Union budget 2020-21: What is New to Employees and Business - K. Rahual, 9096242452.
FM Nirmala Sitaraman yesterday presented Union budget 2021 before the parliament and nation experienced instant positive impact on share market. It is boosted beyond the expectations but it is not a criteria to decide effectiveness of budget. It is also far away from expectations of employee, farmer and common people. Boost in share market implies government proposed total privatization and liberalization in all sectors and sections of Indian economy. So it is not a criteria to judge effectiveness of budget. So it is necessary to go section wise impact of budget.
# Union Budget and employee's:
This budget is silent over the tax slabs, deductions from the salary income and fail to meet the minimum requirements of the employees class. Employees were expecting tax slab benefits and increase in limit of deductions under section 80C, but there is no change in the tax rates, slabs and deduction limit. like previous financial year employees can choose old one or new one to calculate tax liability.
In addition to these budget also proposes some new additional deduction benefits from salary, under other section of Income Tax Act, 1961. they are as given below:
1. Contribution to National Pension Scheme upto Rs. 50,000/- is exempt from tax.
2. Payment to Mediclaim insurance scheme up to Rs. 25,000/- is exempt from tax.
3. Interest on saving bank account with bank or post office up to Rs. 10,000/- is exempt from tax.
4. Interest earned on NRO saving bank account up to Rs. 50,000/- is exempt from tax.
5. Interest earned on fixed deposit is fully exempt from tax for Senior citizen.
6. Interest on loan taken for education purpose is fully exempt for first 8 years of repayment.
7. Up to Rs. 75,000/- is exempt from tax for disabled assessee.
8. Interest on loan taken to purchase electronic vehicle is exempt from tax up to Rs. 1,50,000/-
Tax benefits for Income from House Property:
From financial year 2021-22, housing loan taken from employer, friend or private money lender is applicable for deduction but limited to interest amount of loan and not for the principal amount. interest paid on such housing loan taken for Pre-construction period is applicable for deduction in five equal installments.
[Note : Certificate of interest should be compulsory produced by assessee.]
Loss from House Property can be adjusted with other income is now capped to Rs. 2,00,000/-.
Other :
* Provident fund withdrawal after 5 years or more in continued service is tax free.
* Accumulated interest on Provident fund account is taxable at the time of retirement.
* If annual Provident fund contribution of employees is exceeds Rs. 2,50,000/-, interest on such above contribution is taxable at the time of withdrawal.
* Gratuity received after 5 years of completion of services is exempt from tax if amount of gratuity is up to Rs. 20,00,000/-, excess will be taxable.
[Note : If employer is fail to deposit PF and ESIC amount to concern office within stipulated time period, same amount is taxable in the hands of employer.
Tax Benefits for Business:
> 100% tax holidays are declared for "Start Up Business" , up to 31st March, 2022.
> The business or service organization, whose revenue from business or service activities is Rs. 10 Crore or less, is exempt from tax audit; subject to more than 90% revenue arises from digital transactions.
> If any assessee intentionally hide taxable income (which is Rs. 50,00,000/- or more), can be reassessed from previous 11 years instead of 7 years.
- K. Rahul, 909624252.
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