The Union Budget presented on 1st February 2021, focused on the simplification of income tax provisions. The government has curbed from the urge of levy of additional cess on certain categories of income and brought stability, continuity and certainty in the tax regime.
The income tax return filing for senior citizens is exempted in Budget 2021. The new section 194P is inserted with the following conditions:
- The senior citizen must be resident and above 75 years of age.
- Receives only pension income and interest income in the same specified bank.
- He shall be required to furnish a declaration to the specified bank, containing such particulars, in such form and such manner as may be prescribed.
- The specified banks are the banking companies notified by the government.
The specified bank should compute the senior citizen’s taxable income after giving the effect of the eligible deductions under Chapter VI-A, as per the declaration furnished, and rebate allowable under section 87A for the relevant assessment year. The bank is liable to deduct income tax based on rates in force. Once the bank deducts tax on behalf of the senior citizen, he cannot file his return of income for that assessment year. The amendment will take effect from 1st April 2021.
The above provision provides relief to senior citizens from filing income tax returns and income tax payment. Since the bank is required to deduct tax on behalf of eligible senior citizens, it will increase their burden of documentation of declaration forms and computing and paying income tax.
Currently, Section 44AB of the Income Tax Act, 1961, if the taxpayer’s business’s gross turnover or receipts exceeds Rs.1 crore in the financial year, he must get his accounts audited.
The limit of Rs.1 crore is increased to Rs.5 crore for taxpayers whose gross cash receipts are limited to 5 per cent of the gross turnover or receipts.
The Finance Minister had increased the taxpayers’ annual gross turnover limit doing business from Rs.5 crore to Rs.10 crore.
The amendment is a breather to small and medium enterprises doing digital mode of transactions.
It is an initiative towards Digital India campaign. It will push digital payments in the country and help in bringing transparency in the system.
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