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Union Budget 2021 From Taxation Perspective : NRI Perspective

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SMEStreet Edit Desk
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CBDT, Taxation

Tax Proposals

Vision of a transparent, efficient tax system to promote investments and employment in the country with minimum burden on taxpayers

  1. Direct Taxes

Achievements:

  • Corporate tax rate slashed to make it among the lowest in the world
  • Burden of taxation on small taxpayers eased by increasing rebates
  • Return filers almost doubled to 6.48 crore in 2020 from 3.31 crore in 2014
  • Faceless Assessment and Faceless Appeal introduced

Relief to Senior Citizens:

 

  • Exemption from filing tax returns for senior citizens over 75 years of age and having only pension and interest income; tax to be deducted by paying bank

Reducing Disputes, Simplifying Settlement:

 

  • Time limit for re-opening cases reduced to 3 years from 6 years
  • Serious tax evasion cases, with evidence of concealment of income of Rs. 50 lakh or more in a year, to be re-opened only up to 10 years, with approval of the Principal Chief Commissioner
  • Dispute Resolution Committee to be set up for taxpayers with taxable income up to Rs. 50 lakh and disputed income up to Rs. 10 lakh
  • National Faceless Income Tax Appellate Tribunal Centre to be established
  • Over 1 lakh taxpayers opted to settle tax disputes of over Rs. 85,000 crore through Vivad Se Vishwas Scheme until 30th January 2021

Relaxation to NRIs:

  • Rules to be notified for removing hardships faced by NRIs regarding their foreign retirement accounts

Incentivising Digital Economy:

  • Limit of turnover for tax audit increased to Rs. 10 crore from Rs. 5 crore for entities carrying out 95% transactions digitally

Relief for Dividend:

  • Dividend payment to REIT/ InvIT exempt from TDS
  • Advance tax liability on dividend income only after declaration/ payment of dividend
  • Deduction of tax on dividend income at lower treaty rate for Foreign Portfolio Investors

Attracting Foreign Investment for Infrastructure:

  • Infrastructure Debt Funds made eligible to raise funds by issuing Zero Coupon Bonds
  • Relaxation of some conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment

Supporting ‘Housing for All’:

 

  • Additional deduction of interest, up to Rs. 1.5 lakh, for loan taken to buy an affordable house extended for loans taken till March 2022
  • Tax holiday for Affordable Housing projects extended till March 2022
  • Tax exemption allowed for notified Affordable Rental Housing Projects

Tax incentives to IFSC in GIFT City:

 

  • Tax holiday for capital gains from incomes of aircraft leasing companies
  • Tax exemptions for aircraft lease rentals paid to foreign lessors
  • Tax incentive for relocating foreign funds in the IFSC
  • Tax exemption to investment division of foreign banks located in IFSC

Ease of Filing Taxes:

  • Details of capital gains from listed securities, dividend income, interest from banks, etc. to be pre-filled in returns

Relief to Small Trusts:

  • Exemption limit of annual receipt revised from ₹1 crore to ₹5 crore for small  charitable trusts running schools and hospitals

Labour Welfare:

 

  • Late deposit of employee’s contribution by the employer not to be allowed as deduction to the employer
  • Eligibility for tax holiday claim for start-ups extended by one more year
  • Capital gains exemption for investment in start-ups extended till 31st March, 2022

Indirect Taxes

GST:

 

  • Measures taken till date:
  • Nil return through SMS
  • Quarterly return and monthly payment for small taxpayers
  • Electronic invoice system
  • Validated input tax statement
  • Pre-filled editable GST return
  • Staggering of returns filing
  • Enhancement of capacity of GSTN system
  • Use of deep analytics and AI to identify tax evaders

Custom Duty Rationalization:

 

  • Twin objectives: Promoting domestic manufacturing and helping India get onto global value chain and export better
  • 80 outdated exemptions already eliminated
  • Revised, distortion-free customs duty structure to be put in place from 1st October 2021 by reviewing more than 400 old exemptions
  • New customs duty exemptions to have validity up to the 31st March following two years from its issue date

Electronic and Mobile Phone Industry:

 

  • Some exemptions on parts of chargers and sub-parts of mobiles withdrawn
  • Duty on some parts of mobiles revised to 2.5% from ‘nil’ rate

Iron and Steel:

 

  • Customs duty reduced uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels
  • Duty on steel scrap exempted up to 31st March, 2022
  • Anti-Dumping Duty (ADD) and Counter-Veiling Duty (CVD) revoked on certain steel products
  • Duty on copper scrap reduced from 5% to 2.5%

Textiles:

 

  • Basic Customs Duty (BCD) on caprolactam, nylon chips and nylon fiber & yarn reduced to 5%

Chemicals:

 

  • Calibrated customs duty rates on chemicals to encourage domestic value addition and to remove inversions
  • Duty on Naptha reduced to 2.5%

Gold and Silver:

 

  • Custom duty on gold and silver to be rationalized

Renewable Energy:

 

  • Phased manufacturing plan for solar cells and solar panels to be notified
  • Duty on solar invertors raised from 5% to 20%, and on solar lanterns from 5% to 15% to encourage domestic production

Capital Equipment:

 

  • Tunnel boring machine to now attract a customs duty of 7.5%; and its parts a duty of 2.5%
  • Duty on certain auto parts increased to general rate of 15%

MSME Products:

 

  • Duty on steel screws and plastic builder wares increased to 15%
  • Prawn feed to attract customs duty of 15% from earlier rate of 5%
  • Exemption on import of duty-free items rationalized to incentivize exporters of garments, leather, and handicraft items
  • Exemption on imports of certain kind of leathers withdrawn
  • Customs duty on finished synthetic gem stones raised to encourage domestic processing

Agriculture Products:

 

  • Customs duty on cotton increased from nil to 10% and on raw silk and silk yarn from 10% to 15%.
  • Withdrawal of end-use based concession on denatured ethyl alcohol
  • Agriculture Infrastructure and Development Cess (AIDC) on a small number of items

Rationalization of Procedures and Easing of Compliance:

 

  • Turant Customs initiative, a Faceless, Paperless, and Contactless Customs measures
  • New procedure for administration of Rules of Origin

 

Achievements and Milestones during the COVID-19 pandemic

 

  • Pradhan Mantri Garib Kalyan Yojana (PMGKY):
    • Valued at Rs. 2.76 lakh crore
    • Free food grain to 80 crore people
    • Free cooking gas for 8 crore families
    • Direct cash to over 40 crore farmers, women, elderly, the poor and the needy
  • AatmaNirbhar Bharat package (ANB 1.0):
    • Estimated at Rs. 23 lakh crore – more than 10% of GDP
  • PMGKY, three ANB packages (ANB 1.0, 2.0, and 3.0), and announcements made later were like 5 mini-budgets in themselves
  • Rs. 27.1 lakh crore worth of financial impact of all three ANB packages including RBI’s measures – amounting to more than 13% of GDP
  • Structural reforms:
    • One Nation One Ration Card
    • Agriculture and Labour Reforms
    • Redefinition of MSMEs
    • Commercialisation of the Mineral Sector
    • Privatisation of Public Sector Undertakings
    • Production Linked Incentive Schemes
  • Status of India’s fight against COVID-19:
    • 2 Made-in-India vaccines – medically safeguarding citizens of India and those of 100-plus countries against COVID-19
    • 2 or more new vaccines expected soon
    • Lowest death rate per million and the lowest active cases

 

2021 - Year of milestones for Indian history

 

  • 75th year of India’s independence
  • 60 years of Goa’s accession to India
  • 50 years of the 1971 India-Pakistan War
  • Year of the 8th Census of Independent India
  •  India’s turn at the BRICS Presidency
  • Year for Chandrayaan-3 Mission
  • Haridwar MahaKumbh

 

Vision for AatmaNirbhar Bharat

  • AatmaNirbharta – not a new idea – ancient India was self-reliant and a business epicentre of the world
  • AtmaNirbhar Bharat – an expression of 130 crore Indians who have full confidence in their capabilities and skills
  • Strengthening the Sankalp of:
    • Nation First
    • Doubling Farmer’s Income
    • Strong Infrastructure
    • Healthy India
    • Good Governance
    • Opportunities for Youth
    • Education for All
    • Women Empowerment
    • Inclusive Development
  • 13 promises made in the Union Budget 2015-16, and resonating with the vision of AatmaNirbharta, to materialise during the AmrutMahotsav of 2022 – on the 75th year of our independence
Taxation Union Budget 2021