Hello Readers!!

We are in a new year, a new session, and with this soon we will get to hear our Union Budget with new provisions to improve our economy for the fiscal year 2021-22. 

Last year, the pandemic proves to be a turmoil for country’s finances and GDP, so, it is generous that people from different section of our country have hold a lot of hopes from the Union Budget 2021-22 and our honorable finance minister Smt. Nirmala Sitharaman. 

The Union Budget 2021-22 is predicted to be announced in February 2021. With the date coming near, people related to different section and sector are putting their views for new provision for the budget. Various industry associations and taxation experts have been making suggestions to the finance minister for easing the burden on taxpayers.

Here are some key recommendations given by the Bombay Chartered Accountants' Society, Indian Merchants Chambers (IMC) of Commerce and Industry and the Association of Mutual Funds of India (AMFI) to the finance ministry.

Real Estate!

People from this sector have suggested to permit deduction for society maintenance and other monthly charges paid against rental income to ensure only real income is charged. 

Also, you need to purchase or construct a fresh property within two years to set off the capital gains earned on the sale of an old property.

Currently tax deductions for capital gains earned from selling a house under Section 54F are available only if the new house construction is completed in three years. But experts say that due to pandemic and lockdown the projects were stopped, and so they do not get completed in three years. Thus they suggested it is essential to amend this section and increase the period to five years as the tax liability is significant and filing an appeal is a time consuming and costly affair for any lay man. 

Extension Of Limits!

Experts say that the tax exemption limits mentioned under many provisions have not been amended since they were set in 1990’s and early 2000. Thus, there is a need to enhance them now. The limits for clubbing of minor's income (1500), gifts (Rs 50,000), amount received after voluntary retirement (Rs 5 lakh), interest-free loan perquisite (Rs 20,000), medical treatment outside India (Rs 2 lakh), children's education allowance (Rs 100 per month),  children's hostel allowance (Rs 300 per month) and Mediclaim (Rs 25,000 self and Rs 50,000 for senior citizen parents) need to be enhanced.

Advance Tax! 

As per the current provisions for advance tax, the total income for the year must be calculated and a percentage of the total tax for the whole year must be paid in each quarter (15 percent by June 15, 45 percent by September 15).

Now, due to COVID-19 and the fact that people have been working from home and business has been affected, experts say that it is difficult for taxpayers, especially those who are self-employed and freelancers, to predict the annual income, by June 15.

Also, anyone earning more than Rs 10,000 needs to pay the advance tax, failing which an interest is applicable from the June quarter up to the final tax payment. The threshold should be enhanced to Rs 1 lakh; some associations have in fact asked for advance tax requirement to be done way with, completely.

Make mutual funds’ taxation on par with ULIPs

Although unit-linked insurance plans (ULIP) are market-linked investment products plus insurance package, they are more tax-efficient than mutual funds. AMFI (Association of Mutual Funds in India) wants tax parity between mutual funds and ULIPs. They have proposed that the income threshold for TDS deduction for dividends be raised from Rs 5,000 to Rs 50,000.

Well, after the pandemic and lockdown made country’s and individual’s finances turn upside down in the year 2020, it will be interesting to watch what special announcement and provisions, finance ministry is going top add in the Union Budget for the fiscal year 2021-22, to boost up Country’s and individual’s finances. 

For any kind of query you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible. 

Happy Investing!

(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).