While some big sops are always expected by taxpayers, the Budget has sort of left taxpayers high and dry with hardly any relief in their taxable income. The proposals have minor tweaks for a couple of tax deductions and higher focus on tax compliance.
To increase voluntary tax compliance, the Finance Minister has proposed a new option to file an updated return. Earlier, if taxpayers missed the deadline, they had time to file belated returns up until three months before the end of the relevant assessment year (AY). Similarly, while entering details of the host of transactions that one could have dealt with during a financial year, in case a taxpayer omitted or wrongly stated any particulars, the same was allowed to be revised until three months before the end of the relevant assessment year. However, the timeline for filing such belated or revised return ceases with the completion of assessment (by the tax authorities) for that year.
Taxpayers who have exceeded the said timeline for filing belated or revised returns can, henceforth, file updated returns within two years from the end of the relevant assessment year. But it does come with caveats. Taxpayers who haven’t filed any return should pay an additional tax at the rate of 25 per cent (at 50 per cent if the updated return is filed after one year of end of AY) on the aggregate of tax payable (including surcharge and cess) and interest payable (under section 234 A, B and C), while filing the updated returns.
Besides, the updated return cannot be used to reduce tax liability of returns filed earlier or cannot result in a refund or increase the refund from earlier return. Thirdly, taxpayers cannot file updated returns if any proceedings for assessment or reassessment or re-computation or revision of income under the Income Tax Act are pending or have been completed.
Deduction on insurance receipts
Taxpayers can currently claim deduction on the premiums paid in respect of a scheme for the maintenance of a disabled dependent, under section 80DD (inter alia). However, the said deduction was allowed only if the scheme resulted in payment of annuity or lump sum amount to the disabled dependent, upon the death of the subscriber of such scheme. The Budget now proposes to also allow the deduction to schemes that pay such amounts to the disabled dependent, if the subscriber has attained the age of 60 years or more, and payments or deposits to the scheme (by the subscriber) have been discontinued.
TDS on immovable property
Buyers of immovable property (other than agricultural land) where the sale consideration exceeded ₹50 lakh were required to deduct tax at the rate of one per cent on such consideration. Per the Budget proposals, TDS will now have to be deducted on the consideration or the stamp duty value, whichever is higher, if either of the amounts exceeds ₹50 lakh.
Tax on virtual digital assets was, no doubt, the biggest blow for investors this year. However, the Finance Minister has announced other sops for investors.
Extended relief on surcharge
Taxpayers with income exceeding ₹50 lakh are required to pay surcharge at the rate of 10-37 per cent (slab-based), on their tax liability. However, the surcharge on dividend and short or long-term capital gains on listed equities (including an equity-oriented fund), were capped at a maximum of 15 per cent, irrespective of the total income of the taxpayer.
In this Budget, the Finance Minister has proposed to bring other assets on par. Hence the surcharge on long-term capital gains (LTCG) on other assets (taxed under section 112, at the rate of 20 per cent), is also capped at 15 per cent. This includes LTCG on unlisted equities, bonds, debt mutual funds, gold ornaments, and land or building or both.
Post Office investments made easy
Despite the alluring returns, the Post office schemes were not the favorite choice of the tech-savvy investors. This is because, in order to make online investments in the scheme, investors had to open an account with the India Post Payments Bank (IPPB) and only registered users of IPPB could transact digitally in the small savings schemes, using the mobile application.
The Finance Minister proposed to add 100 per cent of the post offices to the core banking system in a bid to enable interoperability between post office accounts and bank accounts, and to enhance financial inclusion. This could also aid in digitisation of small savings schemes, thereby opening up touch-free investment avenues for today’s investors.