Income tax rule changes and latest income tax slab these are two main things which most of the people look for in Budget. I am sure you are also looking for detail about Latest Income Tax Slab FY 2021-22 (AY 2022-23). In this post, I will share key highlights of Union budget 2021-22 and Income tax related changes.
Union Budget 2021-22 is released by Finance minister on 1st Feb,2021. The expectation from budget 2021-22 was very high. Salaried people were expecting Income tax slab change and other major reforms in budget but this year also budget 2021-22 was big disappointment for tax payers. Here is detail about Union Budget 2021-22 Key highlights and Income tax changes.
Union Budget 2021 -22 – Income Tax Changes
# 1 No ITR for Senior Citizens above 75 Years
As per new rule Senior Citizen above 75 Years age and above need not to file Income tax return. This new rule is applicable only if senior citizens have income only from pension and interest.
If senior citizens have other income such as rental income, business income etc. still they need to file income tax return.
Please note that rule change is for not filing Income tax return. This means senior citizen can avoid process of filing return. This does not mean that they have been exempted from Income tax. Income tax is applicable as per actual tax slab rate.
You must be aware that under section 80TTB, senior citizen can claim up to Rs.50000 interest received from bank and post office as exemption from tax.
It is welcome step for the senior citizen.
Also Read – Electric vehicle Loan Income Tax Benefit – Section 80EEB
# 2 Latest Income Tax Slab FY 2021-22 (AY 2022-23)
Latest Income tax slab for FY 2021-22 is same as that of FY 2020-21. This means there is no change in income tax slab for FY 2021-22. The old rate and slab will continue in FY 2021-22 (AY 2022-23).
New simplified tax regime will continue. If you have adopted new tax regime last time where tax rate is lower and flat you cannot claim any tax exemption such as 80C, 80D etc.
In case you have continued with old tax slab, you can invest in tax saving instrument under section 80C, 80D etc. and pay tax at higher rate. In short two types of tax slabs announced last year will continue.
- Tax regime at lower tax rate without any IT deduction and exemptions
- Tax regime at higher tax rate with IT deduction and exemptions
Latest Income Tax Slab for FY 2021-22 is given below.
#3 Section 80EEA available up to March 2022
The earlier announced benefit of section 80EEA shall be available up to March 2022. Under section 80EEA the interest amount up to Rs.150000 for housing loan taken for affordable housing from 1st April, 2019 to 31st March 2020 was exempted. Now this benefit will be available up to March 2022.
#4 ULIP Maturity Amount Taxable
On ULIPs with a premium amount of 2.5 Lakh per annum or more, the maturity amount, which was earlier tax-free under Section 10(10D) of the Income Tax Act, will now be taxable. However, in case of the unfortunate death of the insured person, the death benefit will continue to remain tax-free.
In the simple words, now onwards ULIP would attract 15 percent short-term capital gains tax (STCG) or 10 percent LTCG depending on the holding period.
#5 EPF & VPF Interest Amount Taxable
As per budget 2021 announcement, from 1st April 2021 EPF interest on any contribution above 2.5 Lakh by an employee to PF is taxable as per applicable tax slab. The new rule is applicable for EPF as well as VPF contribution amount.
#6 Reopening ITR period reduced
As per old law ITR can be opened again and inquiry can be sent to tax payer for the last 6 income tax return and for serious fraud case this limit is up to 10 Years. In budget, this limit is reduced. As per new income tax rule the ITR can be opened only up to 3 years. This means tax payer needs to keep all financial document intact up to last 3 years only. In case of serious fraud up to 50 lakh amount the limit remains as it is 10 years.
Budget 2021-22 Review
On analyzing budget 2021-22, I could make out following points.
(1) NO income tax slab or rate change 🙁
Salaried people were expecting major tax reform with respect to income tax slab change or major tax reform. However, budget 2021-22 was major disappointment. No Income tax slab or rate change announced this year in budget.
(2) Nothing for Common man 🙁
The government should give focus on common man. However, on analyzing budget one can easily say that there is nothing for common man in budget this year.
(3) Old Wine in New Bottle 🙁
Budget 2021 is like old wine and new bottle. In the other word it is copy paste budget with respect to income tax rules.
What is your views on Budget 2021-22? Share it in the comment section given below.