Union Budget for F.Y. 2021-22: Direct Tax, GST, MCA, Companies Act, LLP Act, and General Proposals.

Union Budget 2021

General Proposals:-

  • First digital Budget in the history of India
  • Vehicle Scrapping Policy. Vehicle Fitness Test after 20 years in case of Personal vehicle and 15 years in case of commercial vehicles
  • Rs. 64,180 crores allocated for New Health Schemes.
  • Rs. 35,000 crores allocated for Covid Vaccine.
  • 7 Mega Textile Investment parks will be launched in 3 years.
  • Rs. 5.54 lakh crore provided for Capital Expenditure.
  • Rs. 1.18 lakh crore for the Ministry of Roads.
  • Rs. 1.10 lakh crore allocated to Railways.
  • Proposal to amend Insurance Act. Proposal to increase FDI from 49% to 74 %.
  • Deposit Insurance cover (DICGC Act 1961 to be amended). Easy and time-bound access of deposits to help depositors of stress banks.
  • Proposal to revive definition of ‘Small Companies’ under Companies Act 2013. Capital less than 2 Cr. and Turnover Less than 20 Cr.
  • IPO of LIC, Announced : Disinvestment of Companies will be completed in FY 2021-22

Direct Tax Proposals:-

  1. Our Tax system should be transparent and efficient.
  2. Relief for Senior Citizens: 75 years and above with only Pension and Interest – No need to file Return. TDS will be deducted.
  3. The time limit to reopen cases reduced from 6 years to 3 years. In serious cases ie 50 lakhs or more 10 years.
  4. A dispute resolution committee shall be set up for small taxpayers with Income up to 50 lakhs and disputed income up to 10 lakhs.
  5. All communication with ITAT shall be electronic providing for faceless appeal at ITAT
  6. NRIs will get relief from difficulties due to differences in fiscal year and claims of the foreign tax credit.
  7. Tax audit limit of 5 crores for assessee having more than 95% receipts and payments non-cash increased to 10 crores.
  8. No TDS on dividend paid to REIT and INVIT.
  9. Advance Tax on dividend income shall arise only after the declaration of the dividend and foreign investors shall be eligible for lower TDS.
  10. Infrastructure Debt Funds shall be allowed to issue Zero Coupon Bond.
  11. Housing Loan interest deduction u/s 80EEA extended by one year for loans up to 31/3/22.
  12. Deduction for housing project u/s 80IBA extended for one more year up to 31/3/22.
  13. Tax Exemption shall be provided for rental housing.
  14. IFSC shall be eligible for a tax holiday on Capital Gains.
  15. Income Tax return prefill option shall include Capital Gains on listed securities, Dividend, Interest from Banks and Post office.
  16. The turnover limit for 10(23C) exemptions for educational and medical trusts shall increase from 1 crore to 5 crores.
  17. Late deposit of Employee Contribution to funds shall be disallowed for the employer.
  18. Deduction u/s 80IAC for startups shall be extended up to 31/3/22. Exemption for investment in start-up shall also be extended for one year.

MCA, Companies Act, LLP Act Proposals:-

  • Easing Compliance requirements of Small Companies – Threshold increased to Share Capital up to Rs.2 crore and Turnover up to Rs.20 crore will be Small Companies.
  • Allow One Person Companies (OPC) to grow without any restriction in Share Capital or Turnover.
  • NRIs will be allowed to set-up OPCs. Presence in India of 120 days in a year enough to start an OPC.
  • Launching MCA Version 3.0 – E-Scrutiny, E-Adjudication, and Compliance management to be simplified.
  • Decriminalization of LLP Act, 2008.
  • Tribunals to be rationalized.

Budget Documents:-

  1. Finance Bill 2021
  2. Memorandum 2021
  3. Budget Speech 2021
  4. Key to Budget Document, 2021.

Major GST proposals from Finance Bill, 2021

  1. Amendment in Section 50, to implement interest applicability on Net cash liability basis retrospectively w.e.f 01.07.2017
  2. Amendment in Section 16 mandating supplier to report invoices or debit notes in GSTR-1 for availing ITC.
  3. Section 35 and 44 amendments to remove GSTR-9C for all taxpayers. Taxpayers shall file self-certified reconciliation statement along with an annual return.
  4. Amendments in Section 16 of IGST Act – zero-rated supplies:-
    • Only one option to export – Without payment of tax. In case of non-realization of consideration for export of goods, any refund shall be paid back along with interest
    • Export with payment of tax available only for notified suppliers notified supplies
    • Supplies to SEZ unit/developer only for authorized operations will be considered as zero-rated supplies and are eligible for refund
  5. Note:- The effective date of these provisions shall be notified later (probably from 01.04.2021)

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