How changes affect a taxpayer - The optional I-T regime with more income slabs and lower income tax rates is also available for consideration of taxpayers

 The optional I-T regime with more income slabs and lower income tax rates is also available for consideration of taxpayers

The optional income tax regime with more income slabs and lower income tax rates is also available for consideration of taxpayers. But the taxpayer has to forgo most exemptions including standard deduction.: Shutterstock

Pinak Ghosh   |  TT   |    02.02.21  :  ◘ There is no change in the income tax slabs or exemptions in this union budget. The standard deduction remains at Rs 50,000 and exemptions of up to Rs 1.5 lakh available under section 80C.

◘ The optional income tax regime with more income slabs and lower income tax rates is also available for consideration of taxpayers. But the taxpayer has to forgo most exemptions including standard deduction.

◘ Senior citizens, above 75 years, who have pension and interest income are now exempt from filing returns. But, there are caveats. The interest income has to be in the same bank account where pension is received. A declaration has to be furnished to the bank who would compute the income tax

◘ Tax exemption is available on zero coupon infrastructure bonds by notified infrastructure debt funds. These bonds are likely to be long term in respect of which no payment or benefit is received before maturity or redemption.

◘ Additional deduction of Rs 1.5 lakh under section 80EEA on home loan interest on affordable housing extended by one year till March 31, 2022

◘ Tax exemption on maturity proceeds of unit linked insurance plans (Ulips) having annual premium capped up to Rs 2.5 lakh. This cap is applicable only for policies taken on or after February 1, 2021.

◘ Tax exemptions on interest income earned on employees’ contribution to various provident funds restricted to Rs 2.5 lakh. This is applicable on contributions made on or after April 1, 2021.

◘ The income tax returns will have more components that are already pre-filled. Details such as capital gains, dividend income interest from banks and post offices will be automatically filled in.

◘ As part of the LTC Cash Scheme, amount given to the employee in lieu of LTC shall be exempt from tax subject to incurring of certain specified expenditure.