The Union Budget 2021, presented by Finance Minister Nirmala Sitharaman, did not make a change to tax slabs in Income Tax Returns. However, Sitharaman announced relief for senior citizens above the age of 75, relief for NRIs measures that will make filing taxes easier.
Here's a look at 10 things from the budget that may affect your personal finances:
1. NO ITR FOR SENIOR CITIZENS
In a huge relief for those aged above 75 and earning pension and interest income, filing their income tax returns will not be required. MoneyControl.com reported that the finance minister didn’t specify whether dividend income is also included to help senior citizens qualify. Many senior citizens also invest a portion of their portfolios in equities. The fine print of the Budget will likely to provide greater clarity.
2. PRE-FILLED TAX FORMS
To make filing your income tax easier, Sitharaman said that apart from tax deduction at source, now details of capital gains and interests from banks and post offices would be pre-filled. Pre-filled forms improve tax compliance and also help tax payers to file their taxes quickly and efficiently as the data is already captured.
3. FACELESS ASSESSMENTS
MoneyControl.com reported that this year's budget has given further push to faceless assessment and aims to make it more robust. A (faceless) dispute resolution committee will be set up. Anyone with a taxable income of up to Rs 50 lakh and disputed income up to Rs 10 lakh can approach this committee.
4.RELIEF FOR NRIS
Sitharaman announced a change in double taxation on NRIs, especially those who return to India. Relief is also being looked at for those who face difficulty in getting credit for taxes paid in India.
Also read: Union Budget 2021 Live Updates
5. DEPOSIT INSURANCE COVER TO BE BETTER STRUCTURED
Sitharaman said the government and the the Reserve Bank of India will form a better policy framework for bank depositors to claim the deposit insurance cover, when their banks get into trouble. Last year's Budget had hiked the deposit Insurance cover for bank depositors from Rs 1 lakh to Rs 5 lakh. However, so far, this is only available for banks when they go into liquidation. A better and a revised mechanism would now help depositors even before the bank goes into liquidation. “This is a positive development and protect bank customers from the kind of situations we had seen in the recent past when the RBI had imposed moratorium on banks and limited access to deposits,” MoneyControl.com quoted Adhil Shetty, CEO, BankBazaar.com as saying.
6. DEDUCTION ON HOME LOAN INTEREST EXTENDED
Affordable housing gets a boost with benefits available to those who avail deduction for buying an affordable home will now be extended to those who take a housing loan until March 31, 2022.
7. TAX-EFFICIENT ZERO COUPON BONDS FOR INFRA
Soon, retail investors would have a new instrument to invest in. In order to spur infrastructure growth, the Union Budget 2021 proposed that infrastructure debt funds would now be able to raise funds by issuing tax-efficient zero coupon bonds. Further details are awaited as to the extent of income-tax benefits that these bonds would give.
8. FASTER TAX RESOLUTIONS
The timeline for reopening of assessment under income tax returns have been reduced to three years from six years. Serious tax evasion cases, too, would only pertain to cases where there is evidence of concealment of income concealment of Rs 50 lakh or more in a year. The reassessment can be opened in 10 years in such cases. This will ease the burden on the tax authorities and tax payers and pave the way for faster resolution of cases.
9. SOCIAL SECURITY BENEFIT EXTENDED TO MANY MORE WORKERS
Several tax-paying citizens who lost their jobs last year due to Covid-19 and had to take up freelancing assignments get some relief from Budget 2021. Social Security Benefits will be extended to gig and platform workers. E-commerce workers will now be brought under Employees’ State Insurance Scheme (ESI), Employees’ Provident Fund (EPF) and the minimum wage rule. Women will be allowed to work in all categories in night shifts as well.
10. INVESTMENT CHARTER FOR FINANCIAL PRODUCTS
In order to reduce mis-selling of financial products, the FM announced the setting up of an investment charter. This charter would pertain to investors of all products across the financial sector. Details are awaited on this, but this charter is expected to lay down rights of investors, the grievance mechanism in case they have a complaint and so on. The charter is also expected to make all current financial products’ grievance resolution mechanism more robust.