While the 75th Union Budget did not provide any specific relief to individuals, it has, without doubt, aimed to ease the compliance process within the Income Tax regime for taxpayers. The changes include pre-filled ITRs, ULIP getting taxed, HNI getting taxed, among others.
The pre-filled option for your ITR filling will now include capital gains and investment details along with your basics details, salary details, TDS and advance tax details to ease the income tax compliance process. These capital gains details would include transactions from listed securities, banks and post offices etc.
In light of reducing the hardship faced by senior citizens, Finance Minister Nirmala Sitharaman in the 75th Union Budget proposed that citizens of age 75 and above be exempted from filing ITR. Such exemption can be availed by only senior citizens who have their income source as pension funds and bank interest where appropriate taxes are duly deducted.
The tax holiday on affordable housing has been extended to March 31, 2022. This holiday provides you with an opportunity to avail of an additional deduction on account of housing interest under section 80EEA of Rs.1,50,000/- on fulfiling all the prerequisite.
You might avail of this deduction after exhausting the limit of Rs.2,00,000/- under section 24.
The budget proposed to bring high premium Unit Linked
Insurance Policy (ULIP) under tax bracket; thus, investing in ULIPs would now yield only limited exemption. This restrains the large investors from entire tax-free proceeds of ULIPs. Currently, individuals having an aggregate premium of ULIPs exceeding Rs.2,50,000/- will subject to capital gains on their profits as though they were equity-oriented mutual funds.
The budget further proposed an exemption to cash allowance instead of Leave Travel Concession (LTC) due to pandemic. This amendment is proposed to be for the year ending March 31, 2021, only. Also, interest on an employee’s contribution towards EPF will be taxed at the time of withdrawal; if the said interest crosses the limit of Rs.2,50,000/- in any year. This will help the government tax the high net worth individuals (HNI) as they make immense contributions.