Union Finance Minister Nirmala Sitharaman presented Union Budget 2021-22 in Parliament today. While she made no changes to the income tax slabs, other announcements were done that can affect one's personal finances.

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Here are some of them:

Relief to Senior Citizens

In order to ease the compliance burden on senior citizen pensioners who are of 75 years of age or above, Budget 2021 proposed to exempt them from the requirement of filing an income tax return (ITR) if the full amount of tax payable has been deducted by the paying bank. This exemption is

proposed to be made available to such senior citizens who have only interest income apart from the pension income.

Pre-filing of income tax return (ITR)

The government on Monday said that details of salary income, tax payments, TDS, etc. will already come pre-filled in income tax returns.

To further ease filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also be pre-filled.

Tax incentives for Affordable Housing

In order to incentivize the purchase of the affordable house, FM proposed to extend the eligibility period for a claim of the additional deduction for the interest of Rs 1.5 lakh paid for the loan taken for the purchase of an affordable house to March 31, 2022.

This means, buying a home priced below Rs 45 lakh could fetch the buyers' tax exemptions up to Rs 1.5 lakh on the interest paid towards the loan in question.

Relaxation to NRI for Income of Retirement benefit account

In order to remove the genuine hardship faced by the NRIs in respect of their income accrued on foreign retirement benefit account due to a mismatch in taxation, Budget 2021 proposed to notify rules for aligning the taxation of income arising on foreign retirement benefit account.

Rationalisation of taxation of Unit Linked Insurance Plan (ULIP)

Budget 2021 proposed to allow tax exemption for maturity proceed of the ULIP having annual premium up to Rs 2.5 lakh. However, the amount received on death shall continue to remain exempt without any limit on the annual premium. The cap of Rs 2.5 lakh on the annual premium of ULIP will be applicable only for the policies taken on or after February 1, 2021.

Further, in order to provide parity, the nonexempt ULIP shall be provided the same concessional capital gains tax regime as available to the mutual fund.

Interest earned on annual PF contribution over Rs 2.5 lakh to be taxable

In order to rationalize tax exemption for the income earned by high-income employees, the Union Finance Minister Nirmala Sitharaman while presenting Budget 2021, proposed to restrict tax exemption for the interest income earned on the employees’ contribution to various provident funds to the annual contribution of Rs 2.5 lakh.

"This restriction shall be applicable only for the contribution made on or after April 1, 2021," FM said.

In simple words, this means that the interest earned on the annual provident contribution above Rs 2.5 lakh will be taxable.

According to experts, Rs 2.5 lakh annual threshold means that a person contributing up to Rs 20,833 a month to PF (basic salary of up to Rs 1.73 lakh a month) will escape the tax.

Exemption for Leave Travel Concession (LTC)

In order to provide relief to employees, it is proposed to provide tax exemption to the amount given to an employee in lieu of LTC cash scheme subject to incurring of specified expenditure.

For full coverage on Budget 2021, click here

First Published:Feb 1, 2021 6:07 PM IST