banks where account holders will be eligible for this exemption. The person will be required to present the declaration form to the designated bank.
4) Once the declaration form is filled, giving effect to the deductible allowances under Chapter VI-A for the respective assessment year and the exemption allowable under section 87A of the Act, the specified bank shall compute the income of such senior citizen Will need to do and cut income tax based on the rates in force. Once this is done, there will be no need for the return of income by such senior citizens for this assessment year.
5) The Unit Linked Insurance Plan (ULIP) has been brought under the tax bracket in Budget 2021. Currently, ULIPs are exempted from tax if the total premium payable for the policy does not exceed 10% of the estimated amount.
Under the new proposals, ULIPs issued on or after 1 February 2021 where the annual premium payable by the individual would be more than 2.5 lakhs, would be subject to capital gains tax equivalent to equity-oriented mutual funds.
6) Interest income on contributions made by an employee to a provident fund in excess of ₹ 2.5 lakh in a year or after April 1, 2021, is now taxable. Currently, any accumulated balance is treated as a tax exemption provided the employee has provided five years or more of continuous service.
7) Employees can still avail of exemption for one-third of the expenses for travel concession (LTC) or ver 36,000 whichever is less, for the 2018-21 block if they have the goods or services liable to GST Expenditure on purchases is @ 12% or more, provided the payment is made through non-cash mode and during the period from 12 October 2020 to 31 March 2021. The amendment is proposed only for FY20-21.
8) "As a measure to reduce litigation for small taxpayers where income is up to 50 lakhs and the total amount of fractions is up to 10 lakhs, a separate dispute resolution committee is to be set up in a specified order, "Aditya Hans, Partner, Dhruv Advisor LLP.
9) "The deadline for filing a belted or revised return for three months, ie for age 2021-22, the deadline for the belled/revised return will be 31 December 2021 (instead of 31 March 2022)," he said.
10) To support the housing sector, the government extended the additional tax deduction of ₹ 1.5 lakh on interest on housing loans for the purchase of affordable houses by one year and till March 31, 2022. Additional deductions of an additional 1.5 lakh were introduced in the 2019 budget and more than 2 lakh. For first time home buyers and. Up to a cost of 45 lakhs was allowed.