For Everyone in General
- Exemption of interest of upto Rs. 1.5 lakhs – For Loans sanctioned under affordable housing scheme has been extended till 31/02/2022. Property value to be less than 45 lakhs and valid for first property purchase. Done to promote real estate sector.
- Sale of residential property to fund a startup is exempted from capital gains tax provided incorporation happens before 1st April 2022 and property is sold before 31/03/2021.
- Safe Harbour Limit – 20% variation from ready reckoner rate allowed – For property with value less than 2 crore and sale between 12/11/2020 to 30/06/2021 and for first time buyer. Done to promote real estate.
- ULIP Benefit Gone
- Existing policies are totally insulated however. All tax benefits are intact.
- Tax benefits now available only for premium amounts of Rs. 2.5 lakhs and below.
- Death benefit is tax free.
For Salaried Employees
- LTC Scheme – Benefit of exemption upto Rs. 36,000 or 1/3rd of expenditure for period from 12/10/2020 to 31/03/2021
- Employer will not get deductions if they do not deposit with PF commissioner on time. No impact as such on employees.
- EPF Interest will be taxable now.
- Employees can get tax free interest income to the extent annual contribution of Rs. 2.5 lakh only.
- Hence for any excess that is contributed to the EPF by you, tax will be levied on the interest you earn according to your tax bracket.
- Thus employees need to be mindful before contributing more money as VPF to the PF account.
- Consider making better investments e.g. sip, equity shares and bond funds for the conservative.
For Senior Citizens
- Exemption from filing IT returns – For persons above age of 75, having pension income & interest income only.
- Banks have to compute, calculate & pay. All activities should be in one bank… that’s practically not feasible.
- Thus, per se relief for Sr. Citizens, but do not bet on this too much. For you may have other income even if you are just middle class. In my view there is no respite from filing returns.
For NRI
- Rationalisation of income reporting – Foreign basis is actual while India is accrual.
- So rules to mitigate the same shall be made available.
Tax Compliance & Ease of administration
- Assessment & Appeal were faceless; now Appellate Tribunal is also faceless.
- Tax Audit limit raised to 10 Cr for business/trading firms receiving 95% proceeds electronically. For professional services the limit is still at Rs. 50 lakhs only.
- Extended due date for filing applicable to spouse of person whose due date for IT return is linked to the audit of company where he/she is partner.
- Re-opening of Assessment – Only for last 3 years. This is a welcome move. In serious cases 10 years allowed but that too if suspected of 50 lakh+ income concealment and upon approval of Prin. Ch. Commissioner.
- Advance Tax liability on dividend only upon payment of dividend. Waiver of Interest u/s 234C – for dividend income along with capital gains. This should save everyone some money.
- Pre-filled returns: For capital gains, dividends, interest payment etc. Some serious data mining activity is underway. This should help all assesses greatly and yet another warning for those who choose to isolate some parts of income due to ignorance / oversight.
- Dispute Resolution Committee – For taxable income upto 50L and disputed income upto 10L. A good measure to create a platform where such disputes can be resolved.
- Double rate for non-filing persons – Those having TDS/TCS of 50k or more. Watch out and please file returns if this is applicable to you.
Inflation and Cost of living
- What’s expensive now: Mobile phones, Imported Solar Products (to boost locals), Automobiles (auto parts up), garments, leather and handicrafts. Gem stones & jewellery, agri products cotton, yarn
- What’s Cheap now: Metal based products, Textiles, Chemicals