Budget 2021 did not impose any new tax neither did it lower any taxes. As far as taxes are concerned, this has been a status quo budget. But Finance Minister Nirmala Sitharaman has rolled out a few benefits to a specific category of taxpayers and ease of compliance. Here are five things that as a taxpayer you must know about this budget-
1) A sigh of relief for Senior Citizen
The senior citizen who is above the age of 75 gets exemption from filing the income tax return. But it is mandatory that such senior citizen’s income comprises of pension and earning from interest only.
2) Return form will have more information
The pre-filled return form was pre-populated with income and tax details, but it will now give more detail. Return forms will now include information about capital gains, dividend income and interest from banks and post office.
3) Tax on high EPF contribution
If employees contribution to his/her provident fund is more than Rs 2.5 lakh in a year he /she will have to pay tax on earned interest. From an exempt-exempt-exempt category of investment, EPF now will become exempt-tax-exempt. The deposit and withdrawal are still exempted from tax but if you contribute more than Rs 2.5lakh then be prepared to pay tax on interest. This tax will commence on 1st April 2021.
4) No more tax exemption Unit Linked Insurance Plan (ULIPs) maturity
ULIPs issued after 1st February 2021 will be taxed on maturity if the premium for any year exceeds Rs 2.5 lakh. The ULIPs will be treated like equity-oriented funds and their gains will be considered as capital gains.
5) Affordable housing will give an additional tax deduction
Section 80EEA gets an extension till 31st March 2022. This will give an additional benefit of Rs 1.5 lakh on interest payment of a home loan. But the cost of the house/flat mustn’t exceed Rs 45 lakh. Another condition is that if the property is in one of the metro cities like Delhi, Mumbai, Kolkata or Bangalore, then the house’s size should be up to 60 sq metres and if it is in the smaller city then the size can’t be more than 90 sq metres.
