The Union Budget 2021, following a monumental year of challenges posed by the Covid-19 pandemic, was probably one of the most hugely-anticipated fiscal workout routines in current instances. While some of the important expectations like these pertaining to direct taxes like decreasing the slab prices or escalating the Section 80C tax deduction limits or unique allowances for workers working from residence had been not met, Finance Minister Nirmala Sitharaman did make various announcements aimed at easing the monetary issues of popular Indians.
Here are some of the Budget 2021 announcements that could influence your finances in the close to future.
1. Senior citizens above the age of 75 years to be exempted from tax filing
Senior citizens above the age of 75 years and obtaining only interest and pension as earnings sources would be exempted from filing their earnings tax returns. “For senior citizens who only have pension and interest income, I propose exemption from filing their income tax returns. The paying bank will deduct the necessary tax on their income,” FM Sitharaman announced. The announcement is anticipated to lessen the tax-filing hassles for eligible senior citizens.
2. The final date for tax exemption u/s 80EEA extended by one year
The final date for availing the further tax deduction below Section 80EEA of the I-T Act has now been extended by one more year to March 31, 2022. Under Section 80EEA, a residence purchaser buying their initially reasonably priced residence can avail an further tax deduction of up to Rs 1.5 lakh against their residence loan interest. Do note this advantage is more than and above tax deduction advantage of up to Rs. 2 lakh offered below Section 24. This announcement will attract various potential purchasers of reasonably priced properties who fulfil the criteria to avail the tax advantage below this scheme. These criteria involve the advantage could be availed only by initially-time homebuyers for a home valued at much less than Rs. 45 lakh and the loan sanctioned throughout FY2019-20, 2020-21 or 2021-22. Also, the carpet location of the home shouldn’t exceed 645 sq. ft. in metros and 968 sq. ft. in other cities and towns.
3. Pre-filled ITR to make tax-filing more hassle-cost-free
In Budget 2020, the government began searching for information connected to taxpayers’ monetary transactions from institutions like banks, stockbrokers, insurance coverage organizations, depositories, and so on. In Budget 2021, the government has proposed that the pre-filled ITR type will also consist of information like capital gains from investments in mutual funds and shares, dividend earnings, interest received from the bank, and so on. “In order to ease compliance for the taxpayer, details of salary income, tax payments, TDS, etc. already come pre-filled in income tax returns. To further ease filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also be pre-filled,” FM Sitharaman announced in her most recent Budget speech. The pre-filled type will ease the tax-filing method for a big quantity of taxpayers even though also producing it more correct and transparent.
4. DICGC to facilitate time-bound resolutions
In the earlier Budget, the government had improved the deposit insurance coverage coverage from Rs 1 lakh to Rs 5 lakh in the interest of depositors. But the claim could only be created if the bank’s license was cancelled and its liquidation proceedings had been began. Now, as per the most recent announcement, bank prospects whose accounts are inaccessible due to moratorium can also count on to get access to their funds up to the insurance coverage limit. This is a positive improvement and protects bank prospects from the type of scenarios we had noticed in the current previous when the RBI had imposed a moratorium on banks and restricted access to deposits. Do note, on the other hand, the Rs. 5 lakh deposit consists of the total quantity, like principal and interest thereof.
5. A handful of other announcements that may perhaps influence you
Capital gains tax has now been proposed on the gains created by way of unit-linked plans (ULIPs). “In order to rationalise taxation of ULIP, it is proposed to allow tax exemption for maturity proceed of the ULIP having annual premium up to Rs. 2.5 lakh. However, the amount received on death shall continue to remain exempt without any limit on the annual premium. The cap of Rs. 2.5 lakh on the annual premium of ULIP shall be applicable only for the policies taken on or after 01.02.2021. Further, in order to provide parity, the non-exempt ULIP shall be provided same concessional capital gains taxation regime as available to the mutual fund,” the government has announced. This will be an very vital consideration for ULIP investors whose annual premiums are above Rs. 2.5 lakh. The extended-term capital gains on equity funds (when the holding period is more than one year) exceeding Rs. 1 lakh are taxed at a 10% price with 4% cess.
Lastly, the FM has also proposed in Budget 2021 to lessen the time permitted for re-opening tax investigations from 6 years to 3 years with an exemption of critical circumstances, for which permitted time is up to ten years.
(The writer is CEO, BankBazaar.com)