What the Union budget means for you
The only exception is the retired senior citizen who is not claiming deductions like the standard deduction, tax saving investments or house rent allowance
Budget 2021 did not make any changed to slab rates or major deductions leaving the choice between old and new regime much the same as last year. The old regime is beneficial for most types of profiles that we considered. The only exception is the retired senior citizen who is not claiming deductions like the standard deduction, tax saving investments or house rent allowance.
What's in it for corporates
The infra push
Government spends on infrastructure projects like roads, public transport and ports will have a multiplier effect, taking consumer goods to rural markets. As India’s consuming class grows, better infrastructure will help drive both online and offline consumption. Commercial vehicle makers will benefit as demand for trucks, tractors and buses will get a boost.
Bad bank’s good
The plan to create an institutional framework to develop the bond market will encourage corporate entities to tap the domestic bond market and reduce dependence on banks. This will benefit companies looking for funds for expansion and other purposes. The proposal to form a ‘bad bank’ will free up banks from their non-performing asset problems and increase lending to corporates.
On the road
Introducing voluntary vehicle scrappage and improving urban transportation will up demand for passenger and commercial vehicles and two-wheelers. This is a big stimulus for the auto sector which has been facing a slowdown for two years. Vehicle scrappage policy and the proposed green tax could result in increased investment by companies.
No new taxes
There’s no new tax on corporate India. Companies will not have to worry about the impact on their financials at a time when they’ve been challenged by the Covid-19 induced economic downturn. The Centre was expected to impose a covid cess on corporate earnings to cover revenue shortfall. The sharp rise in import duty on certain goods like spare parts for auto and aviation might impact negatively.
What’s in it for consumers
Complying is easier
Three tax compliance changes stood out. Seniors aged 75 or more won’t need to file IT returns if they have only pension and interest income. Two, income from capital gains, dividends and interest would be available in pre-filled tax forms. On the flip side, the deadline for filing revised and belated returns is down three months (31 Dec of an assessment year).
Depositor protection
Depositors can now get access to funds even if the RBI puts operational restrictions on a bank. This will be made possible by amendments to the Deposit Insurance and Credit Guarantee Corporation Act, 1961. The payment would be through deposit insurance and the maximum pay out a depositor would get is ₹5 lakh. The limit was raised five times in the last Budget
PF exemptions limited
Interest on contributions to Employees Provident Fund, Voluntary Provident Fund and exempted PF trusts could now be taxed if your contributions exceed ₹2.5 lakh. Until now, interest earned on contributions to different types of PF was tax-free. If your contribution exceeds ₹20,833 a month, be ready to pay tax on the interest earned on any amount above this limit.
More tax certainty
The period for re-opening of income tax assessment has been reduced to three years from the existing six years. Only in cases where the assessing officer has evidence that the taxpayer has deliberately hidden income or assets above ₹50 lakh can tax assessments can be re-opened. But, in this case too, cases can’t be re-opened after 10 years.
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First Published:2 Feb 2022, 02:13 AM IST
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