In a bid to reverse dwindling spending and household consumption demand due to Covid-19, the Union Government did not make any changes to the personal income tax of common people and gave relief to 75 and above aged citizens by exempting them from filing income tax returns.
She announced exemption of filing of income tax returns for 75 and above citizens who have an only pension and interest income.
The filing of Income Tax returns will apply to senior citizens who have no other income, but depend on pension and interest income from the bank hosting the pension account, Finance Minister Nirmala Sitharaman said in her 2021-22 Budget Speech in Lok Sabha today.
“The government will be notifying a few banks where account holders will be eligible for this exemption,” she said.
The individual will have to furnish a declaration to the bank, the budget document said.
Sitharaman also announced relief for NRIs by sparing them from double taxation. “New rules to be notified, she said. She also announced that Tax audit limit has been increased from Rs 5 crore to Rs 10 crore.
Some sections of the salaried people expected the finance minister to provide relief. They hoped it would broaden some tax advantages through Budget.
In the run-up to the Budget presentation, several experts and professional bodies like ICAI had recommended the government to increase the deduction limit under Section 80C of the Income Tax Act. Some even suggested the government allow higher deduction under Section 80D and increase the deposit limit in PPF to Rs 3 lakh.
Other sections of the salaried people were wary of the government burdening with a hike in income tax because of allocating funds to various schemes amidst pandemic.
Sitharaman, however, did not make any changes to the personal income tax of common people.
In contrast, in 2020-21, she had announced a significant cut in the tax rates for the salaried class which ushered in a new tax regime where the taxpayer got the option of taking new rates without exemptions or sticking to old rates with exemptions.
As per the tax rates last year, income under Rs 2.5 per annum remained untaxable as it was earlier.
Also, a tax of 5 percent was announced on income between Rs 2.5 to Rs 5 lakh and 10 percent for those earning between Rs 5 – Rs 7.5 lakh per annum, which were earlier 20 percent.
Sitharaman had also proposed a 15 percent tax for those earning between Rs 7.5 lakh to Rs 10 lakh per annum and had said that those earning between Rs 10 lakh to Rs 12.5 lakh per annum will now have to pay 20 percent tax. Earlier it was 30 percent.
The new tax rate applicable to those earning in the range of Rs 12.5 lakh per annum to Rs 15 lakh per annum was set at 25 percent and 30 percent tax was announced for salaries above Rs 15 lakh per annum.
She announced simplification of Income Tax Returns. Sitharaman said, “To ease compliance for taxpayers, details of salary income, tax payment and TDS will be pre-filled.”
Sitharaman said the central government plans to reduce the timeline for reopening of tax cases to 3 years from 6 years.
The central government also proposed to make income tax appellate tribunals faceless and set up a national income tax appellate tribunal center, she added.
Exemption from tax audit limit has been doubled to Rs 10 crore turnover for companies doing most of their business through digital modes, Sitharaman said.
Serious tax offenses of concealment of income of over Rs 50 lakh can be reopened after 10 years, she said.
Sitharaman also announced large investments in road and metro infrastructure in poll-bound states like West Bengal and Tamil Nadu. She announced Rs 1,10,055 crore outlay for railways.
She said 3,500 km corridor in Tamil Nadu, 1,100 km in Kerala at an investment of Rs 65,000 cr, 675 km in West Bengal at a cost of Rs 95,000 cr, and 1,300 km in Assam in the next three years.
“To award 8,500-km of highways by March 2022 and 11,000-km of national highway corridor to be completed in 2021,” she said.
Sitharaman allocated Rs 25,000 crore for projects in West Bengal and Rs 63,000 crore for the Chennai Metro.
She also announced more metro and urban buses on the PPP model and 20,000 buses planned in cities.
Sitharaman announced that the PM Atmanirbhar Swasth Bharat Yojana will be launched with an outlay of 64,180 crores over 6 years.
She said that this will help 15 health emergency centers and will strengthen National Center for Disease Control, among other things.
The total outlay for health and wellbeing: Rs 2,23,246 cr, which is an increase of 137 percent as compared to last Budget’s allocation of close to Rs 94,000 crore.
This will also strengthen nutritional content, delivery, outreach, and outcome. We will merge the supplement Nutrition Programme, she said.
Sitharaman announced Rs 35,000 crores for Covid-19 vaccines and added there will be two more vaccines other than Covaxin and Covidshield.
She also “One Nation One Ration Card” scheme for beneficiaries to claim rations anywhere in the country keeping in mind migrant workers.
“The government will also set up a portal to collect information on unorganized labor force, migrant workers especially, to help formulate schemes for them,” she said.