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IMPACT OF UNION BUDGET 2021 22

ON PERSONAL FINANCE

MAYURIKA PATWARI
FINANCE MANAGER

Union Finance Minister Nirmala Sitharaman presented Union
Budget 2021-22 in Parliament on 01.02.2021. While she made no
changes to the income tax slabs, other announcements were done
that can a ect one's personal nances.

Following are some which can be of relevance to us:
Pre- ling of income tax return (ITR)

The government on Monday said that details of salary income, tax
payments, TDS, etc. will already come pre- lled in income tax
returns.

To further ease ling of returns, details of capital gains from listed securities, dividend
income, and interest from banks, post o ce, etc. will also be pre- lled.

Tax incentives for A ordable Housing
In order to incentivize the purchase of the a ordable house, FM proposed to extend the
eligibility period for a claim of the additional deduction for the interest of Rs 1.5 lakh paid for
the loan taken for the purchase of an a ordable house to March 31, 2022.
This means, buying a home priced below Rs 45 lakh could fetch the buyers' tax exemptions
up to Rs 1.5 lakh on the interest paid towards the loan in question.

Rationalization of taxation of Unit Linked Insurance Plan (ULIP)
Budget 2021 proposed to allow tax exemption for maturity proceed of the ULIP having
annual premium up to Rs 2.5 lakh. 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 will be applicable only for the policies taken on or after February 1,2021.
Interest earned on annual PF contribution over Rs 2.5 lakh to be taxable

In order to rationalize tax exemption for the income earned by high-income employees, the
Union Finance Minister Nirmala Sitharaman while presenting Budget 2021, proposed to
restrict tax exemption for the interest income earned on the employees’ contribution to
various provident funds to the annual contribution of Rs 2.5 lakh.

"This restriction shall be applicable only for the contribution made on or after April 1, 2021,"
FM said.
In simple words, this means that the interest earned on the annual provident contribution
towards Employee contribution and VPF above Rs 2.5 lakh will be taxable.

According to experts, Rs 2.5 lakh annual threshold means that a person contributing up to
Rs 20,833 a month to PF (basic salary of up to Rs 1.73 lakh a month) will escape the tax.

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