From 2021 to 2022, the honorable finance minister Nirmala Sitaraman presented the union budget 2021 income tax in parliament on the 1st of February 2021. During the budget speech, the finance minister spoke from 11 a.m. to 1:00 p.m. Seven pillars are the focus of the current budget. There are seven pillars, including:
- Well-being and health.
- Re-energizing infrastructure, human capital, and research and development with inclusive physical and financial capital development.
- Government should be minimal and governance should be maximal.
A few regulations have also been introduced in the budget regarding the securities market,
It would be proposed to merge these codes into one.
Among the highlights of the 2021 budget are reforms and schemes aimed at boosting the economy
A total of INR 5,54,000 lakh crore will be spent on capital in the financial year 2021-2022. A new centrally sponsored scheme is needed for improving the health care sector, so the finance minister has proposed the Pradhan Mantri Atma Nirbhar swasth Bharat Yojana with an outlay of 64,180 crores.
For the financial year 2021 to 2022, the budget has allocated around 2,23,846 crores to health and well-being, a 130% increase y-o-y. It is likely that the increased allocation will help to expand and strengthen the existing national healthcare institutions’ health emergency operations, mobile hospitals, and the National Center for Disease Control.
In the insurance sector, FDI limits have increased from 49% to 74%, which was one of the key highlights. Moreover, a public sector unit and an insurance company are to be divested by the government.
Budget Highlights 2021: Direct Tax Proposals
Also, some direct tax proposals were introduced, which relaxed the tax burden on individuals and small businesses to some extent. For 2021 to 2022, both individual and corporate tax rates remained the same. Taxation audits under section 44 AB now have a limit of INR 10,00,00,000 instead of INR 5,00,00,000. The number of digitized payments is estimated at 195%, which is a significant relief for several corporate houses. The numbers are as follows.
First Stop: IT Relaxation for Senior Citizens Over 75
All senior citizens who receive only pension and interest income would be exempt from filing income tax returns. A new section 194 P has been added to make banks deduct some tax from pension and interest income of senior citizens over 75.
Time reduction for income tax proceedings
Unless there is serious tax evasion, assessment proceedings will be reopened only for three years. Previously, the time limit was six years. Establish a dispute resolution committee
For small and medium taxpayers, those with taxable incomes exceeding 50,00,000 and those with disputed incomes over 10,00,000 can approach the committee provided under section 245ma and resolve the issue.
The National Faceless Income Tax Appellate Tribunal
As a result, the taxpayer’s compliance costs will be reduced and further appeals will be handled in a more transparent manner. Moreover, this will allow some work to be distributed among different benches. This will ensure efficient administration, which is the main reason.
Start-up Tax Initiatives
It has been extended for one more year, until 31st March 2022.
To remove the challenges of double taxation, all rules and regulations should be notified.
The importance of pre-filing returns cannot be overstated
Tax payments, salary TDs, etc. could be pre-filed, as well as details of all capital gains from listed securities dividends.
Contribution to PF disallowed
If the employee’s Provident Fund was deducted by the employer but not deposited, the employer cannot deduct the PF contribution – deduction.
In the case of a residential unit transfer, meaning an independent housing unit made between 12th November 2020 and 30th June 2021, stamp duty would be 120% of the consideration.
Section 44ada Amendment
The purpose of this section is to assess who is a resident of India. Individual Hindu undivided families, partnerships, and limited liability companies are affected.
The 80th section
As of 31 March 2022, the additional direction for affordable housing has been extended.
Tax proposals for indirect taxes
These are the few items on which custom duty rates have been revised:
- There is a reduction in duty on copper scrap from 5% to just 2.5%.
- The primary and special additional excise duty on petrol and high-speed diesel oil has been reduced.
- The duties on solar inverters have increased from 5% to 20%.
- The duty on solar lanterns has been raised from 5% to 15%.
- There is a reduction in the essential customs duty on silver and gold.
- Instead of rationalizing the duty on other products, the department will rationalize the duty on textile chemicals.
- From 2nd February 2021, the revised rates will be in effect.
- A higher customs duty is imposed on agricultural products like cotton, silk, and alcohol.
Silver and gold are exempt from social welfare surcharges. Due to the importance of an additional essential customs duty, the items would be subject to some charge.
Therefore, this is all you need to know about the budget highlights.