Union Budget 2021: 5 major announcements by FM that will impact your taxation

The Budget seeks to reduce the compliance burden on senior citizens who are of 75 years of age and above.  

Such senior citizens having an only pension and interest income will be exempted from filing their income tax return. The paying Bank will deduct the necessary tax on their income.

The Budget proposes to notify rules for removing the hardship of non-Resident Indians returning to India on the issue of their accrued incomes in their foreign retirement account.

The Budget proposes to make a dividend payment to REIT/InvIT exempt from TDS.

For Foreign Portfolio Investors, the Budget proposes deduction of tax on dividend income at lower treaty rate.  The Budget provides that advanced tax liability on dividend income shall arise only after the declaration or payment of dividend.  

The Finance Minister said that this was being done as the amount of dividend income cannot be estimated correctly by the shareholders for paying advance tax.  

In order to reduce compliance burden, the Budget provides a reduction in the time-limit for reopening of income tax proceeding for three years from the present six years.  

In serious tax evasion cases, where there is evidence of concealment of income of Rs. 50 lakh or more in a year, the assessment can be reopened up to 10 years but only after the approval of the Principal Chief Commissioner.  

The Finance Minister proposed to extend the eligibility period for a claim of the additional deduction for the interest of Rs. 1.5 lakh paid for a loan taken for the purchase of an affordable house to 31st March 2022.

In order to increase the supply of affordable houses, she also announced the extension of the eligibility period for claiming tax holiday for affordable housing projects by one more year to 31st March 2022.  

For promoting the supply of affordable rental housing for the migrant workers, the Minister announced a new tax exemption for the notified affordable rental housing projects.