Nothing more, nothing less: Budget relief for taxpayers
NEW DELHI: In a budget that has proved disappointing for many taxpayers, especially those who were hit hard by the covid-19 pandemic, the finance minister maintained status quo as far as the income tax slabs and other tax relief measures are concerned. But the fact that the government did not levy additional tax either is being seen as a relief by some experts, who said the FM had little room for making changes. The government instead focused on reducing tax compliance.
No slab changes
Popular deductions, such as those under Section 80C and 80D also remained unchanged. “The current financial year has been tough for taxpayers. Hence, some benefits such as relaxation of tax slabs, increased limit under Section 80C and deduction for work from home expenses were expected,” said Sandeep Sehgal, director, taxes and regulatory, AKM Global, a consulting firm.
Some see a silver lining even in this absence of any tinkering. “The government has not levied any additional tax by way of covid cess, which in itself is a
relief for the taxpayers. Countries like Mauritius have levied covid cess to fund the expenditure caused by the pandemic,” said Naveen Wadhwa, deputy general manager, Taxmann, a research and advisory firm.
Focus on compliance
Budget 2021 focused on easing taxpayers’ compliance burden and making the tax filing process efficient.
Relief for senior citizens: Senior citizens, who are above 75 years of age or above and don’t have any income apart from pension and interest bank from
the same bank, do not need to file their income tax return (ITR). As per the proposal, such pension and interest income should be received in the accounts of specified banks as notified by the government.
Senior citizens will, however, have to file a declaration confirming that they have no other source of income. The bank will deduct TDS (tax deducted at source) on the pension and interest income after taking into account deductions. “This is a welcome procedural relief but could have been extended to all the senior citizens (60 years and
above),” said Suresh Surana, founder, RSM India. This will be applicable from 1 April 2021. More pre-filled information in ITR: Your ITR for FY22 will provide more pre-filled information. The FM has proposed that details of capital gains, dividend income, interest from banks and post offices be pre-filled to ease the tax filing process. “The prefilled information will help taxpayers avoid any inadvertent omission,” said Shailesh Kumar, partner at Nangia & Co. LLP, a law firm.
Reduced time to file belated or revised return: The time allowed to file belated or revised ITR has now been reduced by three months. The deadline is now 31 December and not the previous 31 March. The government has also reduced the timeline for issuance of scrutiny notice by the tax department by three months.
Reopening of assessment up to three years: Earlier, the tax department could reopen assessment against a taxpayer up to six years after processing of tax returns in case evidence of tax evasion was found. It has now been reduced to three years. Also, a dispute resolution committee will be formed for small taxpayers. “A committee will be formed to review cases where the disputed tax amount is more than ₹10 lakh and the person’s taxable income is less than ₹50 lakh,” said Sudhir Kaushik, CEO, Taxspanner.com.
Higher TDS/TCS for not filing ITR: “A person who is liable to TDS/TCS of ₹50,000 or more in the past two years but has not filed ITR shall have to pay TDS/ TCS at double the specified rate or 5%, whichever is higher. This provision shall not be applicable for transactions where the full amount of tax is required to be deducted such as salary income,” said Archit Gupta, Archit Gupta, founder and CEO, Cleartax.
But overall your tax liability remains the same.