The Union Budget 2021-22 did not mark any changes in the income tax slab. The move by the government was much anticipated, given the pandemic and increase in the Government expenditure. However, finance minister Nirmala Sitharaman did announce a few changes in the income tax rules.
Let us discuss in detail the changes in the rule announced under the new Budget:
No Income Filing for Citizens above 75 years of age
Perhaps, the highlight of the budget in the income tax section was giving relief to the senior citizens who are above 75 years of age from filing ITR. However, the only source of income of such citizens should be pension and interest. Moreover, the exemption on interest will be from filing the ITR in the case where the interest income and pension bank accounts are the same.
Only few banks eligible to offer the exemption
In the union budget 2021-22, the government also stated that the banks will be notified where the account holders can avail the exemption. The notified banks will have to follow a due process post which the senior citizens will be exempted from filing an ITR.
Union Budget – Contribution to EPF
The Union budget marks an additional liability for the high net worth individual who are contributing in EPF. Under the new regulation, the contribution to employees’ provident fund on or after April 1, 2021 will be taxable if it goes beyond INR 2.5 lakh in a year. The additional tax comes on the employer’s contribution exceeding 7.5 lakhs to EPF, superannuation fund and NPS.
Higher TDS on Non ITR filers
In the Union budget, the Government has also proposed section 206AB in the Income tax act under which those who are not filing the income tax returns will have to pay higher TDS. Government has proposed the rate which would be double of the current rate in the relevant provision of the Act or twice the effective rate, or the rate of 5%.
Union Budget – Affordable Housing Tax Holiday
The Government has also increased the additional tax deduction of INR 1.5 lakh on interest paid on affordable homes till March 31, 2022. The proposal was introduced in 2019 budget for the people who are buying the homes for the first time and of up to 45 lakhs.
Union Budget – LTC Scheme
Since there was a total lockdown during the last year, the Government is allowing the employees to avail exemption on the purchase of goods and services on which the GST incurred is 12% or higher. However, the payment should be made through non-cash mode and incurred in the period October 12, 2020 to March 31, 2021.
ULIP will be Taxed
As of now the ULIP redemption is tax exempt but the government has brought this type of investment under tax bracket. The premium payable on such policy should not be more than 10% of the assured sum. The new proposal states that the redemption of ULIP issued after February 1, 2021 with the annual payable premium exceeding INR 2.5 lakh will come under capital gains tax equivalent to equity-oriented mutual funds.
