The time limit for reopening of income tax assessment cases has been reduced to three years from six years
India unveiled a massive spending plan focused on healthcare and infrastructure on Monday, as the government sought to boost a coronavirus-ravaged economy on course for its biggest annual contraction on record.
The nation of 1.3 billion was badly hit by one of the world’s strictest virus lockdowns, with growth slumping by a historic 23.9 per cent in April-June, and the economy expected to contract 7.7 per cent in 2020-21.
While talking about taxes in her Budget Speech, Finance Minister Nirmala Sitharaman said, “I begin my direct tax proposals by offering my ‘pranaam’ to our senior citizens. Many of them, despite having foregone several basic necessities of their own, have strived to build our nation.”
Even as there has been no change in the income tax (I-T) slabs of individual taxpayers, here are key announcements on income tax in Budget 2021:
1. The government reduced the compliance burden on senior citizens who are 75 years of age and above. For senior citizens who only have a pension and interest income, Sitharaman proposed exemption from filing their income tax returns. The paying bank will deduct the necessary tax on their income.
2. The time limit for reopening of income tax assessment cases has been reduced to three years from six years, while for serious tax fraud cases where concealment of income is Rs 50 lakh or more it would be 10 years.
3. Sitharaman extended the additional relief of Rs 1.5 lakh for home loans for affordable housing. Now, homebuyers can avail additional tax relief on home loans till March 31, 2022.
4. Income earned by high-income employees has also been rationalised. Budget 2021 proposed to restrict tax exemption for the interest income earned on the employees’ contribution to various provident funds to the annual contribution of Rs 2.5 lakh.
5. Exemption from tax audit limit has been doubled to Rs 10 crore turnover for companies doing most of their business through digital modes.
6. Income Tax Appellate Tribunals to go faceless. The Centre also proposed a National Faceless Income Tax Appellate Tribunal Centre.
7. To remove hardship faced by NRIs in respect of their income accrued on foreign retirement benefits due to mismatch in taxation, the Centre proposed to exempt them from double taxation.
8. The blanket exemption in annual receipts for charitable trusts running educational institutions, has been increased from Rs 1 crore to Rs 5 crore.
9. The Centre also proposed to extend the eligibility for claiming tax holiday for startups by one more year till March 31, 2022.