By Neha Malhotra
The Union Budget serves as an occasion for the government to introduce measures for simplifying the taxation framework and creating compliance much easier. Amidst the higher expectations of a pandemic-struck India, FM treaded the tightrope effectively and created an sincere try to fuel financial development. While no adjustments have been proposed to the person tax prices, the Finance Minister accorded relief in the type of ease of compliance for the taxpayers.
Senior citizens have contributed immeasurably towards nation-developing and deserve comfort at their old age. In view of the hardships that they may perhaps face whilst complying to the requirement of filing return of earnings, the Finance Minister has proposed that such folks, above 75 years of age, shall not be essential to file a return of earnings if they draw earnings from pension.
In addition to such earnings, they may perhaps have also have interest earnings from the similar bank in which they are getting their pension earnings. The senior citizens shall be essential to furnish a declaration to specified banks pursuant to which the bank would be essential to compute the earnings of such persons just after providing impact to deductions and rebates allowable and deduct earnings tax as per the prices in force.
Only final year, the Government had imposed an aggregate monetary cap of INR 7.5 lakhs on tax-absolutely free employers’ contributions to recognized Provident Fund, authorized pension scheme or authorized superannuation fund and corresponding annual accretion (becoming interest or dividend or any other equivalent quantity) in respect of such employers’ contributions to these funds.
The explanation behind such imposition was to stop personnel earning higher salaries from parking their salary in such tax-absolutely free funds. In the existing spending budget, the Government has proposed to restrict tax advantage on accretions arising from employee’s contribution, if such contribution exceeds INR 250,000 per annum, which was restricted to the employer’s contribution to Provident Fund and other specified funds and accretion pertaining to employers’ contribution only. Therefore, personnel earning interest on Provident Fund on annual contribution exceeding INR 250,000 would be essential to spend tax on such excess contribution, as per guidelines to be notified later.
The Government has worked tirelessly to provide a taxpayer- friendly administration technique to the taxpayers. The government has attempted to lessen, if not get rid of the interface in between the taxpayers and the division, thereby curtailing the powers of overzealous tax officials. A faceless dispute resolution committee for compact person taxpayers is now becoming set up in furtherance of the government’s objectives. Taxpayers obtaining returned earnings of up to INR 50 lakh and disputed earnings of up to INR 10 lakh shall be entitled to method the dispute resolution committee.
Notably, specified order based on search or survey or order based on DTAA shall not be eligible for consideration by the committee. The Committee shall have the energy to lessen/ waive any penalty or grant immunity from prosecution for any offence beneath the Act. The scheme shall impart higher efficiency and transparency, get rid of interface as considerably as achievable and enable unclog the tax administration technique, thereby generating an atmosphere that is conducive to the taxpayers.
The government has normally attempted to make compliance much easier for taxpayers by suggests of technologies upgradations. Accordingly, a pre-filled XML file comprising information of employer, allowances, deductions, is created readily available to the taxpayers at present. A step additional has been taken in this path and ITRs would now have pre-filled details on dividend, interest & capital gains also. In addition to accuracy of information, it shall also make certain quicker compliance by the taxpayers. Pre-filling taxpayers’ information also suggests that the government is observing all the taxpayers’ transactions and that the tax evaders should beware.
Another measure to enhance the morale of the very first-time house purchasers and the genuine estate sector was the extension of time limit beneath section 80EEA of the Income Tax Act. Individual assesses, not owning any other house at the time of sanction of loan, can claim deduction for interest on house loan up to INR 150,000 topic to fulfilment of stipulated riders, one of which is the requirement that the loan shall be sanctioned from 1st April 2019 to 31st March 2021. This time limit is proposed to be extended for yet another year up to 31st March 2022. However, this move shall prove to be inconsequential for folks opting for the decreased slab prices. Those opting for the concessional tax regime shall have to give up this deduction.
(The author is Director, Nangia Andersen LLP)