Union Budget 2021 Towards a thriving India - Embassy of India, Hague, Netherlands
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Union Budget 2021 Towards a thriving India
Key tax proposals – corporate and individual taxation
No change in tax rates
• Tax rates for corporates and individuals
Employee’s contribution to welfare funds
• To provide that an employee’s contribution
Highlights
remain same as last year. to welfare funds, which is deemed to be an
employer’s income, will be tax deductible
only if such sum is credited to the relevant
fund on or before the prescribed due date
Goodwill not an intangible asset for tax
per the law.
depreciation
• A deduction for such contribution will not
• Goodwill (including existing goodwill) not to
be available on a payment basis. Employee’s contribution to welfare funds
be eligible for tax depreciation to be deposited before the due date
• These amendments are proposed to be
• Where goodwill forms part of an asset block provided under law for claiming
effective from FY 20-21.
on which tax depreciation has been claimed,
the asset block’s written down value and the
deduction
short-term capital gains on goodwill will be
determined in a manner to be prescribed Other key proposals
• Acquisition cost of acquired goodwill will be Tax depreciation not available on goodwill
• To tax the interest accrued on employee
the purchase price (as reduced by obtained contributions to provident fund/other
tax depreciation); it will be nil for other cases provident funds exceeding INR 250,000 in a
• The amendment is proposed to be effective Slump exchange now taxable
year, subject to conditions
from FY20–21
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© 2021 Deloitte Touche Tohmatsu India LLP
International taxation – Equalization levy
Equalisation levy
• To provide ‘online sale of goods’ and ‘online • The consideration liable for equalisation
Highlights
provision of services’ to include one or levy shall not include consideration, which
more of the following online activities: is taxable as royalty or fees for technical
− Acceptance of offer for sale services in India
− Placement of purchase order
− Acceptance of purchase order • To make the following changes with respect Any ‘online element’ of a transaction
− Payment of consideration to the income-tax exemption: may trigger equalisation levy
− Supply of goods or provision of services, − The exemption will not apply to
partly or wholly consideration, which is taxable as a
• The consideration will include the following: royalty or fees for technical services in
− For sale of goods irrespective of whether India
the e-commerce operator owns the − The exemption will apply from 1 April
goods; or 2020
− For provisions of services irrespective of • These amendments are proposed to be
whether the service is provided or effective from FY20-21
facilitated by the e-commerce operator
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© 2021 Deloitte Touche Tohmatsu India LLPDispute Resolution
Board for Advance Ruling (BFAR) Dispute Resolution Committee Faceless Tribunal appeals
• AAR was non-functional for • For eligible small taxpayers, a new Faceless scheme may be notified on or
substantial time because of non- voluntary mechanism is being before 31 March 2023
availability of eligible person to fill the activated • All communication shall be electronic
post of Chairman and Vice Chairman • Returned income below 5 million; and • Where personal hearing is needed, it shall
• AAR is being replaced by one or more Variation in income less than 1 million be done through video-conferencing
BFAR each comprising of two • Other disqualifications mentioned • Optimisation of resources and achieve
members not below the rank of Chief
• Committee has powers to reduce or functional specialisation
Commissioner
waive penalty, grant immunity from
• The Government has retained an prosecution
option to allow faceless functioning of
BFAR • Faceless scheme for this committee
may be notified
• BFAR orders are appealable, strict
deadlines
− Appeal can be filed within 60 days;
− High Court allowed power to
extend it by another 30 days
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© 2021 Deloitte Touche Tohmatsu India LLPCompliance and procedural matters
TDS on purchase of goods
• TDS of 0.1 % on purchase of goods from a
Re-assessment proposed to be revamped
• Entire concept of re-assessment revamped;
Highlights
resident exceeding INR 5 million in an FY concept of ‘reason to believe’ dropped
proposed to be introduced from 1 July • Reopening to happen only if AO is in
2021; other conditions applicable as well possession of information, which suggests that
the income chargeable to tax has escaped
assessment TCS on sale of goods effectively replaced
Tax filing and assessment time limits
• Time limit to re-open reduced to three years; with TDS on purchase of goods
• Belated or revised return to be filed within
time limit is 10 years where AO has books of
9 months (at present 12 months) after the
account or other documents or evidence
end of the FY, or before the completion of
revealing that income, represented in the Reduced timelines for filing return,
assessment, whichever is earlier
form of asset, has escaped assessment of INR
• Time limit reduced for processing tax processing of return, completion of
5 million or more
returns to 9 months from the end of year in
• Process for passing an order before issuing a
assessment, etc.
which tax return is filed
re-opening notice
• Time limit lowered for initiating an
assessment to 3 months from the end of
the year in which return of income is filed
• Time limit is reduced for the completion of
assessment proceedings to 21 months from Points to ponder
the end of the FY for tax returns filed for Amend the internal control systems in order to
FY20-21 and onwards comply with the TDS on purchase of goods
along with TCS.
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© 2021 Deloitte Touche Tohmatsu India LLPQuestions
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Partner
Deloitte Haskins & Sells LLP
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