Union Budget 2021: Nirmala Sitharaman provides relief to almost all; home buyers, pensioners, employees, among others

A budget with care for all.

Union Finance Minister Nirmala Sitharaman has in her first budget post-pandemic-Budget 2021 offered some relief measures to almost all. Be it entrepreneurs or MSMEs and tax payers, everyone has been given a cushion.

Here are some of the relief measures announced by the finance minister in Budget 2021:

Affordable housing

To continue encouraging first-time homebuyers towards buying affordable houses, i.e., residential property having stamp duty value up to Rs. 45 lakhs, the end-date for taking a home loan from financial institutions has been extended by one year from 31 March 2021 to 31 March 2022.

With an attempt to boost the housing sector, waiver from deemed taxation on the difference between stamp duty value and transaction value has been extended from 10 percent to 20 percent on the sale of residential units by builders during the period 12 November 2020 to 30 June 2021 for a consideration not exceeding Rs 2 crore.

Lesser tax compliance for pensioners

Senior citizens of age 75 years and above absolved from filing tax returns where income consists of only pension and interest income from the same bank providing a pension. Senior citizens have to furnish a declaration to the bank which would deduct applicable taxes on such income.

Alternative to LTC exemption

Individual employees can still avail exemption for leave travel concession (LTC) of one-third of specified expenditure or Rs 36,000 whichever is less for the block of 2018-21 if they have incurred expenditure on purchase of goods/services liable to GST at the rate of 12 percent or more, provided the payment is made via non-cash mode and incurred during the period 12 October 2020 to 31 March 2021.

Deferment in payment of advance taxes

Advance taxes on dividend income to be paid only when the dividend is announced or paid as accurate determination of such income is not possible. The provisions are at par with the liability to pay advance taxes on capital gains.

Dispute Resolution Committee

As a measure to reduce litigation for small taxpayers where returned income is up to Rs 50 lakhs and the aggregate amount of variation is up to Rs 10 lakh in a specified order, a separate dispute resolution committee to be set up.

Employees contribution to PF

After bringing the employer’s high contribution to Provident Fund (PF) under the tax net in the previous year, Budget 2021 brings employees high contributions to PF under the tax net. The interest income on contributions made by a person in excess of Rs 250,000 in a year on or after 1 April 2021 to the provident fund is now taxable. In the previous year’s Budget, the deductions available on employer contribution to retirement benefit funds (including PFs) was restricted to Rs 750,000.

Boost to entrepreneurship

With intent to encourage entrepreneurship, the government has extended the period till which exemption from capital gains on transfer of residential property can be claimed if proceeds are invested in equity shares of an eligible start-up from 31 March 2021 to 31 March 2022.

Lesser tax compliance for SMEs

Exemption from mandatory tax audit compliance is extended for small and medium-sized entrepreneurs whose turnover is less than Rs 10 crore (earlier Rs 5 crore), only when the aggregate of all receipts and payments in cash do not exceed 5 percent.

Time limit for filing returns

The time limit for filing belated or revised returns has been curtailed by three months i.e. For AY 2021-22, the last date for belated/revised return would be 31 December 2021 (instead of 31 March 2022).

The writer is Partner, Dhruva Advisors LLP