Union Finance Minister Smt. Nirmala Sitharaman in her first budget kept the income tax slab rates unchanged but announced new income tax proposals that could impact many taxpayers. Making it convenient for the tax-payers, the government has proposed to make PAN and Aadhaar card interchangeable and allow those who don’t have PAN to file Income Tax Returns by quoting their Aadhaar card number. Sitharaman also told the House that more than 120 crore Indians have Aadhaar and so the proposal intends to make the process more convenient for the tax-payers.
As the government laid down a clear road map for the tax administration for over the next five years, here are the key changes in the income tax provisions:
– Additional income tax deduction of Rs 1.5 lakh on interest paid on loans taken to buy electric vehicles. “This leads to a benefit of Rs 2.5 lakh crore over the tax period of the loan for the loan payer,” said Sitharaman.
– The Budget also proposes to levy a TDS of 2 per cent on cash withdrawal exceeding Rs 1 crore annually from a bank account.
– The government set a Rs 1.05 lakh crore divestment target this year. Currently, investments made in ELSS (equity-linked savings scheme) mutual funds, which come with a lock-in period of three years, are eligible for a tax deduction of up to Rs 1.50 lakh under Section 80C of the Income Tax Act. However, the mutual fund advisors ask investors to be cautious as government ownership does not ensure capital protection in equity instruments.
– The government increased the income tax surcharge of 3 % for high net worth individuals (HNIs) with annual income between Rs 2 crore to Rs 5 crore a year. The income tax on incomes of Rs 5 crore and above will also be increased by 7%.
– The Budget also proposes faceless tax assessments. “The existing system of scrutiny assessments in the Income-tax Department involves a high level of personal interaction between the taxpayer and the Department, which leads to certain undesirable practices on the part of tax officials,” she said.
– It was also proposed that pre-filled tax returns will be made available to taxpayers which will contain details of salary income, capital gains from securities, bank interests, and dividends, etc and tax deductions