The Union Budget 2021-22 was presented on the 1st of February 2021 by Nirmala Sitharaman, the Union Finance Minister. This budget was expected to address the financial hardships that have arisen due to the COVID-19 pandemic. Various changes proposed are expected to benefit taxpayers, investors and depositors.
However, this year’s budget amendments have not provided any major relief concerning personal income tax. There are no changes in the income tax slab rates as the Finance Minister decided not to touch the two existing income tax slabs. In case you are not aware of the current income tax slabs, here they are:
|Income Tax Slab||Existing Regime Slab Rates for FY 19-20 and FY 20-21||New Regime Slab Rates for FY 20-21|
|Resident Individuals & HUF < 60 years of age & NRIs||Resident Individuals & HUF > 60 to < 80 years||Resident Individuals & HUF > 80 years||Applicable for All Individuals & HUF|
|Rs 0.0 – Rs 2.5 Lakhs||NIL||NIL||NIL||NIL|
|Rs 2.5 – Rs 3.00 Lakhs||5% (tax rebate u/s 87a is available)||NIL||NIL||5% (tax rebate u/s 87a is available)|
|Rs. 3.00- Rs 5.00 Lakhs||5% (tax rebate u/s 87a is available)||NIL|
|Rs. 5.00 – Rs 7.5 Lakhs||20%||20%||20%||10%|
|Rs 7.5 – Rs 10.00 Lakhs||20%||20%||20%||15%|
|Rs 10.00 – Rs. 12.50 Lakhs||30%||30%||30%||20%|
|Rs. 12.5 – Rs. 15.00 Lakhs||30%||30%||30%||25%|
|> Rs. 15 Lakhs||30%||30%||30%||30%|
There are no modifications made to the standard deduction and the extent of tax deduction available under Section 80C of the Income Tax Act, 1961. Individuals expected the levying of additionals on the higher-income taxpayers on the back of the COVID-19 pandemic, but the Finance Minister made no such announcement.
The only direct tax relief announced in this year’s budget happens to be the reduction of compliance burden on the senior citizens aged 75 years and above. They are not required to file their income tax return if their income source is a pension and interest income. In such cases, the paying bank will deduct the applicable tax.
The Finance Minister proposes extending the additional tax relief of Rs 1.5 lakh for home loan borrowers under the affordable housing scheme to encourage housing for all. Initially, this additional tax relief was announced in July 2019 and was extended in the previous year’s budget until March 2021. This relief is now extended for home loans availed under affordable housing until the 31st of March 2022.
Earlier, the income tax assessment could be reopened for up to six years. The Finance Minister has now amended this time limit to three years. Furthermore, in cases where serious tax evasion is noticed, the tax assessment in such cases can be reopened for up to ten years, with the consent of the Principal Chief Commissioner.
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