NEW DELHI: Budget this year has not been too generous on individual taxpayers as the finance minister has shied away from making any major changes in tax slabs, tax rates or giving any exemptions to individual taxpayers.
The focus of the finance minister seems rather to be strengthening the tax reporting mechanism as far as individual taxation is concerned. The budget proposes to allow taxpayers to update the income tax returns – in case of any error or omissions for 2 years. This will enable taxpayers to declare income that they might have missed out earlier.
“Presently, if the department finds out that some income has been missed out by the assessee, it goes through a lengthy process of adjudication. Instead, with this proposal now, there will be a trust reposed in the taxpayers that will enable the assessee herself to declare the income that she may have missed out earlier while filing her return,” the FM said while proposing change.
Earlier, one could revise the tax return within the completion of the assessment year. The budget has given a minor relief to taxpayers with disabled dependents. At present, a taxpayer with a disabled dependent is allowed deduction benefit up to Rs 75,000 or Rs 1,25,000 (depending on the severity of the disability) invested in an annuity plan.
However, the deduction is allowed only if the annuity or lump sum benefit is availed after the death of the parent or guardian. The FM has relaxed the rule and allowed such deductions even if such sum is received during the life-time of the subscriber on attaining the age of 60 years, provided the payment to the scheme has been discontinued.
Income tax deduction on employer contributions to National Pension System (NPS) is limited to 10% of salary. For central government employees, however, 14% of salary is deductible. The same benefit has now been extended to state government employees.
However, this benefit has not been extended to non-government NPS subscribers. While there’s not much to cheer in the budget for individuals, the budget has also been unkind to those who invest in cryptocurrencies.
Update return
To strengthen reporting the budget proposes to allow taxpayers to update the income tax returns – in case of any error or omissions — for 2 years. This will enable taxpayers to declare income that they might have missed out on earlier.
