In the Union Budget 2021-22 presented by Finance Minister Nirmala Sitharaman, no major changes in the income tax slabs were announced. The only revisions were seen in the exemption of senior citizens aged above 75 in case of filing an I-T return or if they are dependent on pension or interest income.
Here are 10 major income tax changes seen in the Union Budget 2021-22 which will affect an individual income taxpayer and how they tend to impact your personal finances:
- A Dispute Resolving Committee (DRC) will now be set up to help taxpayers with the taxable income amount of up to Rs.50 lakh or the disputed income of up to Rs 10 lakh.
All proceedings that will take place before the DRC are going to be without jurisdiction and faceless.
- The revised time limit for filing delayed/revised income tax has now been cut down to three months. The last date for filing income tax returns will now be December 31 after the tax year is closed.
With this, the completion of assessment will also be now done within the time period of three months.
- For affordable housing, the tax exemption has now been extended to a period of one year.
This will be beneficial to middle-class first-time homebuyers as they will get an enhanced deduction of Rs.1.5 lakh (above the pre-existing deduction of Rs 2 lakh) for an interest in house loans valued for a house of 45 lakh if the loan is granted before March 2022.
- This year’s Budget will also provide relief to all those people who lost their jobs during the Covid-19 pandemic and were forced to take freelance minor jobs.
Now, gig and platform workers are also bound to receive social security benefits, as reported by Sitharaman.
- All proceeds from ULIPs which are issued on/after February 01, 2021 are going to be taxable as capital gains. This will only happen in case the amount of the premium exceeds Rs.2.5 in an year.
Exemption will be applied for all those in case a taxpayer is paying a premium for more than one ULIP (issued after February 01, 2021). This exemption will only be allowed to those ULIPs exceeding a premium amount of Rs.2.5 in any financial year.
- Another new revision is that taxpayers will not have to calculate their own dividend income while making these advanced income tax payments.
All advanced tax will have to be paid only when the dividend is announced or paid by the company.
- A major change in double taxation on NRIs has also been declared. Relief will be offered to all those who fail to receive credit for taxes paid in India.
- Now that details of capital gains, interests from post offices and banks are going to be pre-filled, tax filing is going to become easier as this will help taxpayers file their returns as data has been captured already.
- The interest on employee contributions to provident fund of Rs 2.5 lakh will be taxed from April 01, 2021.
This will aim at taxing the high-value depositors in the EPF. This will affect additional tax liability and will also affect the EPF contributions.
- Senior citizens aged above 75 are no longer required to file the income tax return if they are dependent only on pensions or IT returns.
In such cases, the bank will compute a taxable income and therefore deduct the tax accordingly after a declaration by the resident is submitted.