Finance Minister Nirmala Sitharaman presented the Union Budget 2021-22 on Monday. The Union Budget-2021 assumes greater significance as it comes amidst the novel coronavirus pandemic, which has led to massive economic disruption across the world.
In her speech, FM Sitharaman announced that India’s fiscal deficit is set to jump to 9.5 per cent of Gross Domestic Product in 2020-21 as per Revised Estimates. This is higher than the 3.5 per cent of GDP that was projected in the Budget Estimates last year.
Considering the circumstances, the tax provisions in the Union Budget 2021 acquires special significance. Citizens every year look forward to the announcements on taxes during every budget speech and this year was no different.
Here are the government’s direct and indirect tax proposals announced in this year’s budget:
Direct tax proposals:
- For senior citizens above 75 years who only have an interest and pension income are exempt from filing income tax.
- Banks and agencies will deduct the necessary income tax directly.
- Reopening of assessments reduced to 3 years from 6 years other than cases of serious tax evasion. In serious tax evasion cases of concealment of 50 lakh or more in a year, reopening can be done up to 10 years as at present.
- Tax audit limit increased from Rs 5 crore to Rs 10 crore.
- Budget Proposes to increase the threshold for tax audit to Rs 10 cr as against Rs 5 cr for those transacting 95% digitally.
- Advance tax liability on dividend income shall arrive only after the declaration of payment of dividends.
- Startups get one more year of the tax holiday. Capital Gain exemption for investment in Start-ups gets increased by one more year.
- Propose to constitute a dispute resolution committee for small taxpayers. Anyone with a taxable income of up to Rs 50 lakh, disputed income of up to Rs 10 lakh eligible to approach dispute resolution committee.
- Govt to extend eligibility of erstwhile tax sop on home loan up to the year 2022.
- Finance Minister Sitharaman proposes policies to make it easy for foreign investors to invest in India’s infrastructure projects.
- Propose to make dividend payments to REIT (estate investment trusts) and Invit’s (Infrastructure investment trusts) exempt from TDS.
- To further ease filing of IT returns, details of capital gains and interest from banks, post offices, etc will be pre-filled.
- Details of capital gains from listed securities, dividend income, and interest income to also be pre-filled in tax forms.
- To extend the eligibility of provision for an additional deduction of Rs 1.5 lakh for loans taken to purchase affordable housing by one more year.
- To ensure employees’ contribution to retirement schemes is done on time, late payment of such contributions by employers will not be allowed.
Indirect Tax proposals
- Reducing customs duty uniformly to 7.5% on semi, flat and products of non-alloy, alloy and stainless steel.
- Exempting duty on steel scrap till March 2022.
- To provide relief to copper recyclers, reducing duty on copper scrap from 5% to 2.5%.
- To rationalise customs duty gold and silver Raising customs duty on some auto parts to 15%.
- To raise customs duty on cotton from 0% to 10%, on raw silk and silk yarn from 10% to 15%.
- Agri Infrastructure Development Cess on a small number of items, to not put additional burden on consumers on most items.