Budget 2021: Top 5 income tax changes individual taxpayers

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The Union Budget for 2021-22 was announced by Finance Minister Nirmala Sitharaman on February 1. Although the Budget focuses on healthcare, infrastructure and other sectors, it fails to provide any particular relief to the middle class in terms of income tax exemption.Budget

Take a look at the top 5 changes announced by Nirmala Sitharaman in Budget 2021:

1. No income tax filing required by citizens above 75 years

Sitharaman announced that senior citizens above the age of 75 years, whose source of income is only pension and interest, will be exempted from filing income tax returns. These senior citizens will be exempted from filing an ITR if they fulfill certain conditions. If the interest income is earned in the same bank where the pension is deposited, the senior citizen will then be exempted from filing ITR.

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2. EPF contribution

After April 1, 2021, interest on the Employee’s share of the Provident Fund (PF) exceeding ₹2.5 lakh will be taxable at the stage of withdrawal in any year. This will lead to additional tax liability, especially for high net worth (HNIs) individuals, who make higher contributions, and will also discourage voluntary provident fund (VPF) contributions.

3. Time limit for filing delayed income tax return to be reduced by 3 months

The last date to file a revised income tax return or belated return on a voluntary basis will now be after the close of the financial year instead of the earlier date of March 31, 2022.

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4. Tax holiday on affordable housing extended

The Finance Minister has proposed that affordable housing projects can avail a tax holiday for one more year, till March 31, 2022. This is to keep up the supply of affordable houses. Additional interest deduction of Rs 1.5 lakh for loans taken to purchase an affordable house will now be eligible for loans taken up to March 31, 2022.

5. Higher TDS for non-filers of income tax returns

There is a new provision proposed in the Budget 2021- Section 206AB in the Income Tax Act, which provides for a higher rate for tax deducted at source (TDS) for the non-filers of income tax return. The proposed TDS rate in this section will be higher of- twice the rate specified in the relevant provision of the Act, or twice the rate or rates in force, or the rate of 5%.