Presenting the Union Budget 2021 in Parliament, Union Finance Minister Nirmala Sitharaman said that the senior citizens who only have pension and interest income are exempted from filing the tax returns. “In the 75th year of Independence of our country, we shall reduce compliance burden on senior citizens. For senior citizens who only have pension and interest income, I propose exemption of filing of income tax returns,” she said.
The Finance Minister also announced that the NRIs will be spared from double taxation. “New rules to be notified, she said. Sitharaman also announced that Tax audit limit has been increased from Rs 5 crore to Rs 10 crore.
Also, Sitharaman said that the reassessment will be opened for 10 years only if evidence of concealment of income of Rs 50 lakh or more in a year will be found. “In serious tax evasion cases, only where there is evidence of concealment of income of Rs 50 lakh or more in a year, can reassessment be opened for 10 years. For others, assessment reopening only for 3 years.”
In 2020-21, a significant cut in the tax rates for the salaried class was announced, which, Sitharaman said, was to simplify the tax regime which was riddled with multiple exemptions and needed taxpayers to take the help of the professionals. Last year’s announcement ushered in a new tax regime where the taxpayer got the option of taking new rates without exemptions or sticking to old rates with exemptions.
As per the tax rates last year, income under Rs 2.5 per annum remained untaxable as it was earlier. Also, a tax of 5% was announced on income between Rs 2.5 to Rs 5 lakh and 10% for those earning between Rs 5 – Rs 7.5 lakh per annum, which were earlier 20 per cent. The Finance Minister had also proposed 15 per cent tax for those earning between Rs 7.5 lakh to Rs 10 lakh per annum and had said that those earning between Rs 10 lakh to Rs 12.5 lakh per annum will now have to pay 20 per cent tax. Earlier it was 30 per cent. The new tax rate applicable to those earning in the range of Rs 12.5 lakh per annum to Rs 15 lakh per annum was set at 25 per cent and 30 per cent tax was announced for salaries above Rs 15 lakh per annum.