Highlights of Budget 2021

The Finance Minister of India, Smt. Nirmala Sitharaman, presented the Union Budget 2021 on 1st February 2021. Common man to big players all had set their eyes on the budget since it was the first budget post COVID-19. However, with no change in income tax slab rates and other major changes, the budget majorly boosts the healthcare and infrastructure. The key highlights of the Union Budget 2021 are summarized hereunder-

Direct Tax-

Taxpayer satisfying the following conditions are not required to file an income tax return-
- The taxpayer is a senior citizen over 75 years and above; and
- The taxpayer is earning only pension and interest income.
Re-opening of assessment-
- The time limit for re-opening of assessment is reduced from 6 years to 3 years.
- Re-opening up to 10 years is possible only in cases having evidence of concealment of income of INR 50 Lakhs or more in a year. Prior approval of Principal Chief Commissioner is mandatory.
Increase in tax audit limit-
- Tax audit limit for the taxpayer, having less than 5% cash transaction, is increased to INR 10 Crores from INR 5 Crores.
Dividend-
- Advance tax liability on dividend income will arise only after declaration or payment of dividend.
- TDS to be deducted at lower treaty rate on dividend income in case of Foreign Portfolio Investors.
Affordable Housing Project-
- Additional interest deduction, under 1, of INR 1.50 Lakhs extended for loans taken till 31st March 2022.
- The tax holiday, in case of Affordable Housing Project, extended till 31st March 2022.
Start-ups-
- The tax holiday, in case of start-ups, extended to 31st March 2022.
- The capital gain exemption, on investment in start-ups, extended to 31st March 2022.
It is proposed to set up a ‘Dispute Resolution Committee’ for taxpayer having taxable income up to INR 50 Lakhs vis-à-vis disputed income up to INR 10 Lakhs.
Income Tax Appellate Tribunal will soon become faceless.
Following details will be auto-filled in the income tax returns-
- Capital gains from listed securities;
- Dividend income;
- Income from bank interest etc.
Exemption limit for small charitable trusts running schools and hospitals increased to INR 5 Crore from INR 1 Crore.
New tax holiday-
- Tax holiday for capital gains from the incomes of an aircraft leasing company.
- Tax exemption towards aircraft lease rentals paid to the foreign lessors.
The deduction is not available in case the employee contribution is deposited late by the employer.
Rules will be notified to remove double taxation for NRIs in case of foreign retirement funds.

Indirect Tax-

Customs-

It is proposed to review more than 400 old exemption relating to customs duty. Further, distortion-free customs duty structure is likely to be introduced from 1st
Exemption on the duty of steel scrap till 31st March 2022. Further, duty on copper scrap reduced to 2.5% from 5%.
Customs duty to be rationalized on textile; copper; gold and silver.
Customs duty on solar invertors increased to 20% from 5%. Further, duty on solar lanterns increased to 15% from 5%.
Customs duty on various parts of mobile increased from NIL to 2.5%.
Customs duty on cotton increased to 10% from NIL. Further, customs duty on raw silk as well as silk yarn increased to 15% from 10%.

Goods and Services Tax

Reconciliation statement in Form GSTR-9C can be filed by self-certification. Now, CA/ CMA certification is not required.
Interest will be charged on net cash liability effective retrospectively from 1st July 2017.
25% pre-deposit is mandatory for filing an appeal against detention or seizure order.
Input tax credit will be available only if the details of invoice/ debit note has been furnished by the supplier in the statement of outward supplies. Further, such details should also be communicated to the recipient of respective invoice/ debit note.
The term ‘supply’ includes the activities/ transactions, by a person (other than an individua) to its members/ constituents or vice-versa against payment of cash, deferred payment or other valuable consideration.