Mundle Venkatraman & Associates

Union Budget 2021 - A Synopsis

By: Mr. Prasanna Ravikant Bhat - 2nd February, 2021

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Tax and Compliance Reforms:

There is no change proposed in the direct tax rates, but steps have been taken to provide a few incentives to ease compliance by taxpayers. FM has proposed that advance tax liability on dividend income shall arise only after declaration or receipt of dividend. Details like salary income, dividends, capital gains, tax payments and TDS would be prefilled in the forms.
Tax filing for seniors above 75 with only pension, interest income exempted. Certain conditions are required to be complied with to become eligible for this exemption.
A dispute resolution committee for small taxpayers is being planned. Anyone with taxable income of up to Rs 50 lakh, and disputed income of up to Rs 10 lakh is eligible to approach dispute resolution committee.
Tax audit limit of Rs. 5 crore for assessee having more than 95% digital receipts and payments increased to Rs. 10 crore. If 95% condition not satisfied than the Tax Audit applicability remains same as the last year.
Deadlines for filing belated and revised income tax return voluntarily from F.Y 2020-21 onwards are proposed as 31st December, 2021 rather than 31st March, 2022. Original due dates for filing the return remain unchanged.
The govt plans to allow incorporation of one-person companies with no restriction on paid-up capital and turnover. Non-resident Indians will also be allowed to incorporate one-person companies in India.
Government to notify rules to eliminate double tax for NRIs on foreign retirement funds. This will benefit those taxpayers having investments in 401(k) funds in the USA.
Govt to extend eligibility of erstwhile tax sop on home loan up to FY22. Hon FM also said that affordable housing projects can further avail tax holiday for one more year. Hon FM proposed extension of tax holiday for start-ups by one more year, a tax exemption for relocating funds to IFSC, and tax holiday for aircraft leasing business in Gift city.
The budget has also proposed to remove the tax exemption under Section 10(10d) to Ulips with a premium of more than Rs 2.5 lakh a year. This will not apply to existing Ulips, but only to policies sold after 1st February this year.
EPF: The interest earned by the Provident Fund (PF) contributions above Rs 2.5 lakh a year will now be taxed at the normal rates. This will only apply to the employee's contribution and not that of the employer. It will hit high-income salaried people who use the Voluntary Provident Fund to earn tax-free interest.
The Budget proposes to introduce TDS on purchase of goods which was hitherto not subject to TDS. The section makes it mandatory for the purchaser of goods to deduct tax at source if:
1. The turnover of the entity has exceeded Rs.10 crores in the immediately preceding year; and
2. The purchase from the seller has exceeded Rs.50 lakhs in the immediately preceding year.
The rate of TDS is 0.1%.

Disclaimer: The information contained herein is of general nature and based on the union budget. Applicability of the information to specific situations should be determined through consultation with your Tax advisor only.

Disclaimer

The Blogs published in this website are for educational purposes only. It is meant to give you a general information and a general understanding of the topics discussed therein and not to provide you or any person any professional advice thereof. By using this website you understand that there is no professional relationship between you and Mundle Venkatraman and Associates (MVA) or with any of its partners, associates or employees. Any information available on this website should not be used as a substitute for competent professional advice.

Union Budget 2021 - A Synopsis

Union Budget 2021 - A Synopsis

By: Mr. Prasanna Ravikant Bhat - 2nd February, 2021

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Tax and Compliance Reforms:

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