Budget 2021: Five Takeaways for Taxpayers

Thu, 04 Feb 2021 10:56:41 +0000

Budget 2021 did not impose any new tax neither did it lower any taxes. As far as taxes are concerned, this has been a status quo budget. But Finance Minister Nirmala Sitharaman has rolled out a few benefits to a specific category of taxpayers and ease of compliance. Here are five things that as a taxpayer you must know about this budget-

1) A sigh of relief for Senior Citizen

The senior citizen who is above the age of 75 gets exemption from filing the income tax return. But it is mandatory that such senior citizen’s income comprises of pension and earning from interest only.

2) Return form will have more information

The pre-filled return form was pre-populated with income and tax details, but it will now give more detail. Return forms will now include information about capital gains, dividend income and interest from banks and post office.

3) Tax on high EPF contribution

If employees contribution to his/her provident fund is more than Rs 2.5 lakh in a year he /she will have to pay tax on earned interest. From an exempt-exempt-exempt category of investment, EPF now will become exempt-tax-exempt. The deposit and withdrawal are still exempted from tax but if you contribute more than Rs 2.5lakh then be prepared to pay tax on interest. This tax will commence on 1st April 2021.

4) No more tax exemption Unit Linked Insurance Plan (ULIPs) maturity

ULIPs issued after 1st February 2021 will be taxed on maturity if the premium for any year exceeds Rs 2.5 lakh. The ULIPs will be treated like equity-oriented funds and their gains will be considered as capital gains.

5) Affordable housing will give an additional tax deduction

Section 80EEA gets an extension till 31st March 2022. This will give an additional benefit of Rs 1.5 lakh on interest payment of a home loan. But the cost of the house/flat mustn’t exceed Rs 45 lakh. Another condition is that if the property is in one of the metro cities like Delhi, Mumbai, Kolkata or Bangalore, then the house’s size should be up to 60 sq metres and if it is in the smaller city then the size can’t be more than 90 sq metres.

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Highlights of Budget 2021

Wed, 03 Feb 2021 05:51:50 +0000

The BuyT Desk

The Union Budget 2021 has not changed the common man’s tax liability but will change many other things around him/her. Let’s take a look at how things will change-

Budget Impact On Sectors

Consumer Goods – Government has announced an Agricultural Infrastructure and Development CESS (AIDC) on petrol, diesel, gold and silver bars, alcohol, sunflower oil and crude palm oil. There will be an agricultural cess Rs 2.5per litre on petrol, Rs 4 on diesel and 100% on alcoholic beverages. The aim is to generate funds for the agriculture sector. However, to keep these consumer goods’ prices unchanged, basic excise duty and special additional excise duty have been reduced. So, no impact will be visible in the short term. Mobile phones will get costlier. The precious metals, gold and silver, will get cheaper.

Steel Industry – Government has opened the gate for steel and steel products import by reducing duty. The cheap scrap may reduce cost. The impact of this change will be visible on infrastructure and other sectors.

Healthcare – Healthcare has been the core sector which saw a massive jump in allocation. An outlay of 64,180 crores will be made towards PM Atma Nirbhar Swasth Bharat Yojna whose objective would be to ensure a network of primary, secondary and tertiary health centres. Finance Minister has doubled the spending on the healthcare sector to boost healthcare infrastructure. The government will be spending around Rs 2,23,846 crore on health and well being. A generous outlay of Rs 35,000 crore was made towards COVID19 vaccination.

Employment – The Developmental Financial Institution will aid the government to collect investments for infra projects. It will give a spending boost and create jobs. The government’s move to bolster infrastructure in all sectors like rail, solar energy, water, roads, etc. will reinforce demand and generate new jobs.

Education – Finance minister has allocated Rs 93,224 crore for education, keeping her attention more on digital education and National Education Policy 2020. Government’s aim to set a hundred new Sainik schools. This move will give a boost to the sector and will strengthen the education system.

Agriculture – Government has announced the integration of 1000 more Mandis into E-NAM market place, the development of five more fishing hubs and a seaweed park in Tamil Nadu. It has kept more focus on the strengthening of agriculture infrastructure. The project, operation green will cover 22 more perishable commodities.

Taxes – Government has not done changes in the tax slab. However, the senior citizens have received some rewards in terms of filing ITR. People above the age of 75 who get pension and earn interest from their deposits don’t have to file ITR. Though unchanged tax slab has given no immediate benefits to taxpayers, amid pandemic crises, the government has not taken anything from people’s pocket, which is plausible.

These are the beneficiary sectors of budget 2021-22. Other strong government moves are two PSU banks and one general insurance organization to be disinvested this financial year.

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Budget 2021: Five Takeaways for Taxpayers

Highlights of Budget 2021