75? Only pension and interest income? No need to file tax return

Union Budget: Number of return fillers increase from 3.31 crore to 6.48 crore in 6 years, further push to affordable/rental housing, faceless dispute resolution committee in the offing

GN Bureau | February 1, 2021


#Union Budget   #economy   #finance ministry   #finance minister   #Nirmala Sitharaman   #taxation  


The Union Budget 2021-22 presented in Parliament on Monday by the finance minister Nirmala Sitharaman seeks to further simplify the tax administration, litigation management and ease the compliance of direct tax administration.

In the budget speech, the finance minister provided relief to senior citizens in filing of income tax returns, reduced time limit for income tax proceedings, announced setting up of the Dispute Resolution Committee, faceless ITAT, relaxation to NRIs, increase in exemption limit from audit and relief for dividend income.  She also announced steps to attract foreign investment into infrastructure, relief to affordable housing and rental housing, tax incentives to IFSC, relief to small charitable trusts, and steps for incentivizing Start-ups in the country.

Sitharaman, in her Budget speech, said that post-pandemic, a new world order seems to be emerging and India will have a leading role therein.  She said in this scenario, our tax system has to be transparent, efficient and should promote investment and employment in the country.  The Minister said that at the same time, it should put minimum burden on our tax payers.  She said that a series of reforms had been introduced by the Government for the benefit of tax payers and economy, including slashing of corporate tax rate, abolition of dividend distribution tax, and increasing of rebate for small tax payers.  In the year 2020, the income tax return filers saw a dramatic increase to 6.48 crore from 3.31 crore in 2014.
 
RELIEF TO SENIOR CITIZENS
In the 75th year of independence, the Budget seeks to reduce compliance burden on senior citizens who are of 75 years of age and above.  Such senior citizens having only pension and interest income, will be exempted from filing their income tax return.  The paying Bank will deduct the necessary tax on their income.

RELAXATION TO NRIs, RELIEF FOR DIVIDEND
The Budget proposes to notify rules for removing the hardship of Non-Resident Indians returning to India, on the issue of their accrued incomes in their foreign retirement account. It proposes to make dividend payment to REIT/InvIT exempt from TDS.  For Foreign Portfolio Investors, the Budget proposes deduction of tax on dividend income at lower treaty rate.  The Budget provides that advanced tax liability on dividend income shall arise only after the declaration or payment of dividend.  The Minister said that this was being done as the amount of dividend income cannot be estimated correctly by the shareholders for paying advance tax.

AFFORDABLE HOUSING/ RENTAL HOUSING
The Finance Minister proposed to extend the eligibility period for claim of additional deduction for interest of Rs. 1.5 lakh on loan taken for purchase of an affordable house to 31st March, 2022.  In order to increase the supply of affordable houses, she also announced extension of eligibility period for claiming tax holiday for affordable housing projects by one more year to 31st March, 2022.  For promoting supply of affordable rental housing for the migrant workers, the Minister announced a new tax exemption for the notified affordable rental housing projects.

TAX BENEFITS FOR START UPS
In order to incentivize start-ups in the country, Smt. Sitharaman announced extension in the eligibility for claiming tax holiday for startups by one more year till 31st March, 2022.  In order to incentivize funding of start-ups, she proposed extending the Capital Gains exemption for investment in start-ups by one more year till 31st March, 2022.

TIMELY DEPOSIT OF EMPLOYEES’ CONTRIBUTION TO LABOUR WELFARE FUNDS
The Finance Minister said that delay in deposit of the contribution of employees towards various welfare funds results in permanent loss of interest/income for the employees.  In order to ensure timely deposit of employee’s contribution to these funds by the employers, she announced that late deposit of employee’s contribution shall never be allowed as deduction to the employer.

REDUCTION IN TIME FOR REOPENING INCOME TAX PROCEEDINGS
In order to reduce compliance burden, the Budget provides reduction in the time-limit for reopening of income tax proceedings to three years from the present six years.  In serious tax evasion cases, where there is evidence of concealment of income of Rs. 50 lakh or more in a year, the assessment can be reopened upto 10 years but only after the approval of the Principal Chief Commissioner.

DISPUTE RESOLUTION COMMITTEE & NATIONAL FACELESS INCOME TAX APPELLATE TRIBUNAL CENTRE
Stating the resolve of the Government to reduce litigation in the taxation system, the Finance Minister said that the Direct Tax ‘Vivad se Vishwas’ Scheme announced by the Government has been received well.  Until 30th January, 2021, over one lakh ten thousand tax payers have opted to settle tax dispute of over Rs. 85 thousand crores under the Scheme.  To further reduce litigation of small tax payers, Sitharaman proposed to constitute a Dispute Resolution Committee.  Anyone with a taxable income upto Rs. 50 lakh and disputed income upto Rs. 10 lakh, shall be eligible to approach the Committee which will be faceless to ensure efficiency, transparency and accountability.  She also announced setting up of National Faceless Income Tax Appellate Tribunal Centre.

TAX AUDIT LIMIT HIKED FOR DIGITAL TRANSACTIONS
To incentivize digital transactions and to reduce the compliance burden of the person who is carrying almost all of their transactions digitally, the Budget proposes to increase the limit for tax audit for persons who are undertaking 95 per cent of their transaction digitally from Rs. 5 Crore to Rs. 10 Crore.

INCENTIVES FOR FOREIGN INVESTMENTS
To attract foreign investment into infrastructure sector, the Budget proposes to relax certain conditions relating to prohibition on private funding, restriction on commercial activities and direct investment in infrastructure.  In order to allow funding of infrastructure by issue of zero coupon bonds, the Budget proposes to make notified infrastructure debt funds eligible to raise funds by issuing tax efficient zero coupon bonds.
 
TAX INCENTIVE TO IFSC
In order to promote International Financial Services Centre (IFSC) in GIFT City, the Budget proposes more tax incentives which include tax holiday for Capital gains from incomes of aircraft leasing companies, tax exemption for aircraft lease rentals paid to foreign lessors, tax incentives for relocating foreign funds in the IFSC and to allow tax exemption to the investment division of foreign banks located in IFSC.

RELIEF TO SMALL TRUSTS
In order to reduce compliance burden on the small charitable trusts running educational institutions and hospitals, the Budget proposes to increase the limit on annual receipts for these trusts from present Rs.1 Crore to Rs. 5 Crore for non-applicability of various compliances.

FACELESS ITAT
Sitharaman further proposed to make Income Tax Appellate Tribunal faceless. She proposed a National Faceless Income Appellate Tribunal Centre, wherein all communication between the Tribunal and the appellant shall be electronic.

PRE-FILLING OF RETURNS
In order to ease filing of returns, the Budget proposes that details of capital gains from listed securities, dividend income and interest from banks, post office etc. will also be pre-filled in returns.  Details of salary income, tax payment, TDS etc already come pre-filled in returns.
 

Comments

 

Other News

Do you know these hidden forces behind your economic and business decisions?

Predictably Irrational By Dan Ariely Harper Perennial, 384 pages, Revised edition: 2010 In this meticulously researched work, Israel-American psychologist and behavioural economist Dan Ariely [h

Social media guidelines: All you need to know about the change

Amidst growing concerns around lack of transparency, accountability and rights of users related to digital media, the government has framed ‘Guidelines and Digital Media Ethics Code’ after elaborate consultation with the public and stakeholders, to have a “harmonious, soft-touch oversight

PLI scheme to boost IT hardware manufacturing

A production-linked incentive (PLI) scheme with a cost of Rs 7,350 crore over four years was approved by the union cabinet Wednesday, aiming to boost domestic manufacturing and attract global investment in IT hardware like laptops, tablets, PCs and servers. The scheme extends an incentive of

Govt could’ve done more to support film industry: Ramesh Sippy

Lamenting the fact that the government has not done enough to uplift cinema halls badly affected by pandemic-induced lockdown and get back audiences to theatres, legendary filmmaker Ramesh Sippy has said that the film industry needs a revival package and larger government support than that announced in the

Genius of Ghalib, equally at home in solving murder mystery

Murder at the Mushaira By Raza Mir Aleph / 344 pages / Rs 799 While Indian-English writing has achieved great heights in literary fiction, that achievement is ye

As Covid cases rise, stringent restrictions are back in Mumbai

With the surge in the number of Covid-19 cases over the past few days in several districts of Maharashtra as well as in the city of Mumbai, stringent measures are making a comeback. BMC municipal commissioner Iqbal Singh Chahal on Thursday announced stricter rules against those flouting Covi

Visionary Talks series with Ramesh Sippy, On The Future Of Cinema



Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter