Budget 2021 Live Updates........,
What Budget 2021 means for taxpayers, investors and consumers
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| Budget 2021 Live Updates........, |
Budget 2021 LIVE Updates: Finance Minister Nirmala Sitharaman presented Union Budget 2021-22 today. She used a tablet computer to deliver the paperless Budget address. This Budget assumes great significance as it comes amid the novel coronavirus pandemic, which has led to massive economic disruption in India and around the
Senior citizens benefit
There is good news for senior citizens. For those above the age of 75, filing income-tax returns is not required, effective financial year 2021-22. But there is a small caveat. Those who earn income from pension and interest alone are exempt. But if you have an income from capital gains, investments in direct equities or even mutual funds, then you have to file your income-tax returns as usual.
Faster tax resolutions
The timeline for reopening of assessment under income tax returns will now go down to three years from six years presently. Only where there is evidence of concealment of income concealment of Rs 50 lakh or more in a year can the reassessment be opened in 10 years. This will ease the burden on the tax authorities and tax payers, and pave the way for faster resolution of cases.
Not filed your tax return? Pay higher TDS
So far, only those who didn't have a PAN were asked to pay a higher tax deduction at source (TDS) amount for rental income, bank interest or even high value transactions such as property. Come 2021-22, the one who has a PAN, but doesn't file a tax return too would have to shell out a higher tax deduction/ collection at source.
Investment charter for financial products
In order to reduce mis-selling, the finance minister announced setting up of an investment charter. This charter would pertain to investors of all financial products. Details are awaited on this announcement, but this charter is expected to lay down rights of investors.
Stick to short-term debt funds
To fund the various infrastructure programs, the government plans to borrow money from the debt markets. A sum of Rs 14 lakh crore (gross borrowing) for this financial year and another Rs 12 lakh crore in financial year 2021-22. This has caused yields to rise and the prices of debt securities to decline. Stick to short-term debt funds for now.
Advantage gold
Gold and silver become cheaper, as customs duties are cut to 7.5 percent from 12.5 percent. This should work in favour of gold buyers.
Higher contribution in EPF to attract tax
To ensure that the rich don’t get away from paying taxes by putting money in tax-free instruments meant for the middle-class, Budget 2021 has restricted the tax exemption for the interest income earned on the employee’s contribution to various provident funds.
If the employees’ contribution to the provident fund – be it statutory or voluntary – exceeds Rs 2.5 lakh per year, then the interest earned on this excess contribution will be taxable.
Contributions made on or after April 1, 2021 will be considered for taxation. The move will largely impact Voluntary Provident Fund (VPF) contributions. So far, entre interest accrued on provident funds was tax-free and so were withdrawals.
ULIPs taxed on par with equity mutual funds
The other move to tax the rich was made by making unit-linked insurance policies (ULIPs) proceeds taxable beyond a threshold annual premium.
Those ULIPs where you pay an annual premium in excess of Rs 2.5 lakh will now attract long-term capital gains (LTCG) tax. This will be applicable to ULIPs bought on or after February 1, 2021. Gains made on such policies will now attract short-term or long-term capital gains (LTCG) tax at redemption or maturity, at par with other equity-oriented investments.
“The provisions of section 111A and 112A would apply on sale/redemption of such ULIPs and they would attract 15 percent short-term capital gains tax (STCG) or 10 percent LTCG depending on the holding period,” says Chetan Chandak, Director, TaxBirbal.in. Equity investments qualify as long-term assets if held for more than one year.
However, proceeds received by the policyholder’s dependents on her death will continue to be tax-free.
To Be Continue........................
Senior citizens benefit
There is good news for senior citizens. For those above the age of 75, filing income-tax returns is not required, effective financial year 2021-22. But there is a small caveat. Those who earn income from pension and interest alone are exempt. But if you have an income from capital gains, investments in direct equities or even mutual funds, then you have to file your income-tax returns as usual.
Faster tax resolutions
The timeline for reopening of assessment under income tax returns will now go down to three years from six years presently. Only where there is evidence of concealment of income concealment of Rs 50 lakh or more in a year can the reassessment be opened in 10 years. This will ease the burden on the tax authorities and tax payers, and pave the way for faster resolution of cases.
Not filed your tax return? Pay higher TDS
So far, only those who didn't have a PAN were asked to pay a higher tax deduction at source (TDS) amount for rental income, bank interest or even high value transactions such as property. Come 2021-22, the one who has a PAN, but doesn't file a tax return too would have to shell out a higher tax deduction/ collection at source.
Investment charter for financial products
In order to reduce mis-selling, the finance minister announced setting up of an investment charter. This charter would pertain to investors of all financial products. Details are awaited on this announcement, but this charter is expected to lay down rights of investors.
Stick to short-term debt funds
To fund the various infrastructure programs, the government plans to borrow money from the debt markets. A sum of Rs 14 lakh crore (gross borrowing) for this financial year and another Rs 12 lakh crore in financial year 2021-22. This has caused yields to rise and the prices of debt securities to decline. Stick to short-term debt funds for now.
Advantage gold
Gold and silver become cheaper, as customs duties are cut to 7.5 percent from 12.5 percent. This should work in favour of gold buyers.
Higher contribution in EPF to attract tax
To ensure that the rich don’t get away from paying taxes by putting money in tax-free instruments meant for the middle-class, Budget 2021 has restricted the tax exemption for the interest income earned on the employee’s contribution to various provident funds.
If the employees’ contribution to the provident fund – be it statutory or voluntary – exceeds Rs 2.5 lakh per year, then the interest earned on this excess contribution will be taxable.
Contributions made on or after April 1, 2021 will be considered for taxation. The move will largely impact Voluntary Provident Fund (VPF) contributions. So far, entre interest accrued on provident funds was tax-free and so were withdrawals.
ULIPs taxed on par with equity mutual funds
The other move to tax the rich was made by making unit-linked insurance policies (ULIPs) proceeds taxable beyond a threshold annual premium.
Those ULIPs where you pay an annual premium in excess of Rs 2.5 lakh will now attract long-term capital gains (LTCG) tax. This will be applicable to ULIPs bought on or after February 1, 2021. Gains made on such policies will now attract short-term or long-term capital gains (LTCG) tax at redemption or maturity, at par with other equity-oriented investments.
“The provisions of section 111A and 112A would apply on sale/redemption of such ULIPs and they would attract 15 percent short-term capital gains tax (STCG) or 10 percent LTCG depending on the holding period,” says Chetan Chandak, Director, TaxBirbal.in. Equity investments qualify as long-term assets if held for more than one year.
However, proceeds received by the policyholder’s dependents on her death will continue to be tax-free.
To Be Continue........................
