INCOME TAX – MAJOR CHANGES IN BUDGET, 2021 FOR F. Y. 2021-22 (A.Y. 2022-23)

1. Exemption from filing income tax returns for senior citizens (75 years and above) who only have pension and interest income. The paying bank will deduct the necessary tax on their income;

2. Maturity or Surrender Value of Unit Linked Insurance Plan (ULIP) with annual premium exceeding Rs. 2.50 Lakhs, issued after 01-02-2021 shall not be exempted from Income Tax u/s 10(10D) and the same shall be liable to Capital Gain Tax u/s 112A;

3. If the contribution in PF Fund is above Rs. 2.50 Lakhs, then the interest earned on such excess amount shall be taxable [u/s 10(11) and 10 (12)];

4. Aggregate receipts of upto Rs. 5 Crore of Small Universities, Educational Institutions, Hospitals operated as Not for Profit and Charitable Organizations is exempted [10(23C)(iiiad)/ (iiiae)];

5. For Trusts and Institutions registered u/s 12AA and 12AB, Corpus Donations shall be exempted only if the same are invested or deposited in modes specified u/s 11(5) maintained for such corpus. Application of funds from Corpus Donations and Loans shall not be treated as application of income for Charitable or Religious purposes in that year – however they will be allowed as application, in the year in which such Loans are repaid or corpus funds are reinvested/ re-deposited in modes specified u/s 11(5);

6. Builders will be able to sell Residential Units of upto Rs. 2 Crores, transferred as first time allotment of residential unit to any person between 12-11-2020 to 30-06-2021 at 16.67% below DLC value (i.e. DLC upto 120% of Consideration) and the difference shall not be charged as income of Buyer [u/s 56(2)(x)] and / or seller [u/s 43CA];

7. Delay in deposit of Employee Contribution of ESI, PF or other Superannuation Funds before the Due Date shall lead to dis-allowance of expenditure [u/s 2(24)(x) r.w.s. 36(vi)] Section 43B not applicable in such cases;

8. Time for Re-Opening of Assessments reduced from 6 Years to 3 Years. Only in case of income escaping assessment is likely to exceed Rs. 50 Lakhs, cases can be reopened for upto 10 years with prior permission of Chief Commissioner [u/s 149 r.w.s. 147, 148, 148A];

9. Income Tax Appellate Tribunal (ITAT) to be faceless;

10. Asset/ Money received by a partner or member of Partnership Firm, AOP, BOI at the time of dissolution or restructuring shall be liable to Capital Gain based on Fair Market Value of the Asset;

11. Establishment of Dispute Resolution Committee (DRC) for small cases of upto 10 lakhs of addition where the Total Income of assessee during the year was upto 50 lakhs. DRC can reduce / waive penalty and grant immunity from prosecution [u/s 245MA];

12. Time for filling of Belated and Revised return has been reduced by 3 Months [u/s 139(4) and 139(5)];

13. Time limit for exemption to New Start Up extended upto 31-03-2022 [u/s 80IAC and 54GB];

14.Capital Gain on Shares and MF transaction will be auto populated (pre-filled) in the ITR;

15. First Time home buyers of upto 45 lakhs of property till 31-03-2022, will get additional 1.50 Lakhs deduction on Interest [u/s 80EEE];

16.Rental Housing Projects to be given 100% deduction for profits and gains from the business [u/s 80IBA];

17. Higher Rate of TDS & TCS for Non-Fillers of Income Tax Returns [u/s 206AB and 206CCA];

18. Aggregate purchases from a seller exceeding 50 Lakhs in a year will be liable to TDS @ 0.10% subject to total sales, gross receipts or turnover of buyer exceeding 10 Crores in immediately preceding Financial Year [u/s 194Q]

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