Expectations from Union Budget 2021 were high. Given the hardships that people have endured over the past year, it was expected that there would be relief in some form or the other for the middle-class. At the same time, given the fact that the government has suffered loss of revenue due to the pandemic, it was also feared that the FM could ill-afford to loosen the purse strings. Read on to know how your money life has changed.

No change in tax slabs: The Finance Minister had introduced a new tax regime in Union Budget 2020 wherein there is an option for individuals and HUFs (Hindu Undivided Families) to pay taxes at lower rates, but without claiming deductions under various sections. The new regime has not found too many takers, so there were expectations that this tax regime would be tweaked. However, this has not happened.

Concessions for senior citizens: Senior citizens do have reason to cheer. The FM has proposed to reduce the compliance burden for senior citizens above 75 years of age. Those among them who have only pension and interest income will not be required to file Income-Tax Returns (ITR).

Reopening of assessment: The time limit for reopening assessments under the Income-Tax Act has been reduced from six years to three.

The government also plans to set up a Faceless Dispute Resolution Committee to reduce litigations further for small taxpayers. Income-Tax Appellate Tribunal will also become faceless. It will also provide resolution online.

Better procedures for NRIs: Non-Resident Indians (NRIs) too can expect some relaxation. Currently, when they return to India, they face issues with accrued income in foreign retirement accounts. They also face hardships in getting credit for taxes paid in India in foreign jurisdictions. The FM has proposed alterations to double taxation rules to ease matters for NRIs.

A dispute resolution committee will be set up. Anyone with taxable income up to Rs 50 lakh and disputed income up to Rs 10 lakh can approach the committee in case of a dispute.

Sec 44AB audit limit has now been increased. The tTax audit limit was Rs 5 crore in 2020. To further incentivise and reduce the compliance burden on small and medium enterprises, the limit has been increased to Rs 10 crore.

Relief on dividend income: in the previous Budget, the dividend distribution tax was abolished. Dividend was made taxable in the hands of shareholders (from equities and equity mutual funds). To provide ease of compliance, dividend payment from real estate investment trusts (REITs) and infrastructure investment trusts has been exempted from tax deduction at source (TDS). Further, as the amount of dividend income cannot be estimated correctly by shareholders for paying advance tax, the Finance Minister has proposed that the advance tax liability on dividend income shall arise only after the declaration of payment of dividend.

In fact, another move that will make life easier for the taxpayer is the pre-filled ITR. Salary, tax payments, TDS is already pre-filled. Capital gains, dividend incomes, interest income will now be pre-filled.

Loans for affordable housing: The FM has also extended the time limit extended for sanction of housing loans. 80EEA is now extended to loans taken up to 31st March 2022. Section 80EEA offers deduction on interest paid on home loan for affordable housing. A deduction for interest payments up to Rs 1,50,000 is available under Section 80EEA. This deduction is over and above the deduction of Rs 2 lakh for interest payments available under Section 24 of the Income Tax Act.

Other things FM proposed were that notified infrastructure debt funds are eligible to raise funds by issuing Zero-coupon bonds. Also for those employers who deduct PF, but don't submit it to the authorities, will now face a penalty as such late deposits will not be allowed as a deduction for the employer.

FM proposed to review 400 more old exemptions this year through extensive consultations.

A revised customs duty structure will be introduced. and customs duty will be rationalised for gold and silver.

Affordable housing and rental housing: Affordable housing and rental housing: in the July 2019 Budget, the Finance Minister had provided additional deduction of Rs. 1.5 lakh for loan taken to purchase an affordable house. The eligibility of this condition is now being extended by one more year to March 31, 2022.

To keep up the supply of affordable housing, affordable housing projects can also avail a tax holiday for one more year till March 31, 2022.

The government also wants to promote the supply of rental housing for migrant workers. Therefore, in this budget it has proposed to allow tax exemption for notified affordable housing projects.

Pre-filling of returns: Pre-filling of returns: to ease compliance for taxpayers, details of tax payments, TDS, et cetera already come prefilled in income tax returns. To further ease filing of returns, details of capital gains on listed securities, dividend income, and interest from post office and bank instruments will also now be prefilled.

Employer contribution: Many employers deducted the contribution of employees towards Employee Provident Fund and superannuation fund, but do not deposit these contributions within the specified time. For these employees, this means a loss of interest. In cases where an employer becomes financially unviable, non-deposit results in permanent loss for employees. To ensure that employees' contributions are deposited on time, the late deposit of employees contributions by the employer will not be allowed as deduction to the employer.