Amendments Relating to Income Tax.
Introduction : There are several amendments which has been introduced through Finance Bill, 2021; and therefore, every professional and assessee shall know this amendment. In this article we will discuss important amendments introduced through finance bill, 2021.
Important points after Finance Bill, 2021:
Change in Audit Provision
- After the amendment of under section 44ADA, i.e., professionals who are paying tax on presumptive basis, in that it has been clarified that Limited Liability Partnership will not be allowed to opt for such scheme.
- Increase in limit of Audit under section of 44AB; it has been specified that if assessee is having turnover up to Rs. 10 Crore and having cash receipt and payment up to specified amount than in such case person will not be liable to tax audit.
Amendment relating to Trust
- Amendment has been made under section 11, that if any corpus donation has been received by any charitable or religious trust the same shall not be treated as application of Income until and unless the said has been deposited under the various modes specified under section 11(5). Therefore, if trust wants to treat any corpus as application of Income than in that case such shall be deposited in modes or forms specified under section 11(5) of Income Tax Act, 1961; if in case partial amount is deposited than trust will get deduction only to the extent of such partial amount.
- As per section 10(23C) Income of Specified University/Education Institute/Hospital was exempted if the annual receipts do not exceed Rs 1 crore, now the such limit is increased to Rs. 5 Crores. This amendment will take effect from 1st April, 2022 and will accordingly apply to the assessment year 2022-23 and subsequent assessment years.
- No change has been made in basic exemption limit of slab of rates for Individual.
- Further definition of small company is changed and as per new definition under companies act, 2013; If entity is having paid-up share capital up to Rs. 2 Crore and having Turnover up to Rs. 20 Crore and having. It shall be noted that all the other part or definition has been kept unchanged.
- Extension of Deduction in respect of housing Loan (for the interest amount) on loan taken for a residential house property from any financial institution up to one lakh fifty-thousand rupees. The condition that the loan has been sanctioned during the period beginning on 1st April, 2019 and ending on 31st March, 2021 is now proposed to be extended to 31st March 2022.
- As per amendment under section 234C of Income Tax Act, 1961; relaxation is provided from paying interest under section 234C it is difficult to calculate applicable advance tax on dividend income or capital gains due to nature of its income; now if shortfall in advance tax payments and tax due has been paid in the subsequent advance tax instalment than no interest will be levied on such shortfall.
- It has been proposed that last date for filing of belated or revised returns of income, as the case may be, be reduced by three months. Thus, the belated return or revised return could now be filed only up to 31st December of the relevant assessment year. In this case assessee can revise the return on or before 9 months from end on financial year for which return has been filed.
- As per section 54GB of Income Tax Act, 1961; there is exemption from capital gain which arises from the transfer of a long-term capital asset, being a residential property (a house or a plot of land), owned by the eligible assessee; if the proceeds of capital gain has been utilized for subscription in the equity shares of an eligible start-up, before the due date of furnishing of return of income under sub-section (1) of section 139 of the Act is now available when the residential property is transferred on or before 31st March, 2022.
- If person is in receipt of interest income on provident fund and such income is due to encashment of contribution made to such fund (amount of contribution to such fund is exceeding two lakh and fifty thousand rupees in a previous year i.e., on or after 1st April, 2021).
- One more relaxation is provided which is providing major relief to the assessee it has been stated that if any person receives any immovable property for a consideration and the stamp duty value of such property exceeds 10% of the consideration or fifty thousand rupees, whichever is higher, the stamp duty value of such property as exceeds such consideration shall be charged to tax under the head Income from other sources, the said limit is to be increased to 20%.
- Relaxation in audit provision has been provided for specified assessee; business where accounts are required to be audited only in case where turnover is exceeding Rs. 10 Crores instead of earlier limit of Rs. 5 Crores (Specified assesses are those whose all receipts in cash during the previous year does not exceed five per cent of such receipt; and aggregate of all payments in cash during the previous year does not exceed five per cent of such payment).
- Extension of time limit of specific deduction relating to investment in eligible start-up; It has been prescribed that a deduction of an amount equal to 100% of the profits and gains derived from an eligible business by an eligible start-up for three consecutive assessment years out of ten years at the option of the assessee was available under section 80-IAC. Earlier last date of incorporation was on or before 1st day of April 2021 but now the said has been extended to 1st April, 2022.
Insertion of New Section
- Insertion of section 194P of Income Tax, 1961: Specified Senior Citizen will not be required to file Income tax return, however on any Income paid by specified bank (Banking Company as notified by Central Government) than TDS shall be deducted from such Income at the applicable rate (However, while computing tax on such Income, if applicable than deduction under chapter IV-A and rebate under section 87A shall be deducted).
- For the above purpose specified senior citizen means Individual and Resident in India and
(i) who is of the age of seventy-five years or more at any time during the previous year;
(ii) who is having income of the nature of pension and no other income except the income of the nature of interest received or receivable from any account maintained by such individual in the same specified bank in which he is receiving his pension income; and
(iii) has furnished a declaration to the specified bank containing such particulars, in such form and verified in such manner, as may be prescribed.
- Introduction of section 194QAny person, being a buyer who is responsible for paying any sum to any resident for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, will be required to deduct 0.1% of such sum (exceeding fifty lakh rupees) in form of TDS.