Budget seeks to make life easier for the aged and small biz; tax slabs unchanged
Housing loans will be allowed as a deduction till March 31, 2022
In an overall gloomy year, Indian cricket’s Australia outing proved a beacon dissipating the darkness. So it is fitting that I start with a cricketing analogy for Budget 2021, and say that like the Indian Test cricket team in Australia, our Finance Minister Nirmala Sitharaman, has gone for the win and not a draw.
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Let us unlock Budget 2021 highlights and its effect on lives and the economy.
There are no tax audits needed for companies with a turnover of up to Rs 10 crore provided they have undertaken more than 95 per cent transactions digitally. Representation pic
The silver haired set above 75, some with business income or capital gains, will need to file tax returns. The proposed amendment benefits those who have only Fixed Deposits (FDs) or interest-bearing returns or are drawing pensions. I call this the SS factor, small but significant. This may be a small step but it not just factors in, but also honours this demographic.
Limiting the reviews to only three years instead of the earlier provision of six years is path breaking. This had often become a tool creating unnecessary administrative burden on the assesses, leading to uncertainty and posing as a threat. There are exceptions of course like in a situation of identified concealment where the review can be up to 10 years, though that is understandable.
Sizzling start
Start-ups are sizzling, and the sentiment is justified as Non-Resident Indians (NRIs) come to India, set up a start-up, initiate business and enjoy the benefit of lower tax rates. One does not need to stay in India for 182 days, you can run a one-person business staying in India for 120 days and obtain an extended tax holiday of one more year too. The period of stay had discomfited NRIs who wanted to visit India. This will enhance confidence, thus drawing fresh seed capital.
There are no tax audits needed for companies with a turnover of up to Rs 10 crore provided they have undertaken more than 95 per cent transactions digitally. The definition of small companies under the Companies Act has changed to several small companies with a paid-up capital up to Rs 2 crore and turnover up to Rs 20 crore. Faceless assessments have now been extended to Faceless Tax tribunal hearings to simplify the process.
Banking on...
Shine the spotlight on banks going kaput, and with it the common man’s dreams going up in smoke. In tragic extreme scenarios, lives have ended because of financial hardship.
Now all significant NPAs of PSU banks will be taken out into another Junk or Bad loan structure, like in the West, and which will be separately auctioned, making our banks stronger for depositors. If a bank goes bust, depositors will be entitled to withdraw deposits during the intervening period when such banks are facing a liquidity crisis. Such withdrawals will be limited to DICGC cover, which is currently R5 lakh.
House wows
For Mumbai, the hot button issue is housing. Affordable housing loans and interest thereon will be allowed as a deduction till March 31, 2022 and continue to be an advantage to push housing sales, and the real estate sector. With the COVID-19 crisis, the focus now shifts to another H, health, and a 137% increase in the expenditure for the health care sector shows that the New India is undaunted by the financial blows of the pandemic, which has crippled economies around the world. If there is one worry factor that needs attention, it is the possibility of inflation. Looking at the bigger picture, there is vision and courage in this budget and the timing is spot on. All those sterling qualities are nothing though, if not backed by immaculate execution. The vaccine has been created but it is over to the FM to inject the growth jab the economy has been waiting for.
Mitil Chokshi is a Chartered Accountant (CA) and a senior partner in Chokshi and Chokshi, India
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