The Budget 2021 had not made any changes to the personal income tax slab, though the budget 2021-21 had provided relief towards senior citizens in order to file the I-T returns; lessen the time limit for Income Tax proceedings; announced the setting-up of a Dispute Resolution Committee as well as faceless Income Tax Appellate Tribunal proceedings; given relaxations for Non-Resident Indians (NRI); provided an increase in the exemption limit from audit; as well as accounted for relief for dividend income.
The major points are-
• The time limit for filing delayed (belated) /revised income-tax return has been reduced by 3months. The due date to file an income-tax return is now 31stDecemberafter the close of the tax year. Similarly, the timeline for completion of assessment was reduced through 3months. While this would lessen the overall tax compliance timelines, it might create difficulties for taxpayers with foreign income in claiming tax exemption or relief where such benefit has been dependent on tax filing in the other nation.
• In order to lessen the compliance burden on senior citizens who are 75 years of age and above, senior citizens having only pension and interest income would be exempted from filing an Income Tax return, the paying bank would deduct the required tax on their income.
• For eliminating the difficulties of NRIs returning to India, on the concern of their accrued incomes in their foreign retirement account, the Budget proposed to inform rules governing it.
• The Finance Minister Nirmala Sitharaman, while presenting the budget, also offered steps towards attracting foreign investment into infrastructure; relief for affordable housing as well as rental housing; tax incentives towards the International Financial Services Centre (IFSC); relief towards small charitable trusts; and measures for incentivizing start-ups in the nation.
• The Budget had proposed towards making dividend payments to REIT (Real Estate Investment Trusts)/InvIT (Infrastructure Investment Trusts) exempted from tax deducted at source.
• For Foreign Portfolio Investors (FPI), the union budget had proposed the deduction of tax on dividend income at a lower treaty rate. According to the proposal, advanced tax liability on dividend income would arise only after the declaration or payment of the dividend.
• Towards housing for all, the Finance Minister had proposed extending the eligibility period for a claim of the additional deduction for the interest of Rs. 1.5 lakh on loan taken for the purchase of an affordable house to 31st March 2022.
• For growing the supply of affordable houses, the Finance Minister also stated the extension of an eligibility period for claiming a tax holiday for affordable housing projects through one more year to 31st March 2022.
• In order to promote the supply of affordable rental housing for the migrant workers, the Finance Minister announced a new tax exemption for notified affordable rental housing projects.
• The Finance Minister also announced an extension in the eligibility for start-ups towards claiming a tax holiday by one more year.
• In order to lessen the litigation in the taxation system, the Finance Minister had proposed constituting a Dispute Resolution Committee for small taxpayers facing litigation. The Dispute Resolution Committee (DRC) has been set up to assist the taxpayers with a taxable income of up to Rs 50 lakh, and disputed income up to Rs 10 lakh. Every proceeding before DRC will be faceless and jurisdiction-less. This would lessen the litigation and give a push to small and medium taxpayers in order to settle down disputes at the initial stages.
• The Finance Minister stated that an individual with a taxable income up to Rs 50 lakh and disputed income up to Rs 10 lakh would be eligible to approach the committee, which shall be faceless to ensure efficiency, transparency, and accountability.
• Also, the setting up of a National Faceless Income Tax Appellate Tribunal Centre has been announced in the budget 2021.
• For allowing the funding of infrastructure through issuing zero-coupon bonds, the Budget had suggested making notified infrastructure debt funds eligible towards raising funds by issuing tax-efficient zero-coupon bonds.
• For promoting IFSC in GIFT City (Gujarat International Finance Tec-City), the Budget had suggested more tax incentives, which comprise a tax holiday for capital gains from the revenues of aircraft leasing corporations; tax exemption for aircraft lease rentals paid towards foreign lessors; tax incentives for relocating foreign capitals in the IFSC; and towards allowing tax exemption for the investment divisions of foreign banks located in IFSC.
• For simplifying the filing of returns, the Budget has recommended that details of capital gains from listed securities, dividend income, as well as interest from banks and post offices, would also be pre-filled in returns.
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