Union Budget 2021 - Key Highlights on Direct Tax Updates
The following are the major proposals of the Budget 2021, as announced by FM Nirmala Sitharaman:
Relief to senior citizen
The budget proposes exemption of income tax for senior citizen having only pension and interest income. Citizens of age 75 years and above who have only Pension and Interest income – Need not file Income Tax Returns.
The budget proposal will amend section 148 of the Income Tax where the time limit for reassessment has been reduced to 3 years from 6 years. The proposal addresses serious tax evasion, where evasion evidence is Rs.50 lakhs or more can be re-opened within 10 years. and only with the approval of P. CCIT.
Faceless Dispute Resolution Committee/Panel
Anyone with total income less than 50 lacs and disputed income less than 10 Lacs can approach this, faceless committee. Reducing Litigation for small tax payers – Constitution of Faceless Dispute Resolution Panel for people with Total Income upto Rs.50 lakh and disputed income of Rs.10 lakh.
Faceless ITAT Centre
Income Tax Appellate Tribunal to become Faceless where personal hearings will be conducted through Video Conferences. Only electronic communication will be done.
Dividend will be exempt from TDS. Advance tax liability on dividend income will arise only after declaration of dividend.
Tax Audit Limit
Tax Audit Limit to be increased to Rs.10 crores from Rs.5 crores for those having less than 5% cash transactions.
Additional Interest deduction (Sec 80EEA) of Rs.1.5 lakhs to be extended for loans taken till 31st March, 2022. Affordable Housing Projects – Tax Holiday extended till 31st March, 2022.
Pre-filled Income Tax Return
It will have pre filled data regarding Dividend, post office interest income, salary etc. Details of Capital Gains, Dividend Income and Interest income will be pre-filled in the returns.
Relief to Trusts
Charitable trusts running Hospitals and Educational Institutions relief increased from Rs.1 crore to Rs.5 crore.
EPF Employee Contribution
Late deposit of employee contribution of PF will not be allowed as deduction.
Tax holiday for Start-Ups extended to 31st March, 2022. Capital Gains exemption on investment in start ups also extended to 31st March, 2022.