New Delhi: Union Finance Minister Nirmala Sitharaman has not announced any change in the income tax slab rates for the salaried class in the Union Budget 2021, though some of her announcement on direct taxation will have an impact on individual tax payers.
FM Sitharaman, presenting the Union Budget 2021 has announced some relevant changes for salaried taxpayers ranging from tax on PF to pre-filled income tax forms to further extension of Sops for affordable Housing sector.
Interest accruing on Employee’s Provident Fund on employee contribution: Interest accruing on Employee’s Provident Fund on employee contribution exceeding Rs 2,50,000 per annum from April 1, 2021 will be taxable.
Leave Travel Concession: Tax exemption extended to cash allowances received in lieu of LTC, which can be opted by the employee and available for FY 2020-21 only. Lower of one third of the specified expenditure or Rs 36,000 per person exempt. Specified expenditure means expenditure on goods and services which are subject to a GST rate of 12% and above and have been purchased or procured from GST registered vendors or service providers during the period commencing from October 12, 2020 to March 31, 2021.
Pre-filling of returns: Pre-filled returns are available on the Income Tax portal which had details like salary, TDS, tax payments etc. prefilled, in addition to the earlier details and to further ease the tax compliance FM announced that details like capital gains from listed securities, dividend income and interest from banks, post offices etc. will also be prefilled.
Sops for affordable Housing extended till March 2022: The Finance Minister proposed to extend the eligibility period for claim of additional deduction for interest of Rs. 1.5 lakh paid for loan taken for purchase of an affordable house to 31st March, 2022. In order to increase the supply of affordable houses, she also announced extension of eligibility period for claiming tax holiday for affordable housing projects by one more year to 31st March, 2022. For promoting supply of affordable rental housing for the migrant workers, the Minister announced a new tax exemption for the notified affordable rental housing projects.
Delayed deposit of Employee’s share of PF contribution to be added to the taxable income of the Employer: FM proposed to add employee’s share of PF contribution as an income to employers, provided the employers do not deposit the said amount in time.
Commenting on taxable income of employer if there is delayed deposit of Employee’s share of PF contribution Dharmendra Chachan, Partner at Chachan and Lath LLP said, "This will ensure that there is no loss of interest for the employees on such contribution and increase surety of getting their PF money."