Reforms/rebates for salaried staff

(The writer is a former Air Warrior. He can be reached at kamal.baruah@yahoo.com)

History reminded us the effects of World War I (1914-18) and World War II (1939-45) that would go on and on for months and years. After 75 years, another disaster emerged. Is Coronavirus conflict World War III? COVID-19 has shattered global economy. GDP growth remains negative. People have to endure loss of near and dear ones and suffer hardships due to health crisis. Are we in a time of great promise, or great peril?

Even developed countries were not spared from this unseen virus. India overcomes one of the lowest death rate /active cases from global pandemic. She provides free food grain to cooking gas and cash directly to hundreds of millions of the poor and needy under the PMGKY (Pradhan Mantri Garib Kalyan Yojana) and ANB (Atma Nirbhar Bharat) packages. Amid disaster, India developed two vaccines for the world. At the same time, Union Budget 2021 is prepared to raise and capture the economy for sustainable growth.

On 1st February, the Finance Minister presented the Digital Budget in the august House of the Parliament that brought significance steps towards Direct Tax proposals. To benefit taxpayers, government introduced a series of reforms/rebates in the recent past on the Direct Tax system that saw an increase in return filers. Also faceless assessment/appeal through video-conference give further boost to ease compliance and reduce litigation.

Computing taxable income is challenging that taxpayers face while filling Income Tax Returns (ITR) because some incomes are tax-free, some allow deductions. While celebrating India's 75th year of Independence, India propose to reduce compliance burden to senior citizens who are 75 years of age and above. It gives exemption from filing ITR for who have only pension and interest income while paying bank will deduct Tax Deduced at Source (TDS).

Government launches many initiatives like SWADES (Skilled Workers Arrival Database for Employment Support) scheme for jobs to returning Indians (NRI). They now set up non-profit ventures like NGOs and charity institutions to tackle socio-economic issues and want to make a difference to the society and bring change in a positive manner. Small charitable trusts running educational institutions and hospitals are now exempted the limit on annual receipts Rs 5 crore from Rs 1 crore. This budget also removes double taxation for NRIs in their accrued incomes after foreign retirement. Also it is exempted from audit up to Rs 10 crore for making digital transactions.

A tax holiday is extended for affordable housing for additional reduction of interest Rs 1.5 lakh. Income earned by high income employees including defence contributes various provident funds to avoid TDS. In order to rationalize tax exemption, it is now restricted to 2.5 lakh after 01.04.2021. Dividend payment is exempted from TDS for ease of compliance from the hands of shareholders. It extends the capital gains exemption for investment in start-ups for another year. Employees often lose interest or income as employers do not deposit contributions like PF, superannuation fund and other social security fund within the specified time. In such cases, it is not allowed as deduction to the employer now.

Non-filling of ITR by person whose TDS/TCS of Rs 50,000 or more is taken seriously as the rate shall be double of the specified rate or 5%, whichever is higher. Income tax slab remain same as last year. One can choose new tax regime to avail the various rate of tax where claiming of exemptions or deductions are not allowed. However, most of the middle class stick with old tax regime to avail various exemptions. We saw details of salary income, tax payments, TDS etc on pre-filling of returns last time. Now to further ease filling return, details of capital gains from listed securities, dividend income and interest from banks, post office etc., will also be pre filled in the coming year.

Income tax department makes our tax journey simpler and easier in this new era. It is seamless, faceless and paperless now. The campaigns for ITR "honoring the honest" get going now. It was just 6.48 crore Indian, who return filer in 2020. Let all fill their IT returns honestly and contribute in the development of our country. Even though awareness about tax rules has risen in recent years a lot of people still have misconceptions. This then ends up with the taxpayer making mistakes in their return.

Let us deduct Standard Deduction (50,000), P Tax, HRA, LTC, Interest on self-occupied House Property (up to 2 lakh), Family Pension (15,000), 80C to 80U, 87A (12,500 for income up to 5 lakh) 80TTA/80TTB Interest on Saving and FDR (up to 10,000 for Senior Citizen up to 50,000) and get the proud filer badge now. Hope we can file ourselves an error-fee income tax return by next time. We salaried personnel have I. Taxded at payslip to worry about, not forgetting another 4% of income leviable as health and education cess.

Despite all efforts, only 14 paisa upon a rupee come from Income Tax, while 9 paisa goes for subsidies which is higher than pensions (5 p), centrally-sponsored scheme (9 p) and defence (8 p) expenditure. But 15 p from GST is surely a blessing for Rupee Comes from. India now anticipate to borrow big for nearly half-trillion dollar budget to recover from the country's deepest-ever recession.