Articles

Key Takeaways from Direct Tax Proposals in Indian Union Budget 2021-22

Direct Taxes

(i) No changes in existing Tax Slabs.

(ii)Senior Citizens aged 75 years or more having only interest income and pension income exempted from filing of income-tax returns. The paying bank will deduct the necessary tax (TDS) on their income.

(iii) Threshold limit of annual turnover for Tax Audits u/s 44AB raised from Rs 5 crores to Rs 10 crores if their cash receipts and cash payments don’t exceed 5% of their total receipts and payments.

(iv) Time limit for Re-opening Assessments u/s 147 reduced from 6 years to 3 years. In serious tax evasion cases having evidences of concealment of income of Rs 50 lakhs or more in a year, the time limit for re-opening remains 10 years, however, Approval of Principal Chief Commissioner of Income Tax has been made must for reopening, in such cases.

(v) Dividend Payment to REIT/InvIT not to be liable for TDS deduction.

(vi) Liability of Advance Tax on Dividend Income to arise only after declaration of such dividend by the Corporate entities.

(vii) Faceless ITAT Appeals to be introduced like Faceless Assessments & Faceless Appeals by establishing a National Faceless Income Tax Tribunal Centre. All communications between the Tribunal & appellant shall be electronic. Where personal hearing is required, it shall be done through video-conferencing.

(viii) A New Faceless Dispute Resolution Committee to be set up for Settlement of Income-tax Disputes of Small Taxpayers with taxable income of upto Rs 50 lakhs and disputed income of upto Rs 10 lakhs in line with the Vivad se Vishwas Scheme, 2020.

(ix) Particulars of Capital Gain from Listed Securities, Interest Income from Banks & Post Offices etc. & Dividend Income to get pre-filled in ITRs.

(x) The exemption limit of annual receipts, for charitable trusts, educational institutes and hospitals registered u/s 10(23C) to be increased from 1 crore to Rs 5 crores.

(xi) No deduction to be allowed in respect of delayed deposition of employee’s contribution in provident funds, superannuation funds and other social security funds, by the employer.

 (xii) Notified Infrastructure Debt Funds to be made eligible to raise funds by issuing tax efficient Zero-Coupon Bonds.

(xiii) New Rules to be notified for removing the hardship of double taxation of Non Resident Indians.

(xiv) Additional Deduction of upto Rs 1.5 lakhs in respect of interest paid on loan for purchasing an affordable residential house under Affordable Housing Scheme extended for one more year upto 31.3.2022.

(xv) Tax exemptions to be allowed for Notified Affordable Rental Housing Projects.

 (xvi) Eligibility for Claiming Tax Holiday for Start-ups to be extended by one more year till 31.3.2022.