In part B of her speech, while presenting the Union Budget for the fiscal year 2021-22, Finance Minister Ms. Nirmala Sitharaman says that the digital budget focuses on the contraction in the economy due to the pandemic. Hence, it is designed to support the economy for sustainable growth. In the 75th year of independence, the budget was themed around making India self-reliant and promoting its Aatmanirbhar campaign.

Ms. Sitharaman highlights the points and changes in relation to the direct tax system of the country. Considering the 130 crore Indians, the suggested changes in the present tax regime were stressing to make regulations simpler, promote investment income, and decrease the tax compliance burden on the taxpayers. While no changes in the Income Tax slabs were presented, the budget did highlight more critical measures like faster tax proceedings and income tax exemptions for the senior citizens and NRIs. 

1. Tax filing relief for senior citizens

To begin with, one of the most important points presented in budget 2021 was advocating a hassle-free life for the elderly by scrapping the income tax filings for senior citizens above 75 years of age. This relief ensures less compliance burden on those above 75 years who only have a pension and interest income.

2. Faceless assessment and appeal 

In addition to its digital format, Budget 2021 gives a push to faceless assessment and appeal for the ease of compliance and reduced discretion. It proposes to set up a dispute resolution committee where the eligibility criteria for approaching is anyone with a taxable income of up to Rs 50 lakh and disputed income up to Rs 10 lakh. The finance minister highlights the move of going faceless by mentioning its importance for reducing the litigation for small tax-payers and to ensuring efficiency, transparency, and accountability in the process. 

3. Faster Income Tax proceedings

Another important step was taken by the government in respect to reducing the time for income tax proceedings. Keeping in mind the uncertainty that a taxpayer goes through, a faster tax resolution is suggested by decreasing the time limit for reopening of assessments under Income Tax returns to 3 years from the existing 6 years. While, in serious tax evasion cases, the limit is for 10 years for income concealment of Rs 50 lakh or more in a year.

4. Change in Double Taxation for NRIs

Highlighting the issues faced by non-resident taxpayers with their accrued incomes in foreign retirement accounts due to the mismatch in the taxation period. The Government understands the difficulty they face in getting credit for the Indian taxes in foreign jurisdictions. Hence, they suggest notifying rules for removing the hardships of NRIs with double taxation.

5. Pre-filled Tax Forms

Easing the tax paying process for its citizens, we now will have pre-filled tax forms. Apart from tax deduction at source details, the pre-filing of returns will now have details about capital gains from listed securities, interests from banks and post offices, dividend income, etc.

Union budget 2021 is not only digital and paperless but one of its kind in many regards. From advocating an Aatmanirbhar Bharat Budget to focusing on vaccines and healthcare for a healthier and productive India to being the first country globally to provide Social Security Benefits to the Gig and platform workers, the 9th budget by the Modi Government is unique in its own way. 

For the government, the path to increase tax revenue is mainly outlined through increased receipts and improved compliance. As mentioned by the finance minister, the crucial element is to make the tax system more transparent and efficient. By ensuring to make the tax regime simpler, India’s jurisdiction becomes more predictable for doing business. Therefore, creating an optimistic scenario for MSMEs and Startups who have severely been hit by the COVID-19 pandemic. 

The direct taxation part in the budget is sketched to promote investments and employment in the country by ensuring minimum burden on the tax-payers. The ‘ease of doing business’ ranking of India globally is also likely to improve with these changes suggested in the Aatmanirbhar Bharat Budget. 

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