Key points and important Tax/Finance updates of Budget 21

Key points and important Tax/Finance updates of Budget 21:

➤ FM proposes to change the definition of a small company under the Companies Act 2013 by increasing their threshold for paid-up capital, from 'not exceeding 50 lakhs, to not exceeding 2 crores' and Turnover from 'not exceeding 2 crores' to 'not exceeding 20 crores'.

➤No major changes in Direct taxes in this Budget.

➤Govt proposes to increase threshold for tax audit to Rs.10 crore vs Rs. 5crore (for those transacting 95% digitally)

➤ No Return for Senior Citizen of Age 75 Year or More having only Interest and pension Income

➤ Govt proposes to extend exemption available for the purchase of affordable houses & to provide tax exemption for affordable rental housing projects

➤ To reduce litigation for small taxpayers, FM proposes to constitute a Dispute Resolution Committee, which will be faceless to ensure transparency, efficiency, and accountability.

➤ CBDT extends the date for filing of declarations under the VSV Act to 28th Feb 21

➤ Taking a step further, the FM proposes to discontinue the NSSF Loan to FCI for food subsidy and accordingly budget provisions have been made in RE 2020-21

➤ Fiscal Deficit in RE 2020-21 is pegged at 9.5% of the GDP.

➤ A National Faceless Income Tax Appellate Tribunal Center to be constituted, wherein all communication between the Tribunal and the Appellant shall be electronic. Where a personal hearing is needed, it shall be done through video conferencing only

➤ Delayed contribution of EPF by employer for employee will not be allowed as a deduction

➤ Affordable housing deduction extended by one year to FY22. Tax exemption to notified rental housing projects

➤ FM to make the Income Tax Appellate Tribunal Faceless

➤ Govt to set-up a faceless dispute resolution mechanism for small taxpayers. Govt proposes to reduce time allowed to re-open tax investigation to 3 years vs 6 years now (except of serious tax evasion cases)

➤ Government announces multi-state cooperative for ease of doing business

➤ Eligibility of deduction amounting to Interest of Rs.1.5 lakh for the loan taken to purchase an affordable house, which was announced in July 2019 has been extended by one year till 31st March 2022. The additional deduction shall now be available till 31st March 2022

➤ Advance Tax Liability on Dividend Income shall now arise only after the declaration or payment of Dividend - FM

➤ Affordable housing deduction extended by one year to FY22. Tax exemption to notified rental housing projects

➤ Insurance Act 1938 to be amended, to increase permissible FDI limit in insurance companies from 49% to 74% and allow foreign ownership and control with safeguards

➤ Asset Reconstruction Company Ltd. to be set up to consolidate and take over existing stressed debts and manage and dispose of assets for eventual value realization

➤ Additional capital infusion of ₹ 1000 crore to Solar Energy Corporation of India and ₹ 1500 crore to IREDA, to give further boost to green energy sector

➤ For investor protection, Investor Charter as a right of all financial investors across all financial products to be introduced

➤ To set up a system of regulated gold exchanges in the country, SEBI will be notified as regulator and Warehousing Dev. and Regulatory Authority will be strengthened

➤ Permanent institutional framework to set up, to instill confidence in corporate bond market participants during times of stress and enhance secondary market liquidity

➤ Record sum of ₹ 1,10,055 crore to be provided for Indian Railways, out of which ₹ 1,07,100 is for capital expenditure only 100% electrification of rail broad gauge routes to be completed by December 2021

➤ The govt. is cutting custom duty on copper scrap to 2.5% from 5%, cutting Basic Customs Duty rate on nylon chips & nylon fiber - FM

➤ A single and rationalized Securities Markets Code to be set up, by consolidating provisions of SEBI Act 1992, Depositories Act 1996, Securities Contracts Regulation 1956 and Govt. Securities Act 2007