Without making any changes to the personal income tax slab, the Union Budget 2021-21 has provided relief to senior citizens in the filing of I-T returns; reduced the time limit for I-T proceedings; announced the setting-up of a Dispute Resolution Committee and faceless Income Tax Appellate Tribunal proceedings; provided relaxations for Non-Resident Indians (NRI); offered an increase in the exemption limit from audit; and accounted for relief for dividend income.
To reduce the compliance burden on senior citizens who are 75 years and above of age, senior citizens having only pension and interest income will be exempted from filing an I-T return — the paying bank will deduct the necessary tax on their income.
For removing the hardship of NRIs returning to India, on the issue of their accrued incomes in their foreign retirement account, the Budget proposes to notify rules governing it.
Union Minister for Finance and Corporate Affairs Nirmala Sitharaman, while presenting the budget, also announced steps to attract foreign investment into infrastructure; relief for affordable housing and rental housing; tax incentives to the International Financial Services Centre (IFSC); relief to small charitable trusts; and steps for incentivising start-ups in the country.
The Budget has proposed to make dividend payments to REIT (Real Estate Investment Trusts)/InvIT (Infrastructure Investment Trusts) exempt from TDS (tax deducted at source).
For Foreign Portfolio Investors (FPI), the Budget has proposed the deduction of tax on dividend income at a lower treaty rate. As per the proposal, advanced tax liability on dividend income will arise only after the declaration or payment of dividend.
Towards housing for all, the FM has proposed to extend the eligibility period for claim of additional deduction for interest of ₹1.5 lakh on loan taken for the purchase of an affordable house to March 31, 2022.
For increasing the supply of affordable houses, she also announced the extension of an eligibility period for claiming a tax holiday for affordable housing projects by one more year to March 31, 2022.
For promoting supply of affordable rental housing for the migrant workers, the FM announced a new tax exemption for notified affordable rental housing projects.
Commenting on this, Shishir Baijal, chairman and MD, Knight Frank India, said, “Amid the prolonged pandemic scenario, this extension was needed to support the latent housing demand in the country. Further, the relaxation on tax compliance for REIT investors will further improve the marketability of such products, considering we are likely to witness new REITs this year.”
The FM announced an extension in the eligibility for start-ups to claim a tax holiday by one more year.
To reduce litigation in the taxation system, the FM has proposed to constitute a Dispute Resolution Committee for small tax payers facing litigation.
“Anyone with a taxable income up to ₹50 lakh and disputed income up to ₹10 lakh shall be eligible to approach the committee, which will be faceless to ensure efficiency, transparency and accountability,” the FM said.
She also announced the setting up of a National Faceless Income Tax Appellate Tribunal Centre.
For allowing the funding of infrastructure by issuing zero coupon bonds, the Budget has proposed to make notified infrastructure debt funds eligible to raise funds by issuing tax efficient zero coupon bonds.
To promote IFSC in GIFT City (Gujarat International Finance Tec City), the Budget has proposed more tax incentives, which include a tax holiday for capital gains from the incomes of aircraft leasing companies; tax exemption for aircraft lease rentals paid to foreign lessors; tax incentives for relocating foreign funds in the IFSC; and to allow tax exemption for the investment divisions of foreign banks located in IFSC.
Tushar Sachade, partner-deals tax, PwC India, said these measures would definitely give wings to create a sustainable ecosystem for operations in the aircraft leasing and financing sector. “This is probably India’s first firm step to become an eventual alternative to sector favourites like Ireland and Hong Kong,” he said.
For ease filing of returns, the Budget has proposed that details of capital gains from listed securities, dividend income, and interest from banks and post offices, will also be pre-filled in returns.