The Union Budget of 2021 was presented on 1 February 2021. The key highlights of this budget are:

Direct Tax:
● Senior Citizens above 75 years of age earning only pension and interest income are exempted from filing their Income Tax Returns (ITR).
● Details regarding Capital Gains, Dividend Income and Interest Income will be auto-populated in the Income Tax Returns.
● NRIs will be relieved from Double Taxation.
● The threshold limit for Income Tax Audit is increased to INR 10 crores (from INR 5 crores). However, to take the benefit of the enhanced threshold, at least 95% of the transactions should be digitally served.
● Dividend payments to REIT/InvIT will be exempted from TDS.
● The Income Tax deduction under section 80EE – Interest for Affordable housing loan (up to INR 1.5 lakhs) is extended for loans taken till 31 March 2022.
● Affordable housing projects and Startups can enjoy tax holiday till 31 March 2022.

Indirect Tax:
● The concept of a GST audit may be dropped. In simple words, GSTR-9C might be eliminated.
● Taxpayers can claim ITC only when their suppliers furnish the invoice/debit note’s details in GSTR-1.
● Interest on net cash liability will be charged retrospectively.
● Only goods or services supplied for authorised operations, to a Special Economic Zone (SEZ) developer or an SEZ unit, will be zero-rated.

Other Amendments:
● The definition of ‘Small Companies’ as per the Companies Act 2013 is amended. The capital threshold is increased to INR 2 crores from INR 50 lakhs. Furthermore, the threshold for Turnover is increased to INR 20 crores (previously INR 2 crores).
● All restrictions on One-Person Company are removed. Furthermore, the threshold to arrive at the residential status is reduced to 120 days (previously 182 days).
● Agriculture Infrastructure and Development Cess will be imposed on petrol and diesel at INR 2.5 and INR 4 per litre respectively.

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