Top changes in income tax policies as per union budget 2021-22

Every year, a new budget is introduced to focus on all the economic aspects with a common object to improve the economy of India. Recently our union finance minister- Nirmala Sitharaman didn’t announce any major change in the income tax slabs which is a sigh of relief for many taxpayers as understanding the new changes become difficult. But there are some changes that every taxpayer or non-taxpayers should know to understand the budget and how it will affect them.

No tax above 75

According to the proposed budget 2021, citizen above the age of 75 will be exempted from filing Income Tax Return (ITR) in this financial year. But to avail of this exemption, there are a few clauses and conditions that need to be fulfilled. The condition is that the people who don’t have a source of income other than pension and interest and the bank for its deposit is the same are eligible to avail this benefit. To make the eligible citizen aware of this change, the responsibility of notifying senior citizen is delegated to banks.

Easy ITR filing with pre-filled forms

To facilitate the taxpayers, now they will be getting pre-filled forms with information on their capital gains, interest, and dividend in detail. Moreover, detailed information on TDS deductions, tax payments, salary, etc. will also be mentioned in the ITR form.

EPF will be taxable at the time of withdrawal

EPF contributes after 31st March will be taxable at the time of withdrawal. This condition applies when the withdrawal amount exceeds 2.5L in a year and will add a liability on an individual. It may discourage people who willingly opted for PF contribution and have a high net worth.

Exemption of REIT/InvIT from TDS

To boost infrastructural growth in the nation, this budget provides a relaxation in the form of exemption. The dividend payment earned from Real Estate Investment Trusts (REITs) & Infrastructure Investment Trusts (InvITs) will be exempted from TDS filing. The tax liability will only be applicable when the payment of the dividend amount is considered as dividend income that can’t be estimated appropriately for paying advance tax.

Higher rate of TDS for non-filers

A new section 206AB is introduced in Income Tax Act that can affect the people who don’t file Income Tax Return. Such people may need to file higher TDS that may range from twice the rate or at the rate of 5%.

ULIPs subject to capital gains tax

Earlier Unit Linked Insurance Plans (ULIPs) exempted from taxes if the total premium does not exceed 10% of its sum assured. But now all the ULIPs issued after 31st January may come to be taxable under capital gains tax if the payable premium exceeds Rs. 2.5L.

Tax holiday on housing

The government extended the benefit of tax deduction up to Rs. 1.5L on the interest paid on home loan for one more financial year. This option is for people who have bought their first house that is priced under Rs. 45L.

Late ITR filing till December 31

Earlier, one can file ITR (belated) till 31st March, but now the timeline has been changed. Everyone needs to file TR till 31st December.

These were only some highlights of this new budget, but there are many more things that you should know as a taxpayer. For complete information and personal consultation on tax saving, you can contact the team of Inside Tax. They have helped many professionals, salaried employees, and businessmen in saving funds by smartly planning finances. Moreover, they can even help in all legal affairs (corporate). So consult them today and know the right way of investing & saving.