The tax proposals in the Union Budget 2021-22 presented by Union Finance Minister Nirmala Sitharaman on Monday focussed on vision of a transparent, efficient tax system to promote investments and employment in the country with minimum burden on tax payers.
Direct Taxes - Key Highlights
Achievements:
-Corporate tax rate slashed to make it among the lowest in the world
-Burden of taxation on small taxpayers eased by increasing rebates
-Return filers almost doubled to 6.48 crore in 2020 from 3.31 crore in 2014
-Faceless Assessment and Faceless Appeal introduced
Relief to Senior Citizens:
Exemption from filing tax returns for senior citizens over 75 years of age and having only pension and interest income; tax to be deducted by paying bank
Reducing Disputes, Simplifying Settlement:
-Time limit for re-opening cases reduced to 3 years from 6 years
-Serious tax evasion cases, with evidence of concealment of income of Rs. 50 lakh or more in a year, to be re-opened only up to 10 years, with approval of the Principal Chief Commissioner
-Dispute Resolution Committee to be set up for taxpayers with taxable income up to Rs. 50 lakh and disputed income up to Rs. 10 lakh
-National Faceless Income Tax Appellate Tribunal Centre to be established
-Over 1 lakh taxpayers opted to settle tax disputes of over Rs. 85,000 crore through Vivad Se Vishwas Scheme until January 30, 2021
Relaxation to NRIs:
Rules to be notified for removing hardships faced by NRIs regarding their foreign retirement accounts
Incentivising Digital Economy:
Limit of turnover for tax audit increased to Rs. 10 crore from Rs. 5 crore for entities carrying out 95% transactions digitally
Relief for Dividend:
-Dividend payment to REIT/ InvIT exempt from TDS
-Advance tax liability on dividend income only after declaration/ payment of dividend
-Deduction of tax on dividend income at lower treaty rate for Foreign Portfolio Investors
Attracting Foreign Investment for Infrastructure:
-Infrastructure Debt Funds made eligible to raise funds by issuing Zero Coupon Bonds
-Relaxation of some conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment
Supporting ‘Housing for All’:
-Additional deduction of interest, up to Rs. 1.5 lakh, for loan taken to buy an affordable house extended for loans taken till March 2022
-Tax holiday for Affordable Housing projects extended till March 2022
-Tax exemption allowed for notified Affordable Rental Housing Projects
-Tax incentives to IFSC in GIFT City:
-Tax holiday for capital gains from incomes of aircraft leasing companies
-Tax exemptions for aircraft lease rentals paid to foreign lessors
-Tax incentive for relocating foreign funds in the IFSC
-Tax exemption to investment division of foreign banks located in IFSC
Ease of Filing Taxes:
Details of capital gains from listed securities, dividend income, interest from banks, etc. to be pre-filled in returns
Relief to Small Trusts:
Exemption limit of annual receipt revised from ₹1 crore to ₹5 crore for small charitable trusts running schools and hospitals
Labour Welfare:
Late deposit of employee’s contribution by the employer not to be allowed as deduction to the employer
Eligibility for tax holiday claim for start-ups extended by one more year
Capital gains exemption for investment in start-ups extended till 31st March, 2022
Indirect Taxes
GST:
Measures taken till date:
Nil return through SMS
Quarterly return and monthly payment for small taxpayers
Electronic invoice system
Validated input tax statement
Pre-filled editable GST return
Staggering of returns filing
Enhancement of capacity of GSTN system
Use of deep analytics and AI to identify tax evaders
Custom Duty Rationalization:
Twin objectives: Promoting domestic manufacturing and helping India get onto global value chain and export better
80 outdated exemptions already eliminated
Revised, distortion-free customs duty structure to be put in place from 1st October 2021 by reviewing more than 400 old exemptions
New customs duty exemptions to have validity up to the 31st March following two years from its issue date
Electronic and Mobile Phone Industry:
Some exemptions on parts of chargers and sub-parts of mobiles withdrawn
Duty on some parts of mobiles revised to 2.5% from ‘nil’ rate
Iron and Steel:
Customs duty reduced uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels
Duty on steel scrap exempted up to 31st March, 2022
Anti-Dumping Duty (ADD) and Counter-Veiling Duty (CVD) revoked on certain steel products
Duty on copper scrap reduced from 5% to 2.5%
Textiles:
Basic Customs Duty (BCD) on caprolactam, nylon chips and nylon fiber & yarn reduced to 5%
Chemicals:
Calibrated customs duty rates on chemicals to encourage domestic value addition and to remove inversions
Duty on Naptha reduced to 2.5%
Gold and Silver:
Custom duty on gold and silver to be rationalized
Renewable Energy:
Phased manufacturing plan for solar cells and solar panels to be notified
Duty on solar invertors raised from 5% to 20%, and on solar lanterns from 5% to 15% to encourage domestic production
Capital Equipment:
Tunnel boring machine to now attract a customs duty of 7.5 per cent; and its parts a duty of 2.5 per cent
Duty on certain auto parts increased to general rate of 15%
MSME Products:
Duty on steel screws and plastic builder wares increased to 15%
Prawn feed to attract customs duty of 15% from earlier rate of 5%
Exemption on import of duty-free items rationalized to incentivize exporters of garments, leather, and handicraft items
Exemption on imports of certain kind of leathers withdrawn
Customs duty on finished synthetic gem stones raised to encourage domestic processing
Agriculture Products:
Customs duty on cotton increased from nil to 10% and on raw silk and silk yarn from 10% to 15%.
Withdrawal of end-use based concession on denatured ethyl alcohol
Agriculture Infrastructure and Development Cess (AIDC) on a small number of items
Rationalization of Procedures and Easing of Compliance:
Turant Customs initiative, a Faceless, Paperless, and Contactless Customs measures
New procedure for administration of Rules of Origin
Achievements and Milestones during the COVID-19 pandemic
Pradhan Mantri Garib Kalyan Yojana (PMGKY):
Valued at Rs. 2.76 lakh crore
Free food grain to 80 crore people
Free cooking gas for 8 crore families
Direct cash to over 40 crore farmers, women, elderly, the poor and the needy
AatmaNirbhar Bharat package (ANB 1.0):
Estimated at Rs. 23 lakh crore – more than 10% of GDP
PMGKY, three ANB packages (ANB 1.0, 2.0, and 3.0), and announcements made later were like 5 mini-budgets in themselves
Rs. 27.1 lakh crore worth of financial impact of all three ANB packages including RBI’s measures – amounting to more than 13% of GDP
Structural reforms:
One Nation One Ration Card
Agriculture and Labour Reforms
Redefinition of MSMEs
Commercialisation of the Mineral Sector
Privatisation of Public Sector Undertakings
Production Linked Incentive Schemes
