In a post-pandemic year, the government showed a serious intent to establish a tax regime with far-reaching impact
In the first post-pandemic budget, Union Finance Minister Nirmala Sitharaman made several announcements. Here are eight of the most important tax-related announcements:
Tax returns for senior citizens
Senior citizens do not have to file tax returns if they have an only pension and interest income provided they are above 75 years. This will enable a number of senior citizens to save the hassle of regular tax return filings. While it may not cover all the relevant people, it is likely to cover a large majority of senior citizens on a pan- India basis.
Reassessment period reduced from six to three years
This is a big positive move by the government and will help to reduce the number of cases in the coming days and also shows that the government is willing to trust its citizens.
Faceless appellate scheme
This is a step in the direct direction. However, it will have to be seen as to how the scheme is going to be implemented because unlike the first appellate system, which was still within the executive control of the government, the ITAT is an independent body and hence, how the actual framework shall be rolled out and how the appellate system shall be given effect to, will be interesting to see.
Settling tax disputes
The Vivaad se Viswas scheme has seen good traction with more than 110,000 cases getting settled involving outstanding taxes amounting to Rs 85,000 crore.
Relief for tax on dividends
Dividends received by REITs and InViTs have been declared as totally exempt, thereby enabling greater acceptability of such schemes.
The announcement that individual taxpayers shall not be liable to pay advance tax on their dividend income till such time they actually receive such dividends is another positive move.
No audits for small charitable organisations
Small charitable organisations having less than Rs 5 crores in revenue have been granted exemption from audits. This will help a lot of smaller institutions to focus more on their core competencies and to worry about regular compliances.
Relaxations for affordable housing
Affordable housing has been granted further relaxations by extending the last date till 31 March, 2022.
Greater flexibility to pension funds
Foreign Sovereign Wealth and Pension Funds have been granted greater flexibility to be within the guidelines framed by the government to encourage further investments by them and this will help them greater flexibility. Tax benefits have been granted to foreign aircraft leasing companies operating from the International Financial Services Centre Authority.
The writer is Partner and Head – Taxation, Cyril Amarchand Mangaldas.
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