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Woman: A Gorgeous Investor

One of the issues underlying empowerment is often money. However there is more to this, even when women earn well, they are still not very likely to be managing their money, savings, and investments

Men are usually the ones who ask for investment advice for their family or on behalf of the women in their life. But what is the reason for this?

From research, it can be noted that the reason is self confidence. Women tend to second guess their questions and often assume they are asking stupid questions, whereas men ask anything and learn from the advice given, regardless of their lack of knowledge.

There is a stereotype that men save money and women spend money

Even TV ads tend to depict this; the woman is portrayed as a smart decision maker only in ads that have to do with household appliances or other consumer goods. When the ads are for financial products, it is always the man who plans for the future while the woman is buying the household appliance.

Why are women shy about investing? The reasons are rooted in societal norms. Women were meant to be nurturers while men were providers. In India, when a woman earns, her income is meant to be for household purchases while the man’s income is mean to be for investment purposes.

The men in the family are usually not very informative when it comes to investments. Women also don’t want to ask so as not to infuriate. It is generally not a widely discussed topic amongst most families. Women are also risk averse and prefer to play it safe.

So, how do we make women less fearful about the idea of investing? Raise awareness

Women need to be made aware that they possess certain traits that are beneficial to investing; women are less impulsive and are able to reflect, women are also better at coming to terms with their mistakes and learning from them.
It is important to remember that at some point in a woman’s life, she will need to take responsibility for her or her family’s finances. Divorce or death makes it important for women to take full responsibility of their children or elderly parents whether the woman is earning or not. At such times, it is prudent that women are aware of the options available to them. About 90% of women will be financially responsibility for their families at some point in their life (Wi$eUp). More women are breadwinners for their families (30%) (Wi$eUp).

Women typically outlive men and need to be prepared financially for a longer future after retirement. Some women breadwinners in the family need to have goal based investments, as well as health insurance plans for themselves and all dependents/family. Pension plans are important to continue receiving a steady income after retirement It is extremely important for every woman to keep money in the bank to cover at least three to six months into the future. Dependent women need to be as involved in financial decision making of the family as they are in running the house. Most housewives tend to be frugal anyways, and always end up spending less money than allotted for various house expenses. It would be extremely beneficial for them to start an SIP even if they aren’t earning.

One of the issues underlying empowerment is often money. However there is more to this, even when women earn well, they are still not very likely to be managing their money, savings, and investments

Men are usually the ones who ask for investment advice for their family or on behalf of the women in their life. But what is the reason for this?

From research, it can be noted that the reason is self confidence. Women tend to second guess their questions and often assume they are asking stupid questions, whereas men ask anything and learn from the advice given, regardless of their lack of knowledge.

There is a stereotype that men save money and women spend money

Even TV ads tend to depict this; the woman is portrayed as a smart decision maker only in ads that have to do with household appliances or other consumer goods. When the ads are for financial products, it is always the man who plans for the future while the woman is buying the household appliance.

Why are women shy about investing? The reasons are rooted in societal norms. Women were meant to be nurturers while men were providers. In India, when a woman earns, her income is meant to be for household purchases while the man’s income is mean to be for investment purposes.

The men in the family are usually not very informative when it comes to investments. Women also don’t want to ask so as not to infuriate. It is generally not a widely discussed topic amongst most families. Women are also risk averse and prefer to play it safe.

So, how do we make women less fearful about the idea of investing? Raise awareness

Women need to be made aware that they possess certain traits that are beneficial to investing; women are less impulsive and are able to reflect, women are also better at coming to terms with their mistakes and learning from them.
It is important to remember that at some point in a woman’s life, she will need to take responsibility for her or her family’s finances. Divorce or death makes it important for women to take full responsibility of their children or elderly parents whether the woman is earning or not. At such times, it is prudent that women are aware of the options available to them. About 90% of women will be financially responsibility for their families at some point in their life (Wi$eUp). More women are breadwinners for their families (30%) (Wi$eUp).

Women typically outlive men and need to be prepared financially for a longer future after retirement. Some women breadwinners in the family need to have goal based investments, as well as health insurance plans for themselves and all dependents/family. Pension plans are important to continue receiving a steady income after retirement It is extremely important for every woman to keep money in the bank to cover at least three to six months into the future. Dependent women need to be as involved in financial decision making of the family as they are in running the house. Most housewives tend to be frugal anyways, and always end up spending less money than allotted for various house expenses. It would be extremely beneficial for them to start an SIP even if they aren’t earning.

...
Sovereign Gold Bond (SGB) scheme 2020-21cheme

The Sovereign Gold Bond Scheme will be free for subscription starting from 01 March to 05 March 2021 with an issue price fixed at a nominal value of Rs.4,662 per gram of Gold to which the last date of settlement will be 09th March 2021 as per a statement issued by the Reserve Bank of India on 26th February 2021.

What and Why of Sovereign Gold Bond Scheme?

Sovereign Gold Bond Scheme initially was introduced by the Government of India way back in November 2015, with an intent to reduce the requirement of physical Gold in the domestic market by individual stock holders. It was an effort made by the Government at the Centre on behalf of Reserve Bank of India to transform household savings in the form of gold into financial savings. Gold Bonds are excellent substitutes for converting physical Gold holdings into Financial savings, 10 such tranches of Sovereign Gold Bonds (SGB) have already been launched by the RBI during the year 2019-2020 aggregating nearly 6.13 tonnes of gold, valuing at Rs.2113.46 crores.

How are they priced?

The issue price of SGB is set in Indian Rupees and is calculated on the basis of simple average of Closing Price* of Gold for the last 3 working days of the week prior to the Subscription Time i.e. Feb 24, 25, 26, 2021. The nominal Bond value is denominated in multiples of Gold grams, the price for series XII is Rs.4662 per gram of Gold.

Further, the Government in consultation with RBI declared that these Gold Bonds will be available at a discounted price, for the subscribers who apply for the Bond online and make digital payments at a Rs.50 per gram lesser rate. This implies that cost for online bookings and digital transfer of payments will be Rs.4,612 only for each gram of Gold.

*Price published by the India Bullion and Jeweller Association Limited (IBJA) for 999 purity of Gold is considered standard.

Minimum and maximum limits for investments:

The permissible investment limit for the SGB starts from a minimum of 1 gram Gold to a maximum limit of 4 KG for an individual investor. This limit shall hold good for a HUF nominee as well but entities like trusts and other similar bodies may subscribe up to a maximum of 20 KG for each fiscal year starting from April to March.

Key Features:

  • Indian residents including individuals, HUF’s, Trusts, Universities, Charitable Institutions and investment on behalf of a minor can be made on SGB’s.
  • Total maturity period of each bond is eight years, however an option to exit bonds can be exercised from fifth year onwards, only on interest pay out dates.
  • Latest SGB interest rate is 2.50% p.a., they are linked with the current market price of Gold and are paid bi-yearly on their nominal value.
  • As per GS Act 2006 only Government of India can issue Gold Bonds on behalf of RBI. A Holding Certificate is issued to each stock holder which can eventually be converted into a Demat Form for further trading.
  • Similar KYC norms (Know Your Customer) are followed which apply at the time of buying physical Gold, thus a copy of Driving Licence, Voter ID, Passport or a PAN Card is required.
  • Interests earned on SGB are taxable as per the norms on IT Act 1961. Although an individual is exempted from the capital gains arising out of redemption of SBG, to add to this on transfer of Bonds from an individual to another, benefit of indexation is provided on the Long Term Capital Gains.
  • The price of redemption is in Rupees, calculated on the basis of average closing price of 999 purity of Gold of previous three business days.
  • These Bonds are good to be acquired by the banks for calculating the Statutory Liquidity Ratio during the process of hypothecation, raising lien or pledging.
  • SGB’s are available in banks, selected post offices, Stock Holding Corporation of India Limited (SHCIL) and also traded at the National Stock Exchange and Bombay Stock Exchange through intermediaries.
  • For the trading of the Bond, the receiving officer may levy a maximum of 1% of the total subscription amount as commission, half of this amount is shared with the brokers or agents.

On the whole, SGB is ideal for investors with low appetite of risk taking, they have an added advantage of Indexation, provide income in the form of interests, can be used as a collateral security at the time of need and can be effortlessly traded.

The Sovereign Gold Bond Scheme will be free for subscription starting from 01 March to 05 March 2021 with an issue price fixed at a nominal value of Rs.4,662 per gram of Gold to which the last date of settlement will be 09th March 2021 as per a statement issued by the Reserve Bank of India on 26th February 2021.

What and Why of Sovereign Gold Bond Scheme?

Sovereign Gold Bond Scheme initially was introduced by the Government of India way back in November 2015, with an intent to reduce the requirement of physical Gold in the domestic market by individual stock holders. It was an effort made by the Government at the Centre on behalf of Reserve Bank of India to transform household savings in the form of gold into financial savings. Gold Bonds are excellent substitutes for converting physical Gold holdings into Financial savings, 10 such tranches of Sovereign Gold Bonds (SGB) have already been launched by the RBI during the year 2019-2020 aggregating nearly 6.13 tonnes of gold, valuing at Rs.2113.46 crores.

How are they priced?

The issue price of SGB is set in Indian Rupees and is calculated on the basis of simple average of Closing Price* of Gold for the last 3 working days of the week prior to the Subscription Time i.e. Feb 24, 25, 26, 2021. The nominal Bond value is denominated in multiples of Gold grams, the price for series XII is Rs.4662 per gram of Gold.

Further, the Government in consultation with RBI declared that these Gold Bonds will be available at a discounted price, for the subscribers who apply for the Bond online and make digital payments at a Rs.50 per gram lesser rate. This implies that cost for online bookings and digital transfer of payments will be Rs.4,612 only for each gram of Gold.

*Price published by the India Bullion and Jeweller Association Limited (IBJA) for 999 purity of Gold is considered standard.

Minimum and maximum limits for investments:

The permissible investment limit for the SGB starts from a minimum of 1 gram Gold to a maximum limit of 4 KG for an individual investor. This limit shall hold good for a HUF nominee as well but entities like trusts and other similar bodies may subscribe up to a maximum of 20 KG for each fiscal year starting from April to March.

Key Features:

  • Indian residents including individuals, HUF’s, Trusts, Universities, Charitable Institutions and investment on behalf of a minor can be made on SGB’s.
  • Total maturity period of each bond is eight years, however an option to exit bonds can be exercised from fifth year onwards, only on interest pay out dates.
  • Latest SGB interest rate is 2.50% p.a., they are linked with the current market price of Gold and are paid bi-yearly on their nominal value.
  • As per GS Act 2006 only Government of India can issue Gold Bonds on behalf of RBI. A Holding Certificate is issued to each stock holder which can eventually be converted into a Demat Form for further trading.
  • Similar KYC norms (Know Your Customer) are followed which apply at the time of buying physical Gold, thus a copy of Driving Licence, Voter ID, Passport or a PAN Card is required.
  • Interests earned on SGB are taxable as per the norms on IT Act 1961. Although an individual is exempted from the capital gains arising out of redemption of SBG, to add to this on transfer of Bonds from an individual to another, benefit of indexation is provided on the Long Term Capital Gains.
  • The price of redemption is in Rupees, calculated on the basis of average closing price of 999 purity of Gold of previous three business days.
  • These Bonds are good to be acquired by the banks for calculating the Statutory Liquidity Ratio during the process of hypothecation, raising lien or pledging.
  • SGB’s are available in banks, selected post offices, Stock Holding Corporation of India Limited (SHCIL) and also traded at the National Stock Exchange and Bombay Stock Exchange through intermediaries.
  • For the trading of the Bond, the receiving officer may levy a maximum of 1% of the total subscription amount as commission, half of this amount is shared with the brokers or agents.

On the whole, SGB is ideal for investors with low appetite of risk taking, they have an added advantage of Indexation, provide income in the form of interests, can be used as a collateral security at the time of need and can be effortlessly traded.

...
Budget 2021 Highlights

 

Direct Tax- Amendments

 

1.Insertion of Clauses 11 & 12 in section 10 to make interest accrued on PF taxable to the extent it relates to the contribution made exceeding 2.5 lakhs per annum

Currently, Clause (11) of section 10 of the Act provides for exemption with respect to any payment from a provident fund to which the Provident Funds Act, 1925 (19 of 1925) applies or from any other provident fund set up by the Central Government.

Background

 The government says that instances have come to the notice where some employees are contributing huge amounts to these funds and entire interest accrued/received on such contributions is exempt from tax under clause (11) and clause (12) of section 10 of the Act. This is true mainly in case of employees who contribute towards voluntary provident fund.

Amendment

Accordingly, it is proposed to insert a proviso to clause(11) and clause (12) of section 10 of the Act, providing that the provisions of these clauses shall not apply to the interest income accrued during the previous year in the account of the person to the extent it relates to the amount or the aggregate of amounts of contribution made by the person exceeding Rs 2.5 lakh in a previous year in that fund, on or after 1st April, 2021.

Thus this amendment leads to more tax collection.

 

2.Tax exemption on ULIP maturity -limit imposed-10(10D)

 

Existing Law

 

Maturity of ulip polices is exempted u/s 10(10d)

 

Amendment

 

(c) in clause (10D),–– (i) after the third proviso and before Explanation 1, the following provisos shall be inserted, namely:–– “Provided also that nothing contained in this clause shall apply with respect to any unit linked insurance policy, issued on or after the 1st day of February, 2021, if the amount of premium payable for any of the previous year during the term of such policy exceeds two lakh and fifty thousand rupees:

 

it is proposed to allow tax exemption for maturity proceeds of the ULIP having annual premium up to Rs 2.5 lakh only. However, the amount received on death shall continue to remain exempt without any limit on the annual premium. The cap of Rs 2.5 lakh on the annual premium of ULIP shall be applicable only for the policies taken on or after 01.02.2021.

Thus this amendment leads to more tax collection.

 

Further, in order to provide parity, the nonexempt ULIP shall be provided same concessional capital gains taxation regime as available to the mutual fund.

 

3. Relaxation to NRI for Income of Retirement Benefit Account

 

In order to remove the genuine hardship faced by the NRIs in respect of their income accrued on foreign retirement benefit account due to mismatch in taxation, it is proposed to notify rules for aligning the taxation of income arising on foreign retirement benefit account,

 

 

4.Affordable house buyers get more time to avail additional tax benefits

Union Budget 2021-22: Giving a fillip to the buyers of affordable houses, Finance Minister Nirmala Sitharaman has extended the time period of taking loans to buy such houses by one year – i.e. from March 31, 2021 to March 31, 2022 – to avail additional tax benefits of Rs 1.5 lakh u/s 80EEA of the Income Tax Act.

Section 80EEA provides tax benefits up to Rs 1.5 lakh on the interest paid on loans taken for Residential House Property for affordable housing. The benefit is over and above the tax benefit of Rs 2 lakh available u/s 24(B) of the Income Tax Act on interest on Housing Loan on both self-occupied and rented properties.

 

5. Income Tax Return Filing: Rule Changed for Senior Citizens!

Budget 2021, has proposed no filing of Income Tax Return (ITR) by senior citizens who are above 75 years of age and have only pension and interest income. Pension from the ex-employer is taxed under the income tax head of Salary while family pension is taxed as ‘income from other sources’. Interest income received from SCSS, bank fixed deposit etc is taxed as per one’s income slab under the head ‘income from other sources’.

 

The bank, however, will deduct the necessary tax before paying to them. It is important to note that they have not been exempted from paying tax but only from filing ITR provided the eligibility is there.

 

6. Taxation for startups: Eligibility for claiming tax holiday, capital gains exemption extended till Mar 2022: FM

Budget for startups: Finance Minister Nirmala Sitharaman today proposed extension of the eligibility for claiming tax holiday and capital gains exemption for investment in startups till March 31, 2022. "In order to incentivise startups in the country, I propose to extend the eligibility for claiming tax holiday for startups by one more year to March 31, 2022," Finance Minister Nirmala Sitharaman said. (PTI)

 

7. ITR filing made easy: Interest income, Capital gains from securities to be pre-filled

Sitharaman said that in ITR, details of capital gains, income from list securities, dividend income, income from interest on bank deposits tom come pre-filled in ITR, said Nirmala Sitharaman in Budget Speech 2021.

 

 

8. NRIs can now set One Person Companies (OPC)

Non-resident individuals with entrepreneurial potential are now enabled to set up One Person Companies (OPC) with no paid up capital and turnover restrictions, reducing registration  timeline for residency from 182 days to120 days.

 

This would help NRIs set up business in India in a short time & thus would lead to more foreign fund

Inflows.

9. Dispute resolution scheme to reduce small taxpayers' compliance

The dispute resolution scheme for small taxpayers should reduce the burden of compliance and adjudication on them, especially since it is expected to be technology driven

10.Increase in Tax Audit limit-Section 44AB

 

Union Budget 2021 announced the increase in the Tax Audit Limit increased to Rs.10 crores from 5 crores  for those using Digital Transaction Mode.

 

11.Faceless ITAT-A revolution in litigations

 

Budget 2021 proposes a National Faceless Income Tax Appellate Tribunal Centre. All communication between the Tribunal and the appellant shall be electronic. Where personal hearing is needed, it shall be done through video-conferencing.

 

India’s Income Tax Appellate Tribunal (ITAT) was set up on 25 January 1941, and it was the first experiment in tribalization in the history of India. It is a second appellate authority under the direct taxes and the first independent forum in its appellate hierarchy. The orders passed by the ITAT can be subjected to appellate challenge, on substantial questions of law, before the respective High Court.

 

12.Reassessment & Reopening of Assessment: The budget proposal will amend section 148 of the Income Tax where the time limit for reassessment has been reduced to 3 years from 6 years.

In serious tax evasion cases too, only where there is evidence of concealment of income of Rs. 50 lakh or more in a year, can the assessment be reopened up to 10 years. Even this reopening can be done only after the approval of the Principal Chief Commissioner, the highest level of the Income Tax Department.

 Presently, an assessment can be re-opened up to 6 years and in serious tax fraud cases for up to 10 years. As a result, taxpayers have to remain under uncertainty for a long time.

 

13.Dispute resolution committee: Anyone with total income less than 50 lacs and disputed income less than 10 Lacs can approach this, faceless committee

 

14. Budget 2021 proposes Levy of TDS on Purchase of Goods

194 Q - A New Section

‘194Q. (1) Any person, being a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, shall, at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier, deduct an amount equal to 0.1 per cent. of such sum exceeding fifty lakh rupees as income-tax.

Explanations to the section-

Explanation.––For the purposes of this sub-section, “buyer” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the purchase of goods is carried out, not being a person, as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

(2) Where any sum referred to in sub-section (1) is credited to any account, whether called “suspense account” or by any other name, in the books of account of the person liable to pay such income, such credit of income shall be deemed to be the credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

Impact

Additional compliance burden on the deductor,addition to TDS mismatch issues for the deductee.

Increased tax collection for the Government.

 



15. Budget 2021 Rate of TDS/TCS would be doubled for Non-Filers of Returns

Section 206AB New Section

The Union Budget 2021 has introduced new special provisions to the Income Tax Act, 1961. The new provision is expected to discourage the practice of not filing returns by the ‘specified person’ whose case TDS has been deducted/collected. As per the new provision, a person in whose case TDS/TCS of Rs. 50,000 or more has been made for the past two years and who has defaulted to file return of income, the rate of TDS/TCS shall be deducted at the higher of the following rates: at twice the rate specified, at twice the rate or rates in force at the rate of five per cent.

It is also provided that the specified person shall not include a non-resident who does not have a permanent establishment in India. The provisions will come into effect from 1st July 2021. The penalty for late filing or Non filing of TDS statement is provided under section 271H. As per the section, where a person fails to file the statement of tax deducted/collected at source return on or before the due dates, then the assessing officer may direct such person to pay a penalty. The minimum penalty is Rs. 10,000 which can go up to Rs. 1,00,000. It should be noted that this penalty is in addition to late filing fees.

16.  Transaction Taxable under Income Tax are not liable for Equalisation Levy

Clause (50) of the said section provides for the exemption for the income arising from any specified service provided on or after the date on which the provisions of Chapter VIII of the Finance Act, 2016 comes into force or arising from any e-commerce supply or services made or provided or facilitated on or after 1st April, 2021 and chargeable to equalisation levy under the provisions of that Chapter. It is proposed to change the said year to 2020. It is proposed to substitute the Explanation to the said clause with Explanations 1 and 2. Explanation 1 proposes to clarify that the income referred to in this clause shall not include and shall never be deemed to have included any income which is chargeable to tax as royalty or fees for technical services in India under the said Act read with the agreement notified by the Central Government under section 90 or section 90A. Explanation 2 proposes to define the expressions “e-commerce supply or services” and “specified service” for the purposes of the said clause. These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Applicability of Equalisation Levy

Equalisation Levy is a direct tax, which is withheld at the time of payment by the service recipient. The two conditions to be met to be liable to equalisation levy:

The payment should be made to a non-resident service provider;

The annual payment made to one service provider exceeds Rs. 1,00,000 in one financial year.

. Services Covered Under Equalisation Levy

Currently, not all services are covered under the ambit of equalisation Levy. The following services covered:

 

Online advertisement;

Any provision for digital advertising space or facilities/ service for the purpose of online advertisement;

As and when any other services are notified will be included with the aforesaid services.

 

17. Tax incentives to IFSC

The  Finance Minister, Nirmala Sitharaman while announcing the Budget 2021-22 has announced the Tax incentives to International Financial Services Centre (IFSC). The government with the objective of attracting foreign investment into the infrastructure sector government had granted 100% tax exemption, subject to certain conditions, to foreign Sovereign Wealth Funds and Pension Funds, on their income from investment in Indian infrastructure. In addition to the tax incentives already provided, the Finance Minister proposed to include, among others, tax holiday for capital gains for aircraft leasing companies, tax exemption for aircraft lease rentals paid to foreign lessors; tax incentive for relocating foreign funds in the IFSC; and to allow tax exemption to the investment division of foreign banks located in IFSC. The government has now proposed to relax some of these conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment in infrastructure include, among others, tax holiday for capital gains for aircraft leasing companies, tax exemption for aircraft lease rentals paid to foreign lessors; tax incentive for relocating foreign funds in the IFSC; and to allow tax exemption to the investment division of foreign banks located in IFSC.
 
18. Govt. clarifies Depreciation on Goodwill –

The word goodwill was not specifically provided within the meaning of intangible assets.  But it was considered to be eligible for depreciation. By amending the definition and clarifying that depreciation of goodwill shall not be allowed, the government has resolved the debate of whether Section 32 of the IT Act provides for such depreciation.

The Union Budget 2021 has clarified that no depreciation on Goodwill shall be allowed. The bill also amends the definition of ‘block of assets’ by expressly excluding goodwill’ from intangible assets.  Earlier depreciation was allowed only on tangible assets but since 1998 depreciation of intangible assets had become a norm. then the intangible assets only included know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to assessment year 2021-2022 and subsequent assessment years.

19. IDS Scheme 2016- Refund of Excess Payment to be sanctioned but No Interest

Presently, as per section 191 of the Finance Act, 2016, any excess amount of tax, surcharge or penalty paid in pursuance of a declaration made under the Income Declaration Scheme, 2016 shall not be refundable. The proviso to the section provides that the Central Government may, by notification, specify a class of persons to whom the excess amount so paid shall be refundable. However, the Union Budget 2021 has proposed to amend the proviso of section 191 of the Finance Act, 2016 which says that such excess amount of tax, surcharge or penalty paid in pursuance of a declaration made under the Scheme shall be refundable to the specified class of persons without payment of any interest. The amendment will take effect retrospectively from 1st June, 2016.

 

 

Direct Tax- Amendments

 

1.Insertion of Clauses 11 & 12 in section 10 to make interest accrued on PF taxable to the extent it relates to the contribution made exceeding 2.5 lakhs per annum

Currently, Clause (11) of section 10 of the Act provides for exemption with respect to any payment from a provident fund to which the Provident Funds Act, 1925 (19 of 1925) applies or from any other provident fund set up by the Central Government.

Background

 The government says that instances have come to the notice where some employees are contributing huge amounts to these funds and entire interest accrued/received on such contributions is exempt from tax under clause (11) and clause (12) of section 10 of the Act. This is true mainly in case of employees who contribute towards voluntary provident fund.

Amendment

Accordingly, it is proposed to insert a proviso to clause(11) and clause (12) of section 10 of the Act, providing that the provisions of these clauses shall not apply to the interest income accrued during the previous year in the account of the person to the extent it relates to the amount or the aggregate of amounts of contribution made by the person exceeding Rs 2.5 lakh in a previous year in that fund, on or after 1st April, 2021.

Thus this amendment leads to more tax collection.

 

2.Tax exemption on ULIP maturity -limit imposed-10(10D)

 

Existing Law

 

Maturity of ulip polices is exempted u/s 10(10d)

 

Amendment

 

(c) in clause (10D),–– (i) after the third proviso and before Explanation 1, the following provisos shall be inserted, namely:–– “Provided also that nothing contained in this clause shall apply with respect to any unit linked insurance policy, issued on or after the 1st day of February, 2021, if the amount of premium payable for any of the previous year during the term of such policy exceeds two lakh and fifty thousand rupees:

 

it is proposed to allow tax exemption for maturity proceeds of the ULIP having annual premium up to Rs 2.5 lakh only. However, the amount received on death shall continue to remain exempt without any limit on the annual premium. The cap of Rs 2.5 lakh on the annual premium of ULIP shall be applicable only for the policies taken on or after 01.02.2021.

Thus this amendment leads to more tax collection.

 

Further, in order to provide parity, the nonexempt ULIP shall be provided same concessional capital gains taxation regime as available to the mutual fund.

 

3. Relaxation to NRI for Income of Retirement Benefit Account

 

In order to remove the genuine hardship faced by the NRIs in respect of their income accrued on foreign retirement benefit account due to mismatch in taxation, it is proposed to notify rules for aligning the taxation of income arising on foreign retirement benefit account,

 

 

4.Affordable house buyers get more time to avail additional tax benefits

Union Budget 2021-22: Giving a fillip to the buyers of affordable houses, Finance Minister Nirmala Sitharaman has extended the time period of taking loans to buy such houses by one year – i.e. from March 31, 2021 to March 31, 2022 – to avail additional tax benefits of Rs 1.5 lakh u/s 80EEA of the Income Tax Act.

Section 80EEA provides tax benefits up to Rs 1.5 lakh on the interest paid on loans taken for Residential House Property for affordable housing. The benefit is over and above the tax benefit of Rs 2 lakh available u/s 24(B) of the Income Tax Act on interest on Housing Loan on both self-occupied and rented properties.

 

5. Income Tax Return Filing: Rule Changed for Senior Citizens!

Budget 2021, has proposed no filing of Income Tax Return (ITR) by senior citizens who are above 75 years of age and have only pension and interest income. Pension from the ex-employer is taxed under the income tax head of Salary while family pension is taxed as ‘income from other sources’. Interest income received from SCSS, bank fixed deposit etc is taxed as per one’s income slab under the head ‘income from other sources’.

 

The bank, however, will deduct the necessary tax before paying to them. It is important to note that they have not been exempted from paying tax but only from filing ITR provided the eligibility is there.

 

6. Taxation for startups: Eligibility for claiming tax holiday, capital gains exemption extended till Mar 2022: FM

Budget for startups: Finance Minister Nirmala Sitharaman today proposed extension of the eligibility for claiming tax holiday and capital gains exemption for investment in startups till March 31, 2022. "In order to incentivise startups in the country, I propose to extend the eligibility for claiming tax holiday for startups by one more year to March 31, 2022," Finance Minister Nirmala Sitharaman said. (PTI)

 

7. ITR filing made easy: Interest income, Capital gains from securities to be pre-filled

Sitharaman said that in ITR, details of capital gains, income from list securities, dividend income, income from interest on bank deposits tom come pre-filled in ITR, said Nirmala Sitharaman in Budget Speech 2021.

 

 

8. NRIs can now set One Person Companies (OPC)

Non-resident individuals with entrepreneurial potential are now enabled to set up One Person Companies (OPC) with no paid up capital and turnover restrictions, reducing registration  timeline for residency from 182 days to120 days.

 

This would help NRIs set up business in India in a short time & thus would lead to more foreign fund

Inflows.

9. Dispute resolution scheme to reduce small taxpayers' compliance

The dispute resolution scheme for small taxpayers should reduce the burden of compliance and adjudication on them, especially since it is expected to be technology driven

10.Increase in Tax Audit limit-Section 44AB

 

Union Budget 2021 announced the increase in the Tax Audit Limit increased to Rs.10 crores from 5 crores  for those using Digital Transaction Mode.

 

11.Faceless ITAT-A revolution in litigations

 

Budget 2021 proposes a National Faceless Income Tax Appellate Tribunal Centre. All communication between the Tribunal and the appellant shall be electronic. Where personal hearing is needed, it shall be done through video-conferencing.

 

India’s Income Tax Appellate Tribunal (ITAT) was set up on 25 January 1941, and it was the first experiment in tribalization in the history of India. It is a second appellate authority under the direct taxes and the first independent forum in its appellate hierarchy. The orders passed by the ITAT can be subjected to appellate challenge, on substantial questions of law, before the respective High Court.

 

12.Reassessment & Reopening of Assessment: The budget proposal will amend section 148 of the Income Tax where the time limit for reassessment has been reduced to 3 years from 6 years.

In serious tax evasion cases too, only where there is evidence of concealment of income of Rs. 50 lakh or more in a year, can the assessment be reopened up to 10 years. Even this reopening can be done only after the approval of the Principal Chief Commissioner, the highest level of the Income Tax Department.

 Presently, an assessment can be re-opened up to 6 years and in serious tax fraud cases for up to 10 years. As a result, taxpayers have to remain under uncertainty for a long time.

 

13.Dispute resolution committee: Anyone with total income less than 50 lacs and disputed income less than 10 Lacs can approach this, faceless committee

 

14. Budget 2021 proposes Levy of TDS on Purchase of Goods

194 Q - A New Section

‘194Q. (1) Any person, being a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, shall, at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier, deduct an amount equal to 0.1 per cent. of such sum exceeding fifty lakh rupees as income-tax.

Explanations to the section-

Explanation.––For the purposes of this sub-section, “buyer” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the purchase of goods is carried out, not being a person, as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

(2) Where any sum referred to in sub-section (1) is credited to any account, whether called “suspense account” or by any other name, in the books of account of the person liable to pay such income, such credit of income shall be deemed to be the credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

Impact

Additional compliance burden on the deductor,addition to TDS mismatch issues for the deductee.

Increased tax collection for the Government.

 



15. Budget 2021 Rate of TDS/TCS would be doubled for Non-Filers of Returns

Section 206AB New Section

The Union Budget 2021 has introduced new special provisions to the Income Tax Act, 1961. The new provision is expected to discourage the practice of not filing returns by the ‘specified person’ whose case TDS has been deducted/collected. As per the new provision, a person in whose case TDS/TCS of Rs. 50,000 or more has been made for the past two years and who has defaulted to file return of income, the rate of TDS/TCS shall be deducted at the higher of the following rates: at twice the rate specified, at twice the rate or rates in force at the rate of five per cent.

It is also provided that the specified person shall not include a non-resident who does not have a permanent establishment in India. The provisions will come into effect from 1st July 2021. The penalty for late filing or Non filing of TDS statement is provided under section 271H. As per the section, where a person fails to file the statement of tax deducted/collected at source return on or before the due dates, then the assessing officer may direct such person to pay a penalty. The minimum penalty is Rs. 10,000 which can go up to Rs. 1,00,000. It should be noted that this penalty is in addition to late filing fees.

16.  Transaction Taxable under Income Tax are not liable for Equalisation Levy

Clause (50) of the said section provides for the exemption for the income arising from any specified service provided on or after the date on which the provisions of Chapter VIII of the Finance Act, 2016 comes into force or arising from any e-commerce supply or services made or provided or facilitated on or after 1st April, 2021 and chargeable to equalisation levy under the provisions of that Chapter. It is proposed to change the said year to 2020. It is proposed to substitute the Explanation to the said clause with Explanations 1 and 2. Explanation 1 proposes to clarify that the income referred to in this clause shall not include and shall never be deemed to have included any income which is chargeable to tax as royalty or fees for technical services in India under the said Act read with the agreement notified by the Central Government under section 90 or section 90A. Explanation 2 proposes to define the expressions “e-commerce supply or services” and “specified service” for the purposes of the said clause. These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.

Applicability of Equalisation Levy

Equalisation Levy is a direct tax, which is withheld at the time of payment by the service recipient. The two conditions to be met to be liable to equalisation levy:

The payment should be made to a non-resident service provider;

The annual payment made to one service provider exceeds Rs. 1,00,000 in one financial year.

. Services Covered Under Equalisation Levy

Currently, not all services are covered under the ambit of equalisation Levy. The following services covered:

 

Online advertisement;

Any provision for digital advertising space or facilities/ service for the purpose of online advertisement;

As and when any other services are notified will be included with the aforesaid services.

 

17. Tax incentives to IFSC

The  Finance Minister, Nirmala Sitharaman while announcing the Budget 2021-22 has announced the Tax incentives to International Financial Services Centre (IFSC). The government with the objective of attracting foreign investment into the infrastructure sector government had granted 100% tax exemption, subject to certain conditions, to foreign Sovereign Wealth Funds and Pension Funds, on their income from investment in Indian infrastructure. In addition to the tax incentives already provided, the Finance Minister proposed to include, among others, tax holiday for capital gains for aircraft leasing companies, tax exemption for aircraft lease rentals paid to foreign lessors; tax incentive for relocating foreign funds in the IFSC; and to allow tax exemption to the investment division of foreign banks located in IFSC. The government has now proposed to relax some of these conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment in infrastructure include, among others, tax holiday for capital gains for aircraft leasing companies, tax exemption for aircraft lease rentals paid to foreign lessors; tax incentive for relocating foreign funds in the IFSC; and to allow tax exemption to the investment division of foreign banks located in IFSC.
 
18. Govt. clarifies Depreciation on Goodwill –

The word goodwill was not specifically provided within the meaning of intangible assets.  But it was considered to be eligible for depreciation. By amending the definition and clarifying that depreciation of goodwill shall not be allowed, the government has resolved the debate of whether Section 32 of the IT Act provides for such depreciation.

The Union Budget 2021 has clarified that no depreciation on Goodwill shall be allowed. The bill also amends the definition of ‘block of assets’ by expressly excluding goodwill’ from intangible assets.  Earlier depreciation was allowed only on tangible assets but since 1998 depreciation of intangible assets had become a norm. then the intangible assets only included know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature.

These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to assessment year 2021-2022 and subsequent assessment years.

19. IDS Scheme 2016- Refund of Excess Payment to be sanctioned but No Interest

Presently, as per section 191 of the Finance Act, 2016, any excess amount of tax, surcharge or penalty paid in pursuance of a declaration made under the Income Declaration Scheme, 2016 shall not be refundable. The proviso to the section provides that the Central Government may, by notification, specify a class of persons to whom the excess amount so paid shall be refundable. However, the Union Budget 2021 has proposed to amend the proviso of section 191 of the Finance Act, 2016 which says that such excess amount of tax, surcharge or penalty paid in pursuance of a declaration made under the Scheme shall be refundable to the specified class of persons without payment of any interest. The amendment will take effect retrospectively from 1st June, 2016.

 

...
Global Economy

It isn’t that easy to have confidence the global economy because it feels as if it is built on a busted floorboard. Governments have large deficits and debt is rising worldwide. Interest rates are also still at a low. Stock markets cost more than they did in the past 100 years and China is become a bigger and bigger threat.

Chinese real estate has increased by 31% (mycpane.princeton.edu, 2018), as reported by Bloomberg. However, these flats are purchased usually only as investments and are kept vacant. The mortgage costs in China are around 6-7%(chinadaily.com, 2018), and the consumer debt-GDP ratio is larger than it was in the United States during the 2008 financial crisis. The Chinese government has two alternatives; either sustain the inflation of housing prices, or let real estate prices regularize, which would cause financial institutions to go broke. China is increasing development and they are not limiting development. Banks are going full steam ahead into the tentative real estate rumble.

The main point is the apartment’s purpose from the stat was to be an unoccupied asset and used as investment in China. It’s price will rise and rise, but at some point in time will drop along wih all real estate prices, and  both the country’s economy and banking system will go down with it. An analogy of this can be sardines that are being sold in the market when they were at a time not easily available in California. One man became sick after eating them and told the seller that they were bad sardines. The seller replied that the sardines were not for eating but for trading. The conclusion to draw is that nothing lasts forever.

Today, making an investment in this global economy is much like playing a game. You have some time to grab what’s there, but only a few will. Time will eventually be over in the game. In the past decade, being vigilant has not been tremendously useful. All assets improved in price due to low interest rates. People felt well off with these costly assets, and that fashioned some economic expansion. Due to the lower interest rates, people felt tempted to riskier assets, which formed a divergence between a person’s risk affordability and the assets in their portfolio.

By and large, it has been that the more risk one took, the more money they made, but if the risks become large, the investor will react foolishly.

This is why it is absolutely necessary to have options. With an economy built by falsely appreciated assets, means that there will always come a time when the prices will go down, but the reasons won’t always be perceptible. It could be higher interest rates, or the boom of another country’s economy, such as China; or something that we can’t even foretell. When interest rates are low, global economies are greatly leveraged, and central banks and governments will not have much control to aid. This is why it is valuable to hold stocks in healthcare companies where the demands for their products does not vary, and it is always driven by the older age bracket population worldwide.

 

It isn’t that easy to have confidence the global economy because it feels as if it is built on a busted floorboard. Governments have large deficits and debt is rising worldwide. Interest rates are also still at a low. Stock markets cost more than they did in the past 100 years and China is become a bigger and bigger threat.

Chinese real estate has increased by 31% (mycpane.princeton.edu, 2018), as reported by Bloomberg. However, these flats are purchased usually only as investments and are kept vacant. The mortgage costs in China are around 6-7%(chinadaily.com, 2018), and the consumer debt-GDP ratio is larger than it was in the United States during the 2008 financial crisis. The Chinese government has two alternatives; either sustain the inflation of housing prices, or let real estate prices regularize, which would cause financial institutions to go broke. China is increasing development and they are not limiting development. Banks are going full steam ahead into the tentative real estate rumble.

The main point is the apartment’s purpose from the stat was to be an unoccupied asset and used as investment in China. It’s price will rise and rise, but at some point in time will drop along wih all real estate prices, and  both the country’s economy and banking system will go down with it. An analogy of this can be sardines that are being sold in the market when they were at a time not easily available in California. One man became sick after eating them and told the seller that they were bad sardines. The seller replied that the sardines were not for eating but for trading. The conclusion to draw is that nothing lasts forever.

Today, making an investment in this global economy is much like playing a game. You have some time to grab what’s there, but only a few will. Time will eventually be over in the game. In the past decade, being vigilant has not been tremendously useful. All assets improved in price due to low interest rates. People felt well off with these costly assets, and that fashioned some economic expansion. Due to the lower interest rates, people felt tempted to riskier assets, which formed a divergence between a person’s risk affordability and the assets in their portfolio.

By and large, it has been that the more risk one took, the more money they made, but if the risks become large, the investor will react foolishly.

This is why it is absolutely necessary to have options. With an economy built by falsely appreciated assets, means that there will always come a time when the prices will go down, but the reasons won’t always be perceptible. It could be higher interest rates, or the boom of another country’s economy, such as China; or something that we can’t even foretell. When interest rates are low, global economies are greatly leveraged, and central banks and governments will not have much control to aid. This is why it is valuable to hold stocks in healthcare companies where the demands for their products does not vary, and it is always driven by the older age bracket population worldwide.

 

...
Investing

Investing is something that will keep evolving throughout your life. It’s good to start as early as you can, and even if you haven’t started, it doesn’t matter how old you are because you can always start from today. In order to be a successful investor, you first need to make sure your spending habits are firm and fixed so that you can continuously contribute to your investments.

Once you have saved up a decent amount of money to begin, you can start deciding how you want to invest that money. You need to get clear on what your needs are and how much risk you’re willing to take. You can divide this question into two parts: do you want money for growth or for income. That way you can decide if you want to put money into investments that will grow or that will produce income. This will depend on your goals. If you are investing for retirement then you don’t need to produce an income right now. If you are investing to go on a vacation, then you do.

You  will always have to tolerate some risk when you invest, but you can understand how much risk to tolerate depending on how you tolerate price changes in your investments and how that will balance with your rate of return goal. If you are planning to keep a specific investment for a long period of time, you can tolerate a higher level of risk because any losses can be made up, but if you want to save money for a car then you will not be able to sustain as much risk and need more liquidity on your investment.

Investment decisions are personal, but there are some strategies everyone can follow.

Always make sure you have a cash reserve in any CD or savings account so you are always safe in case of emergencies (liquidity). If you can keep a long investment, then you can also have a part of your portfolio in stocks so your savings don’t become low in value. Also try to visit a financial advisor at least yearly so you can review your investments and keep up to date on any issues.

Also always be well-informed on the taxable status of your investment because you need that information when you are putting together or going through a particular investment approach. A tax advisor can address any questions you have.

Your investing decisions will be based on where you are in life, and what life stage you are in. If you are in your 40s, investing for retirement will be important to you. If you have only just gotten your first proper job, then you will need to start a savings account and let that put up a cash store. If you get a higher salary, you can increase your cash store. When you get married, if your spouse also works, then you need to establish new investments after combining incomes. If you just had a kid, your focus will be on growing life insurance and opening a college fund. When you reach your 50s or retirement age, you will want to augment retirement savings contributions. When you finally retire, you should review your income after retirement and decide on investments that will afford returns and allow for increase in assets to fund your future.

Investing is something that will keep evolving throughout your life. It’s good to start as early as you can, and even if you haven’t started, it doesn’t matter how old you are because you can always start from today. In order to be a successful investor, you first need to make sure your spending habits are firm and fixed so that you can continuously contribute to your investments.

Once you have saved up a decent amount of money to begin, you can start deciding how you want to invest that money. You need to get clear on what your needs are and how much risk you’re willing to take. You can divide this question into two parts: do you want money for growth or for income. That way you can decide if you want to put money into investments that will grow or that will produce income. This will depend on your goals. If you are investing for retirement then you don’t need to produce an income right now. If you are investing to go on a vacation, then you do.

You  will always have to tolerate some risk when you invest, but you can understand how much risk to tolerate depending on how you tolerate price changes in your investments and how that will balance with your rate of return goal. If you are planning to keep a specific investment for a long period of time, you can tolerate a higher level of risk because any losses can be made up, but if you want to save money for a car then you will not be able to sustain as much risk and need more liquidity on your investment.

Investment decisions are personal, but there are some strategies everyone can follow.

Always make sure you have a cash reserve in any CD or savings account so you are always safe in case of emergencies (liquidity). If you can keep a long investment, then you can also have a part of your portfolio in stocks so your savings don’t become low in value. Also try to visit a financial advisor at least yearly so you can review your investments and keep up to date on any issues.

Also always be well-informed on the taxable status of your investment because you need that information when you are putting together or going through a particular investment approach. A tax advisor can address any questions you have.

Your investing decisions will be based on where you are in life, and what life stage you are in. If you are in your 40s, investing for retirement will be important to you. If you have only just gotten your first proper job, then you will need to start a savings account and let that put up a cash store. If you get a higher salary, you can increase your cash store. When you get married, if your spouse also works, then you need to establish new investments after combining incomes. If you just had a kid, your focus will be on growing life insurance and opening a college fund. When you reach your 50s or retirement age, you will want to augment retirement savings contributions. When you finally retire, you should review your income after retirement and decide on investments that will afford returns and allow for increase in assets to fund your future.