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    SBS Wiki Budget Special Edition 2021

    SBS Wiki Budget Special Edition 2021

    This is one of the finest budgets this country has witnessed. The budget aligns with the macro economic scenario and takes care of the impact of COVID. In this budget edition, we discuss the various proposals segment and tax wise. Hope this effort of ours is useful for understanding the proposals. Let me also allow to summarise the various proposals before our detailed analysis. 

    On the direct tax front, there are certain amendments which have tried to put an end to decade long litigations. Hope they do not open a new round of litigation. The changes in partnership taxation trying to put an end to abusive strategies and the removal of goodwill from the block of assets to put end to settled views are two extreme hues of the budget.

    Undoubtedly, the tax avenues (leakages looked from the perspective of tax authorities) available high networth individuals are being closed budget by budget. The taxation of ULIPs and interest on provident fund contributions exceeding certain limits are steps in the above direction. The introduction of safe harbour for sale of residential units considering the COVID periods is a thoughtful move putting an end to litigation on this front. Finally, the definition of ‘liable to tax’ has been brought into the domestic tax provisions putting concrete end to so many aspects. The clarification of the dis-allowability on employee share in a way puts end to disputes but a bit harsher on the employer.

    The scrapping of settlement commission, advent of new board for Advance Rulings, contemplation of Dispute Resolution Committee and getting ITAT proceedings also under the faceless are laudable steps. The rationalisation of rationale for re-opening of assessments, reduction of time limit and restricting it to only specified instances is much awaited move.

    The proposal of tax deduction/collection at higher rates if the specified assessee has not filed the return where TDS/TCS is more than INR 50K would cast a huge burden on the assessee. The significant of direct tax proposals is further relaxation of tax audits for business who are having less than turnover of INR 10 Crores subject to a condition that there cash transactions are less than 5%. Prior to this budget, the threshold was at INR 5 Crores.

    On the indirect taxation front, there are no changes to GST laws except for a major one which would be a great relief to the MSME sector, is the scrapping of GST audit. It is a welcome move since a significant time is saved for both the auditors and trade. The existing reconciliation exercise does not really reveals the true spirit of audit.

    The changes brought to OPCs and allowing NRIs to be able to open OPCs is a great move. Further, the increase of threshold for small companies is also a welcome move which facilitates the ease of doing business.

    With this brief,  I present you the detailed analysis on significant clauses on Finance Bill 2021. We wish this effort of ours is fruitful and we would love to receive feedback on this.

    Key Topics:

    Proposals under Direct Taxation
    Proposals under Indirect Taxation
    Amendments under Customs Laws:
    Proposals under Allied Laws


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