Pros - Cons of the Policies of government.
Plans of government
The government now to encourage the first-time homebuyers, severe cut in the Home Loan interest rate have been made up to 1.5 lacs which applied to the loans and the corresponding interests till the 31st March 2021, now that date has been extended by a year's i.e., 31st March 2022.
This initiative not only is a benefit for the home buyers but also the Real Estate infrastructure of the Country i.e. the Real-Estate would see a huge boom.
On a connected note, homebuyers were burdened for the differential between price tag and stamp esteem if the last was over the top. For this reason, a distinction of 10% was viewed as ordinary.
Considering the decrease in land costs as of late, this financial plan proposes to expand the protected harbor limit from 10% to 20% along these lines evading inappropriate tax assessment in the possession of the home purchasers.
This arrangement is appropriate for the acquisition of a house from November 12, 2020, till June 30, 2021, gave it is the first time slot of the private unit and the price tag doesn't surpass INR 2 Crore.
According to Section 89A-
Earlier when the People when invested in Overseas Retirement Funds for the Social Security Purposes, the Government taxation system on this was messed up, there were issues relating to the timings of the taxation and that lead to a dichotomy in the timing, This further lead to tax credit mismatches and double taxation.
Now with Union Budget 2021 this hardship has been considered and Section 89A has been introduced to regulate the tax on such overseas funds.
High premium ULIPs to lose tax edge
Right now, proceeds from the insurance policy, including rewards are excluded dependent upon specific conditions.
It is recommended that unit-connected insurance policies with a yearly premium in the abundance of Rs 2.5 lakh won't fit the bill for the above exclusion. The profit from such strategy would be available at standard with recorded value arranged shared assets.
Also, premium gathered on opportune assets will be liable to expense to the degree yearly commitment surpasses Rs 2.5 lakh.
The above arrangements are to check extreme interest in roads which offer ascent to absolve pay.
ITR filing exemption for Senior Citizens that are of 75 years.
Considering the difficulties looked by old residents in recording assessment form year on year, an exception from assessment form documenting is proposed if the individual has paid just in the idea of benefits and bank revenue on which expenses are properly deducted.
This exclusion is relevant for senior residents who are of the age of 75 years or more and the exception can be asserted by recording an affirmation to the bank.
Proposals for Direct taxes
Pros and cons for Direct taxes introduced in the budget 2021
The exemption to the senior citizens over the age of 75 has reduced a lot of burden from their shoulders as at this age they are only receiving their pension income.
One more advantage is that now they have a specific bank for the same, which makes things easier for the senior citizens.
The reduction in the interest on loan taken for residential house property is also a good policy introduced by the government, as it has 2 advantages, i.e., promoting the real estate sector and it also financially supports the people who are buying new homes.
Also, relating to this policy where earlier the people buying homes were taxed for the differential between the purchase price and stamp value if the latter was excessive, the new policy helps to avoid the taxation in the hands of homebuyers, proving it to be yet another positive aspects of this proposal, keeping in mind the interest of both the real estate sector as well as the citizens.
One of the other positive points in the proposal was to effect that the advance tax liability on dividend shall only arise when the same is received making it easier than before as earlier it was difficult for the taxpayer to pre-empt dividend distribution.
The introduction of Section 89A has made it easier for people to invest in overseas retirement Funds for social security purposes.
The amended insurance policy is a good method to ensure that there are no excessive investments in the avenues, which gives rise to the exempt income, proving to be yet another advantage to keep things under control by the government.
The exemption for senior citizens from tax returns is yet another great step taken by the government, considering the challenges faced by elderly citizens. Also, from the tax return perspective, the pre-filing of capital gains will ease the return preparation process.
Though there are many pros of the proposal of the government, there are some cons as well.
The taxpayer's expectations of a higher investment limit/medical expenditure have not been addressed to the extent to which it was being expected. The restrictions imposed on the exemptions for ULIP, provident fund can lead to taxpayers moving away from such investment opportunities.