Did Union Budget 2021 Bring Anything for Taxpayers?

As the Finance Minister of India Nirmala Sitharaman announced Union Budget 2021-22 in Parliament today, i.e. 01.02.2021, there are some significant changes announced in regards to the taxation process.

If you are a taxpaying Indian, NRI, startup, read below to know what this first digital budget of India brought for you.

Tax Reforms for Senior Citizens

The Finance Minister said that in the 75th year of Independence of India, the compliance burden on senior citizens should be reduced. Senior citizens aged above 75 years, who only have a pension and interest income, will be exempted from filing of income tax returns.

Tax Reforms for NRIs

• After returning to India NRIs face challenge regarding tax on accrued income in foreign retirement accounts in terms of the tax credit for foreign taxes, which arises on account of differential tax years. Now NRIs will be exempted from double taxation.
• NRIs are allowed to operate One Person Companies (OPCs) in India.

Tax Reforms for Startups

Startups will get an extension of 1 more year in their tax holiday till March 31, 2022.

Tax Reforms Regarding Dividend Income

The advance tax liability on dividend income shall arise after the declaration of payment of dividend.

Reassessment Reforms

• In serious tax evasion cases, reassessment can be opened for 10 years only if there is any evidence of concealment of income of Rs. 50 lakhs or above in a year.
• For others, reopening of tax assessments brought down from 6 to 3 years.

Other Reforms

• Tax audit limit is increased from Rs. 5 crores to Rs. 10 crores.
• Corporate tax rates reduced.
• Late deposit of employee’s contribution to PF/pension/gratuity by employers will not be allowed as a deduction to employer.
• ITR, details of capital gains, income from list securities, dividend income, and income from interest on bank deposits to come pre-filled in ITR.
• Govt proposes to extend exemption available for purchasing affordable houses and to provide tax exemption for affordable rental housing projects.
• A faceless dispute redressal platform will be set up for small taxpayers.
• The finance minister also proposed to provide GST relief by reducing inverted GST structures and for this, the Government will take the necessary steps.
• The Government proposed to review over 400 old exemptions in indirect taxes and it will begin extensive consultation from October 2021.

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