The annual Union Budget is like packaged candy for a crying kid. And if it isn't very obvious, the wrapped candy is the expected budget reforms, and the crying kid is the economy. This year, the kid had been crying quite loudly, and while the entire nation was already hoping for candy, it was also expecting it to be bigger in size and sweeter in taste.
The Covid-hit economy, which was already stressed, was looking forward to seeing a ray of hope with the budget. As the markets rejoiced with record-breaking surges, some were also left unhappy.
The budget has rolled out several plans for various sectors including health, agriculture and tax. And hence it becomes crucial to understand how it is going to impact you and your money.
As a taxpayer, investor and consumer, aren't you curious to find out what the budget has in store for you? Read further to find out.
What does Budget hold for taxpayer, investor & consumer:
Below are some pointers you will have to bear in mind while filing your IT returns.
- For senior citizens - The budget 2021-22 has come as a relief to senior citizens. Anyone above the age of 75 wherein their basic income comes from pension and interest need not file Income Tax Returns. However, any other sources of income earners, including gains from mutual funds, equity, etc. must file the returns.
- Starting from 2021-22, those who have a PAN card but do not file ITR will have to pay higher tax deduction at source. Earlier only those who didn't have a PAN card were asked to make such a payment.
- As for the EPF, if the employee's contribution is more than 2.5 lakhs, then the interest on the same will be taxed. This has been introduced to protect the rich from getting away from tax payment. This applies to both the statutory and voluntary PF.
Filing of ITR
A few introductions or pointers that were highlighted about the filing of the ITR in this session are as follows:
- Those who are filing later than the stipulated time or are looking to rectify the mistakes should be careful. This is mainly because the time provided for the same has been reduced for the financial year 2020-21. Hence, crossing the stipulated time might invite fine or extra payment.
- The tax authorities and the budget as such, are taking significant steps to make the entire ITR filing easy and trouble-free. One such attempt to promote hassle-free tax filing is the introduction of pre-filled income tax forms. These forms will have the details about your capital gains, interests earned, dividend, investment details, etc. in the form itself. This is a major step taken towards preventing tax evasion.
- To assist the tax authorities with faster resolution of taxes, the period during which you can reopen the assessment under income tax returns, has been brought down to 3 years from 6 years. However, it will be 10 years when the income concealed is 50 lakh or more.
Following are some of the things brought out by the budget which investors must be aware about:
- An investment charter is expected to be set up in order to reduce misselling, and the details regarding the same are to be further explained by the Government.
- The Government is keen on improving various infrastructure-based projects. For this, they have planned to draw the funds required from the debt markets. As a result, around 12 lakh crore will be borrowed. This has caused a lot of investors to the eye for the short term debt funds. Also, tax-efficient zero-coupon bonds will be open for investment starting from 2021.
- One investment avenue which is being seen as a good prospect with this budget is the Gold based investment. The FM has said that the customs duties on Gold and silver will be reduced from 12.5 per cent to 7.5 per cent.
- In the ULIPs or the unit-linked insurance policies, where you pay the annual premium exceeding 2.5 lakhs will now be taxable under long term capital gains (LTCG). The taxation will apply to any purchase made on or after Feb 1st of 2021. This move is expected to affect the HNI or the high net worth individuals. But the proceeds received by the dependents of the deceased will be exempted.
- The new mechanism put forth in the budget 2021-22 will enable the hiked deposit insurance benefit not only in the case of a bank's liquidation but also when the banks get into trouble.
For consumers, the budget has put forth a variety of things on the table with the purpose of encouraging the "Make in India" movement. For this, budget 2021 has proposed an increase in the customs duty on a number of items. However, certain items have been exempted from this.
Additionally, among other things, the budget has extended the period for those claiming additional deduction of about 1.5 lakhs for a loan taken to purchase a house.
As seen above, the budget has brought light to the fact that the Government is trying to revive the slowing economy. And the budget of 2021 seems to be a well-thought-of step towards that goal.
Now, as a responsible salaried individual or investor, you must plan your spendings according to the various reforms of this budget and file the tax correctly and on time.