1. Relaxation on certain category of senior citizens from filing of Income-Tax returns

To provide relief to the senior citizens aged above 75 years from filing Income Tax Return who earn income by the source of either pension or interest, if the following conditions are satisfied:

• He has pension and/or interest income from the same bank and the bank is specified bank as notified by the Government.
• He is resident of India and of the age 75 years or more during the previous year.
• He shall be required to furnish a declaration to the specified bank in such form and verified in such manner as prescribed.

• Rationalization of provisions relating to tax audit in certain cases.

Earlier through Finance Act, 2020, the threshold limit for tax audit for a person carrying on business is increased from Rs. 1 crore to Rs. 5 crores in cases where aggregate of all receipts and payments in cash during the previous year does not exceed 5% of such receipts/payments. To incentivize non-cash transactions to promote digital economy and to further reduce compliance burden of small and medium enterprises, it is proposed to increase the threshold from five crore rupees to ten crore rupees in above cases.

• Extending Due dates for filing of return of income
• Due date of filing of the original return of income to be extended to October 31 of the assessment year in case of spouse of a partner of a firm whose accounts are required to be audited under the provisions of IT Act.
• due date of filing of the original return of income to be extended to November 30 of the assessment year in case of a partner of the firm which is required to furnish report from an accountant for entering international transaction or specified domestic transaction as per Section 92E of the IT Act (i.e., Report from an accountant to be furnished by persons entering international transaction).

• Reduction in time limit for filing of Revised/Belated Returns
  
  

Reduced to 3 months before the end of relevant assessment year or before completion of assessment whichever is earlier.

• Taxation of proceeds of high premium unit linked insurance policy (“ULIP”)
  
  Limited exemptions on proceeds from ULIP that have so far allowed large investors to receive tax-free returns. Individuals holding multiple ULIPs with an aggregate premium in excess of Rs 2.5 lakh will have to pay tax on the proceeds.

• TDS/TCS on non-filer at higher rates

To insert a new Section 206AB in the IT Act as a special provision providing for higher rate for TDS for the non-filers of income-tax return. Similarly, it is proposed to insert a new Section 206CCA in the IT Act as a special provision for providing for higher rate of TCS for non-filers of income-tax return. Further, amended sub-section (1) of Section 206AA of the IT Act (i.e., requirement to furnish Permanent Account Number) and insert second proviso to further provide that where the tax is required to be deducted under Section 194Q of the IT Act and Permanent Account Number is not provided, the TDS shall be at the rate of 5%. These amendments will take effect from July 1, 2021.

• Reduction of time limit for completing assessment

The time limit for completion of assessment proceedings to be 9 months (previously 12 months) from the end of the assessment year in which the income was first assessable.

• Extension of date of sanction of loan for affordable residential house property
  
  

Previously the condition to avail additional tax benefits of Rs 1.5 lakh under Section 80EEA of the Income Tax Act, 1961 (“IT Act”) (i.e., deduction for interest paid on home loan for affordable housing)stated that the loan to buy house should have been sanctioned between April 1, 2019 and March 31, 2021. Now, it is proposed to extend the time limit given under Section 80EEA ibid by 1 year i.e., from March 31, 2021 to March 31, 2022. This amendment will take effect from April 1, 2022.

• Extension of date of incorporation for eligible start up for exemption and for investment in eligible start-up

Extension of date of incorporation for eligible start up for exemption from April 1, 2021 to April 1, 2022 under the provisions of Section 80-IAC of the IT Act (i.e., special provision in respect of specified business). Similarly, extended the time limit under Section 54GB of the IT Act (i.e., capital gain on transfer of residential property not to be charged in certain cases.) from March 31, 2021 to March 31, 2022

1.  Tax on Interest earned PF contribution [Employees] above 2.5 lakhs per year

Finance Minister Nirmala Sitharaman announced some direct tax proposals in her Budget 2021 speech, including taxing interest earned by provident fund contributions above Rs 2.5 lakh a year at normal rates. This will only apply to the employee’s contribution and not that of the employer.

The above amendments will be effective from April 1, 2021 except otherwise specified.