Union Budget 2021

CA Niket Modi | Posted on February 2, 2021 |

Direct Tax Budget proposals

Tax slabs

Tax slabs have not undergone any changes in this budget. Applicable slab rates are given for your reference.

Income	Old Regime	New Regime
	Age less than 60 years	Age More than 60 but less than 80 years	Age more than 80 years
0 – 2,50,000	0%	0%	0%	0%
2,50,001 – 3,00,000	5%	0%	0%	5%
3,00,001 – 5,00,000	5%	5%	0%	5%
5,00,001 – 7,50,000	20%	20%	20%	10%
7,50,001 – 10,00,000	20%	20%	20%	15%
10,00,001 – 12,50,000	30%	30%	30%	20%
12,50,001 – 15,00,000	30%	30%	30%	25%
Greater than 15,00,000	30%	30%	30%	30%

Exemption to Senior citizen from filing of return

Resident senior citizen (Aged 75 or more) shall be exempt from requirement of filing return subject to below conditions:

Income comprises only of interest and pension.
Interest is received in a bank in which pension is received.
The bank is in list specified by CBDT.
He has furnished specified declaration to that bank.
Bank has calculated and deducted TDS u/s 194P.

Taxability of Interest on EPF

Interest accruing on Recognised Provident funds during the previous year in the account of a person to the extent it relates to the amount or the aggregate of amounts of contribution made by that person (i.e Employee contribution) exceeding 2.5 Lakhs in any previous year in that fund, on or after the 01-04-2021.

Taxability Of ULIPs

In case of policies issued after 01-02-2021, total premium paid during the year for Unit Linked Insurance Policy (In case of multiple ULIPs aggregate of all ULIPs) exceeds 2.5 Lakhs, Amount received on maturity shall be taxable.

Such ULIPs shall be treated as capital asset and proceeds from such ULIPs shall be taxed @ 10% ( Amount received – Premium Paid)

TDS/TCS on non-filers of return at higher rates (w.e.f. 01-07-2021)

In case person has not filed return for both of previous years preceding the Previous year in which TDS/TCS is required, rate applicable shall be as follows:

Section 206AB (in case of TDS except 192, 192A, 194B, 194BB, 194LBC, 194N and payment to NR who does not have PE in India)

TDS shall be higher of

2 times rate specified in act,
2 times rates in force,
5%

Section 206CCA (in case of TCS)

TCS shall be higher of

2 times rate specified in act,
5%

In case Assessee does not have PAN than higher of the rate u/s 206AA and 206AB ( 206CC

and CCA in case of TCS) shall be applicable.

Section 194Q for TDS on purchase Goods (w.e.f. 01-07-2021)

In case of buyer whose total sales/ Gross receipts/ Turnover exceeds 10 Crore in previous year and purchase value from seller exceeds 50 Lakhs than buyer shall deduct TDS @ 0.1%. (In case of No PAN 5%)

Except in cases where TDS is deducted under any other section or TCS is collected under any section except 206C(1H).

It is important to note that TCS under 206C (1H) shall not be applicable in case TDS is deducted under any section. So for transactions where 194Q is applicable, 206C(1H) will no longer apply.

Change in time limit of Return filing and processing

Applicable Section	Particular	Existing Limit	Proposed Limit
139 (4)	Belated Return	End of Assessment Year (31^st March) or Completion of assessment W.E. Earlier	31^st December of Assessment year or Completion of assessment W.E. Earlier
139 (5)	Revised Return	End of Assessment Year (31^st March) or Completion of assessment W.E. Earlier	31^st December of Assessment year or Completion of assessment W.E. Earlier
143 (1)	Processing of IT Return	1 Year from the end of FY in which return was filed	9 Months from the end of FY in which return was filed
143 (2)	issuing Notice of Assessment	6 months from the end of FY in which return was filed	3 Months from the end of FY in which return was filed
153	Completion of Assessment	12 months from the end of AY	9 months from the end of AY
148	Reopening of assessment	6 years / 4 years from the end of AY depending of income escaped assessment	3 Years from the end of AY. 10 years in case of income escaping assessment is exceeding 50 Lakhs (Assessment in case of Search also covered here now)

Extension of Time limits for various benefits
Last day for incorporating eligible startup extended to 31-03-2022.
CG exemption on investing in Eligible startups also extended to 31-03-2022.
Time limit for loan for affordable housing eligible for deduction u/s 80EEA extended to 31-03-2022.
Time limit for approval for affordable housing project also extended to 31-03-2022

Opportunity of being heard before notice u/s 148

Earlier, AO was only required to have reasons to believe that income has escaped assessment. Now, AO needs to inquire first, provide opportunity of being heard to Assessee by issuing SCN. Only after Considering reply of Assessee, AO can issue notice u/s 148.

Charitable Trusts

Corpus donation now exempt only if it is invested in modes specified u/s 11(5).
Any amount applied out of corpus shall not be considered as application of income. However, in case of such corpus not allowed as application shall be treated as application in case it is invested as per modes specified u/s 11(5) in the year of investment.
Any amount applied out of loan shall not be treated as application of income. Loan repayment shall be treated as application of income.
Excess application of one year cannot be carried forward to next year now.

No Depreciation on Goodwill

No Depreciation on goodwill (Purchased or self-generated) shall be allowed from 01-04-2021.

No Presumptive taxation for LLPs

Section 44ADA is amended to exclude LLPs from availing benefit of presumptive taxation in case of income from profession specified u/s 44AA.

Disallowance in case of delay in payment of employee PF contribution.

Even a single day delay in deposit of Employee’s PF contribution shall result in disallowance (Note that this amendment is retrospective)

Slump sale definition widened.

Definition of slump sale is widened to include all types of transfers. Specifically intended at including “Slump Exchange” transactions

Union Budget 2021

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