The highlight of The Union Budget for 2021-22 certainly is Finance Minister Nirmala Sitharaman announcing several proposals that would work in the favour of depositors, investors and taxpayers. So, what exactly does the new budget offer you? We have made a list of the top 10 Budget highlights that may be useful for you:
- COVID Vaccination
A whopping Rs 35,000 crores have been set aside for the COVID-19 vaccine in this year’s Budget. Preventive health-care and fund allocation for the vaccine became important due to the damaging effects of the pandemic.
- Income Tax slab rates
To everyone’s pleasant surprise, no changes were announced in the income tax slab rates. The Finance Minister even added that the tax system should put the least burden on the taxpayer. Accordingly, there were no changes in the PPF limit and Section 80C either.
- ITR filing simplified
Filing income tax returns has never been easy and most of us wonder why it needs to be so complicated, particularly for those who do not get Form 16. To address these issues, the Finance Minister announced that income tax return forms will be further simplified. Capital gains from listing securities and interest income would come pre-filled in ITRs.
- ITR filing relief to 75 Year olds and above
Senior citizens who are 75 or above and earn income only from pension have been exempt from filing income tax returns. The paying bank will deduct the necessary tax on their income as applicable.
- Tax Exemption on ULIPs
Proceeds from Unit Linked Insurance Policies will remain tax free so long as the ULIP premium is capped at Rs 2.5 lakh1 . This is applicable for for ULIP's issued after 1st February 2021. Taxation of ULIPs outside the cap will be like equity-oriented funds.
- Tax on interest earned on Provident Fund
Interest accrued on employee/ individual’s contribution (in excess of Rs 250,000) to a provident fund account is now taxable.
- Exemptions on purchase of affordable housing
Exemption will be made on the purchase of affordable houses and for affordable rental housing projects. Additional tax deduction of Rs 1.5 lakh on interest paid on housing loan for purchase of affordable homes has been extended by one more year to 31st March 2022.
- One-person companies will be allowed
The Finance minister proposed to incentivise incorporation of one-person companies (OPCs). She further added that Non-Residents of India will also be allowed to incorporate OPCs in India.
- Small Businesses
The definition of small companies will be revised by raising capital base to Rs 2 crores from the current limit of Rs 50 lakh. In the words of the Finance Minister, “This will help more than 2,00,000 companies in easing their compliance requirements”.
- COVID Cess
Before the release of the Union Budget, there was speculation among a number of experts that the government might introduce a COVID cess on High Net Worth Individuals(HNIs). No such announcement was made despite the hype, much to their relief.
1. Maturity proceeds from the unit-linked insurance policy (ULIP) issued on or after 1st February 2021, is proposed to be taxed as capital asset & will be subject to capital gain on redemption if the amount of premium payable for any of the previous years during the term of such policy exceeds Rs 2.5 lakh.