Category: Personal Finance

With An Interest Rate Of 7% This FD Can Be A Good Bet For Short Term Investors

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Investment

oi-Vipul Das

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A good approach to enhance your wealth is to invest, and in order to gain the best return on investment there are many high-return investing opportunities, such as Public Provident Funds, bank or corporate fixed deposits, post office savings schemes, FDs of small finance banks, and more. The preference of an investment option, though, varies according to your risk appetite, strategic objectives and liquidity. Fixed-income instruments such as fixed deposits are the ideal investment vehicles for investors finding lucrative returns and stability, along with the security of their principal.

A fixed lock-in term of 3 months falls with a Bajaj Finserv or Bajaj Finance Fixed Deposit. Although there is no penalty towards premature withdrawal of money, in terms of accrued interest one can lose money. Therefore, in the event of a monetary crisis or other emergency, the account holder can just attempt to opt for early withdrawal. Conversely, without missing out on the interest, one can apply for a loan against FD and get the necessary investment capital. Bajaj Finserv provides its customers a fixed-deposit scheme with competitive interest rates and high credit scores from the nation’s leading rating firms.

With An Interest Rate Of 7% This FD Can Be A Good Bet For Short Term Investors

Key benefits of Bajaj Finance FD

It is of great significance to find the best financial institution to invest in a fixed deposit. Bajaj Finance Fixed Deposit is a perfect choice for those searching for a blend of stability and attractive returns by taking into account the benefits covered below:

  • It is best to be committed for the longer term while investing in a Fixed Deposit. For tenures of 36 months or more, Bajaj Finance provides the best FD interest rates. By holding for 36 months or longer, you can enjoy the profit of FD interest rates of up to 7.25 percent. Consequently, owing to the advantage of compounding, your yields are higher by selecting a longer tenure.
  • Bajaj Finance provides an additional rate advantage of 0.10 percent on online deposit for those under 60 years of age. This ensures that from the convenience of your home you can open an FD account and reap benefit from an added rate gain. Elderly people can also benefit from a 0.25 percent additional rate benefit, which lets them get better returns against their fixed deposit.
  • It is better to pick payouts at maturity for those seeking to increase their corpus with Bajaj Finance. Bajaj Finance proposes a better cumulative Fixed Deposit interest rate with payouts at expiration of the FD tenure. If you want to boost your returns with Bajaj Finance FD, pick auto-renewing your deposits and receiving an additional interest rate of 0.10 percent. Bajaj Finance helps you to deposit effortlessly and also provides the best security on your investment, with the highest ICRA and CRISIL scores, which ensures that your principal amount is secured.
  • It is incredibly convenient to invest in a Bajaj Finance Fixed Deposit. Just visit the online FD form for Bajaj Finance, and fill in your personal, banking and other required specifics. Via online banking, you can make deposits and earn your online Fixed Deposit Approval. You can get the Fixed Deposit Receipt by mail at your confirmed address.

Loan against FD

Bajaj Finserv gives its customers up to 75 percent of the amount deposited in a cumulative fixed deposit and up to 60 percent of the capital deposited in a non-cumulative fixed deposit in a fixed deposit system. Depositors can also take advantage of Bajaj Finserv online fixed deposit loans of up to Rs. 4 lakh.

Multi deposit option

You can also opt to contribute to several deposits with a single cheque payment when filling in the FD application form of Bajaj Finserv. Prefer for varying maturity periods for both of these deposits and patterns of interest payouts. Prefer for varying maturity periods for both of these deposits and patterns of interest payments. You can withdraw prematurely from a single deposit if you need immediate funds, without breaking any deposits. Contributing in a Bajaj Finance Fixed Deposit provides you a blend of easy investing procedures, up to 7.25 percent attractive interest rates, and deposit cover, making it one of the best investment opportunities for you to quickly improve your wealth.

Bajaj Finserv FD Rates

The positive effects of Bajaj Finance FD are competitive FD interest rates, flexible tenures, periodic interest payments, multi-deposit facilities, auto-renewal facilities, and convenient FD loans can be made. By investing online, those under 60 years of age can receive the higher rates of up to 7.10 percent, whereas elderly people can get fixed returns of up to 7.25 percent on a minimum deposit amount of Rs 25,000. This guarantees a hassle-free savings approach and the privilege of increasing your deposits with a decent fixed deposit rate. With effect from 01 Feb 2021 here are the current FD interest rates delivered by Bajaj Finance on cumulative deposits, with payouts at maturity, for those seeking to invest in an FD for higher and guaranteed returns.

Tenure ROI in % for deposits up to Rs.5 crore
12 – 23 6.15
24 – 35 6.60
36 – 60 7.00



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Budget 2021: How Interest Earned On PF Above Rs 2.5 Lakhs Is Going To Taxable?

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Personal Finance

oi-Vipul Das

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In introducing the 2021 Budget, finance minister Nirmala Sitharaman announced the tax treatment of interest on multiple provident funds where income is exempted. Actively, Section 10 of Clause (11) of the Act allows for a waiver from any payout from a provident fund to which the Provident Funds Act 1925 relates or from any other provident fund developed by the Government. Which implies that, currently, the income received on the EPF in the employee’s hands is entirely exempted from taxation. The current regime specifies that circumstances have come to the attention that certain employees contribute considerable amounts to these accounts, and under clause (11) and clause (12) of section 10 of the Act, any interest received on such contributions is exempted from taxation.

Budget 2021: How Interest Earned On PF Above Rs 2.5 Lakhs Is Going To Taxable?

This is particularly significant in the field of employees who contribute towards VPF. Consequently, the FM discloses that it is provided that the regulations of clauses (11) and (12) of section 10 of the Act should be added, provided that the restrictions of such clauses do not extend to the interest earned on the holder’s account during the preceding year, to the degree that they refer to the amount or the gross amount of the deposit rendered by the individual in excess of Rs 2.5 lakh in the preceding year. The EPF’s rate of interest is now 8.5 per cent annually. For 2019-20, the government further reduced the Employee Provident Fund interest rate to 8.50 percent from 8.65 percent in the last year. The deposit towards EPF contributes to 12% of the basic wage.

That being said, the laws enable the contribution to be raised by up to 100 per cent of the minimum wage. Under Voluntary Provident Fund additional contribution also counts for tax deduction u/s 80C. Although the adjustment in the taxation of employer contributions in 2019 will have an effect on higher salaried workers, the adjustment introduced in the current budget in terms of interest received on the contribution by employees will seek a big influence. This ensures that the interest gained on the PF balance will be subject to taxation in the future if the investment crosses Rs 2.5 lakh per annum.

Budget 2021: How Interest Earned On PF Above Rs 2.5 Lakhs Is Going To Taxable?

How to deal with it?

The 2021-22 Budget has loosened rules that take advantage of the available tax-saving investment opportunities for high-income employees. After that, interest gained above Rs 2.5 lakh on PF investments is subject to taxation. This rule extends to contributions which are rendered on or after 1 April 2021. This is a reinforcement of last year’s decision by the government to fix an annual ceiling of Rs 7.5 lakh for employer contributions, any contribution above which was made taxable, to the PF, National Pension Scheme (NPS). PF contributions were entitled to tax deductions up to a limit of Rs 1.5 lakh per year under Section 80C.

Interest earned and withdrawals are completely tax-free. Since it offers guaranteed returns close to the EPF, this is a prominent low-risk savings avenue among other low-risk fixed income investments, such as limited savings schemes of post offices and bank deposits. Since it offers guaranteed returns close to the EPF, this is a prominent low-risk savings avenue. Earnings on such low-risk fixed income investments, such as limited savings schemes of post offices and bank deposits, are related to the economy. That being said, it could be simpler said than done to stratify the interest on the current corpus accrued over the years from the one received on the contribution beyond Rs 2.5 lakh per year for tax reasons.

Budget 2021: How Interest Earned On PF Above Rs 2.5 Lakhs Is Going To Taxable?

And after the expiration date of the deadline for filing IT returns, taxpayers were entitled, with interest and penalty fees, to file outstanding returns. In the event of any mistakes, taxpayers may still amend their returns submitted in a given year. The time period for the filing of amended returns was either at the close of the appraisal year or prior to the expiration of the previous appraisal. The Budget 21-22 stated that the date may be advanced by three months. It is now possible to file the amended return three months before the end of the applicable appraisal year or before the expiration of the assessment whichever is earlier. A higher rate of tax deduction at source (TDS) is also introduced by the Budget for the taxpayers who did not submit their tax filings in any of the preceding years. In the case of these kinds of individuals, their wages for the current year will be entitled to a TDS rate which is 5% or double the TDS rate usually applied to that profit, whichever is greater. For example, if the rental profit surpassed Rs 2.4 lakh in any year, the occupant was supposed to subtract TDS on the rent at 10 percent.

Currently, if you haven’t submitted your ITR in the last two years, the TDS limit on your rental profit was already 20%. The budget 21-22 has reinforced guidelines for the deposit of employee contributions by employees into different welfare schemes. Any lag on this consideration typically results in the employees’ diminution of income. In the process to facilitate the appropriate contribution by the employers of the employee’s contribution to these investments, it was recommended to clarify that the delayed contribution by the employer of the employee’s contribution should never be permitted as a tax benefit to the employer.



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Russell Gaitonde, Deloitte, BFSI News, ET BFSI

Personal Finance

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Russell Gaitonde, Partner at Deloitte said, “This year’s budget was a fairly difficult act that the government had to achieve given that this year was a very unusual one with the global pandemic. The economy needed a lot of fiscal stimulus to get back on the path of recovery and i am glad that the hon’ble finance minister has gone down the path of giving the requisite fiscal stimuluses in terms of the investments proposed to be made in the infrastructure sector as well as the PSU divestments plans and recapitalisation of PSB banks. It is a road map that the FM has put out saying that the government intends to bring down the fiscal deficit to 4.9% by FY26. It’ll take around 5 years for the government to bring down the fiscal deficit but clearly there is an intention and path they have in mind.”

He added, “If you look at the budget in terms of balancing the books, the FM had to raise funds from somewhere. One option was to either increase the taxes or to effectively do it by way of a divestment plan. Had there been an increase in taxes which the FM has not done, there would have been a lot of human cry and created a negative sentiment. To balance that out the plan of the government is to go down the path of disinvestments which is the right thing to do.”

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Veena Sivaramakrishnan, BFSI News, ET BFSI

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The resolution framework for stressed assets has been in the works for sometime from the time of Project Sashakt itself and the AMC-ARC structure has been attractive leading to competition because there is now an expectation that there will be competition in this market so the price discovery would get better because NPAs don’t have a mechanism by which they’re traded.

Veena said, “AIFs coming into fray would allow other players to also enter into this market which is not permitted directly and certainly the first step in the right direction.”

On the framework, she says, “ARC purchases bad debt and looks at recovering directly from the borrower and is fairly limited. With an AMC coming into picture means there’s a specialist in the frame who can provide the know-how on actual resolution and outside IBC.”

An expert AMC will play a role in restructuring an account and therefore arrive at a resolution.

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How Budget 2021-22 Is Going To Influence My Personal Finance?

Personal Finance

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Elderly people with an age of 75 or more do not have to file IT return

Budget 2021 introduces an exemption from paying income tax returns for elderly people who are 75 years of age or older and have only retirement and interest income in a fiscal year. They will no longer be required to file income tax returns (ITR) as per the provisions under Budget 2021. The bank giving them income will subtract from their bank account the required tax. According to the descriptive memorandum, the gain will only be possible if the following criteria are met:

  • Elderly people residing in India and are 75 years of age or older in the previous year.
  • That being said, he or she may also get interest income from the same bank where he earns his pension income, in contrast to his pension benefit.
  • The Government shall inform the designated bank of a few banks that are a banking company, and the Government shall be obliged to provide a request to the specific bank.
  • The statement shall provide such details in such a form and shall be checked in such conditions as may be determined. Once the statement has been prepared, the bank in question will have to measure the income of such a senior citizen after granting access to the deduction permissible under Chapter VI-A and the refund allowable under Section 87A of the Act for the relevant year of taxation and to subtract income tax on the grounds of the rates in effect. After this is completed, there will be no provision for those senior citizens to have income return for this appraisal year. This move will take place on 1 April 2021.

Deposit Insurance Cover to become more regulated

Deposit Insurance Cover to become more regulated

The finance minister stated that the government and the Reserve Bank of India will formulate a better regulatory mechanism for bank investors to seek deposit insurance benefits when their banks face a difficult situation. The deposit insurance cover for bank depositors has raised from Rs 1 lakh to Rs 5 lakh in the Budget last year. So far, though, this is applicable only to banks when they go into bankruptcy. And before the bank went bankrupt, a better and revamped process will now support investors. This may be an optimistic move and prevents depositors from the sort of circumstances we have seen in the recent past where banks and poor accessibility to deposits is enforced by the RBI moratorium.

Social security advantage expanded to many other employees

Social security advantage expanded to many other employees

A few tax-payers who lost their employment due to Covid-19 last year and had to undertake freelancing jobs are getting some support from Budget 2021. In her budget speech today, finance minister Nirmala Sitharaman introduced the release of a platform to gather specific information on gig, buildings and construction workers, among others, to assist the unorganized labour market, in particular migrant workers. She also stated that the government has introduced a One Nation One Ration Card mechanism from which recipients in every part of the country can seek their rations. This will especially benefit migrant workers. Sitharaman noted that 32 states and UTs are introducing the One Nation One Ration Scheme, touching nearly 69 crore recipients, covering a total of 86 percent of recipients.

In the coming months, the leftover states and UTs will be incorporated. For the first time internationally, social security benefits will apply to gig and platform employees, said FM. Some measures to assist workers have been further developed by the government. In her budget statement, the Finance Minister clarified that minimum pay will extend to all types of employees and will be supported by the Employee State Insurance Corporation. She also declared that with single authorisation, and online returns, the compliance pressure on employers will be minimized.

New investor charter for investor protection

New investor charter for investor protection

On Monday, Union Finance Minister Nirmala Sitharaman declared a raise in the insurance cap for Foreign Direct Investment (FDI) from 49 percent to 74 percent. Chairing the Union budget for 2020-21, she added, “We are proposing to modify the 1938 Insurance Act and introduce a new investor charter for investor protection. A securities market code that covers the SEBI Act, the Government Securities Act and the Depositories Act will also be introduced.

Faceless tax dispute resolution mechanism for small taxpayers

Faceless tax dispute resolution mechanism for small taxpayers

In her speech on Budget 2021 on February 1, finance minister Nirmala Sitharaman stated that the government will establish a faceless tax dispute settlement system for small taxpayers. The FM declared that for those transacting 95 per cent online, the limit for tax audit has been raised to Rs 10 crore vs Rs 5 Cr. For taxable income up to Rs 50 lakh and disputable income of Rs 10 lakh, the faceless dispute resolution committee will be liable. I propose to establish a dispute resolution board to help minimize lawsuits for small taxpayers, which will be faceless in order to ensure consistency and efficiency. For the approach committee with a taxable income up to Rs 50 Lakhs & disputed income up to Rs 10 Lakhs individuals with a taxable income up to Rs 50 Lakhs & disputed income up to Rs 10 Lakhs will be eligible. FM said in her Budget speech. Sitharaman had founded a tax dispute settlement and faceless appeals tribunal in Budget 2020 and had waived off interest and penalty on the disputed tax prior to 31 March 2020.

Pre-filled Income-Tax Return (ITR) forms for taxpayers

Pre-filled Income-Tax Return (ITR) forms for taxpayers

On Monday, during the presentation of the Union Budget 2021-22, Union Finance Minister Nirmala Sitharaman stated the Union Finance Ministry will incorporate pre-filled Income Tax Return (ITR) forms for taxpayers with details regarding their mutual fund capital gains, shares, dividend income and interest earned from banks. Last year, via the Finance Bill, the government has also incorporated amendments to the Income Tax Act, which will enable the government to seek information from banks, brokers, depositories on a taxpayer’s annual financial transactions. The tax deducted at source (TDS) on dividend income above Rs 5,000 will also be specified in the Form 26AS and will assist in pre-filling your IT returns. All personal details, taxes paid and bank account details are available in the new pre-filled form that taxpayers can download the form using their permanent account number (PAN).

Additional deduction of Rs 1.5 lakh on home loan interest is extended till March 2022

On Monday, the government extended by one more year to March 31, 2022 the additional tax deduction of Rs 1.5 lakh on interest charged on housing loans for the purchase of affordable homes, a bid to improve demand in the stagnant real estate market. The additional Rs 1.5 lakh exemption over and above Rs 2 lakh was incorporated in the budget for 2019. This was permitted for the first time for those purchasing homes for up to Rs 45 lakh. Finance Minister Nirmala Sitharaman stated the government sees ‘Housing for All’ and affordable housing as focus areas in the budget speech for the fiscal year 2021-22. Today, a person buying a reasonable house is going to get an increased interest exemption of up to Rs 3.5 lakh. Ms Sitharaman stated, “Further, to maintain the availability of subsidized houses, I introduce that subsidized housing projects can receive a tax holiday for one more year – till 31st March 2022,” She also stated that the government is geared to incentivising the provision of migrant workers with affordable rental accommodation.

Tax-efficient zero-coupon bonds for infra debt funds

Tax-efficient zero-coupon bonds for infra debt funds

Zero-coupon notes, also called discount bonds, do not pay the bondholders any interest. They get a special offer on the bond’s face value respectively. On maturity, the bondholder earns his or her investment’s principal amount. On Monday, while unveiling Budget 2021, Finance Minister Nirmala Sitharaman revealed tax-efficient zero-coupon bonds for infra-debt funds.

Relaxation for non-resident Indians (NRIs)

Relaxation for non-resident Indians (NRIs) is declared on Monday by Union finance minister Nirmala Sitharaman while proposing the Union Budget 2021. Sitharaman stated that they face problems relating to their accrued earnings in their overseas retirement accounts whenever NRIs return to India, which mostly happens due to mismatches in taxation dates. She also emphasized their challenges in receiving credit in international jurisdictions for Indian taxes, resulting in double income tax. As per the circular outlining the parameters of the Finance Bill, 2021, a mismatch on withdrawals from retirement funds that were established while staying in foreign countries was reported in the year of taxation. Presently, withdrawals may be taxed in overseas nations on a receipt basis, whereas in India on an accrual basis. The Government also introduced a new section 89A of the Income Tax Act, 1961, to resolve the discrepancy in the taxation of income from the approved foreign retirement fund.

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How Budget 2021-22 Is Going To Influence My Personal Finance?

Personal Finance

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Elderly people with an age of 75 or more do not have to file IT return

Budget 2021 introduces an exemption from paying income tax returns for elderly people who are 75 years of age or older and have only retirement and interest income in a fiscal year. They will no longer be required to file income tax returns (ITR) as per the provisions under Budget 2021. The bank giving them income will subtract from their bank account the required tax. According to the descriptive memorandum, the gain will only be possible if the following criteria are met:

  • Elderly people residing in India and are 75 years of age or older in the previous year.
  • That being said, he or she may also get interest income from the same bank where he earns his pension income, in contrast to his pension benefit.
  • The Government shall inform the designated bank of a few banks that are a banking company, and the Government shall be obliged to provide a request to the specific bank.
  • The statement shall provide such details in such a form and shall be checked in such conditions as may be determined. Once the statement has been prepared, the bank in question will have to measure the income of such a senior citizen after granting access to the deduction permissible under Chapter VI-A and the refund allowable under Section 87A of the Act for the relevant year of taxation and to subtract income tax on the grounds of the rates in effect. After this is completed, there will be no provision for those senior citizens to have income return for this appraisal year. This move will take place on 1 April 2021.

Deposit Insurance Cover to become more regulated

Deposit Insurance Cover to become more regulated

The finance minister stated that the government and the Reserve Bank of India will formulate a better regulatory mechanism for bank investors to seek deposit insurance benefits when their banks face a difficult situation. The deposit insurance cover for bank depositors has raised from Rs 1 lakh to Rs 5 lakh in the Budget last year. So far, though, this is applicable only to banks when they go into bankruptcy. And before the bank went bankrupt, a better and revamped process will now support investors. This may be an optimistic move and prevents depositors from the sort of circumstances we have seen in the recent past where banks and poor accessibility to deposits is enforced by the RBI moratorium.

Social security advantage expanded to many other employees

Social security advantage expanded to many other employees

A few tax-payers who lost their employment due to Covid-19 last year and had to undertake freelancing jobs are getting some support from Budget 2021. In her budget speech today, finance minister Nirmala Sitharaman introduced the release of a platform to gather specific information on gig, buildings and construction workers, among others, to assist the unorganized labour market, in particular migrant workers. She also stated that the government has introduced a One Nation One Ration Card mechanism from which recipients in every part of the country can seek their rations. This will especially benefit migrant workers. Sitharaman noted that 32 states and UTs are introducing the One Nation One Ration Scheme, touching nearly 69 crore recipients, covering a total of 86 percent of recipients.

In the coming months, the leftover states and UTs will be incorporated. For the first time internationally, social security benefits will apply to gig and platform employees, said FM. Some measures to assist workers have been further developed by the government. In her budget statement, the Finance Minister clarified that minimum pay will extend to all types of employees and will be supported by the Employee State Insurance Corporation. She also declared that with single authorisation, and online returns, the compliance pressure on employers will be minimized.

New investor charter for investor protection

New investor charter for investor protection

On Monday, Union Finance Minister Nirmala Sitharaman declared a raise in the insurance cap for Foreign Direct Investment (FDI) from 49 percent to 74 percent. Chairing the Union budget for 2020-21, she added, “We are proposing to modify the 1938 Insurance Act and introduce a new investor charter for investor protection. A securities market code that covers the SEBI Act, the Government Securities Act and the Depositories Act will also be introduced.

Faceless tax dispute resolution mechanism for small taxpayers

Faceless tax dispute resolution mechanism for small taxpayers

In her speech on Budget 2021 on February 1, finance minister Nirmala Sitharaman stated that the government will establish a faceless tax dispute settlement system for small taxpayers. The FM declared that for those transacting 95 per cent online, the limit for tax audit has been raised to Rs 10 crore vs Rs 5 Cr. For taxable income up to Rs 50 lakh and disputable income of Rs 10 lakh, the faceless dispute resolution committee will be liable. I propose to establish a dispute resolution board to help minimize lawsuits for small taxpayers, which will be faceless in order to ensure consistency and efficiency. For the approach committee with a taxable income up to Rs 50 Lakhs & disputed income up to Rs 10 Lakhs individuals with a taxable income up to Rs 50 Lakhs & disputed income up to Rs 10 Lakhs will be eligible. FM said in her Budget speech. Sitharaman had founded a tax dispute settlement and faceless appeals tribunal in Budget 2020 and had waived off interest and penalty on the disputed tax prior to 31 March 2020.

Pre-filled Income-Tax Return (ITR) forms for taxpayers

Pre-filled Income-Tax Return (ITR) forms for taxpayers

On Monday, during the presentation of the Union Budget 2021-22, Union Finance Minister Nirmala Sitharaman stated the Union Finance Ministry will incorporate pre-filled Income Tax Return (ITR) forms for taxpayers with details regarding their mutual fund capital gains, shares, dividend income and interest earned from banks. Last year, via the Finance Bill, the government has also incorporated amendments to the Income Tax Act, which will enable the government to seek information from banks, brokers, depositories on a taxpayer’s annual financial transactions. The tax deducted at source (TDS) on dividend income above Rs 5,000 will also be specified in the Form 26AS and will assist in pre-filling your IT returns. All personal details, taxes paid and bank account details are available in the new pre-filled form that taxpayers can download the form using their permanent account number (PAN).

Additional deduction of Rs 1.5 lakh on home loan interest is extended till March 2022

On Monday, the government extended by one more year to March 31, 2022 the additional tax deduction of Rs 1.5 lakh on interest charged on housing loans for the purchase of affordable homes, a bid to improve demand in the stagnant real estate market. The additional Rs 1.5 lakh exemption over and above Rs 2 lakh was incorporated in the budget for 2019. This was permitted for the first time for those purchasing homes for up to Rs 45 lakh. Finance Minister Nirmala Sitharaman stated the government sees ‘Housing for All’ and affordable housing as focus areas in the budget speech for the fiscal year 2021-22. Today, a person buying a reasonable house is going to get an increased interest exemption of up to Rs 3.5 lakh. Ms Sitharaman stated, “Further, to maintain the availability of subsidized houses, I introduce that subsidized housing projects can receive a tax holiday for one more year – till 31st March 2022,” She also stated that the government is geared to incentivising the provision of migrant workers with affordable rental accommodation.

Tax-efficient zero-coupon bonds for infra debt funds

Tax-efficient zero-coupon bonds for infra debt funds

Zero-coupon notes, also called discount bonds, do not pay the bondholders any interest. They get a special offer on the bond’s face value respectively. On maturity, the bondholder earns his or her investment’s principal amount. On Monday, while unveiling Budget 2021, Finance Minister Nirmala Sitharaman revealed tax-efficient zero-coupon bonds for infra-debt funds.

Relaxation for non-resident Indians (NRIs)

Relaxation for non-resident Indians (NRIs) is declared on Monday by Union finance minister Nirmala Sitharaman while proposing the Union Budget 2021. Sitharaman stated that they face problems relating to their accrued earnings in their overseas retirement accounts whenever NRIs return to India, which mostly happens due to mismatches in taxation dates. She also emphasized their challenges in receiving credit in international jurisdictions for Indian taxes, resulting in double income tax. As per the circular outlining the parameters of the Finance Bill, 2021, a mismatch on withdrawals from retirement funds that were established while staying in foreign countries was reported in the year of taxation. Presently, withdrawals may be taxed in overseas nations on a receipt basis, whereas in India on an accrual basis. The Government also introduced a new section 89A of the Income Tax Act, 1961, to resolve the discrepancy in the taxation of income from the approved foreign retirement fund.

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How Budget 2021-22 Is Going To Influence My Personal Finance?

Personal Finance

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Personal Finance

oi-Vipul Das

|

During the Union Budget 2021, finance minister Nirmala Sitharaman declared on Monday a number of actions, including those in the healthcare industry, railways, road infrastructure, and many others. The 2021 budget seems to have held the tax rates on taxable income untouched. Below are the major announcements made by FM today which may influence your personal finance.

How Budget 2021-22 Is Going To Influence My Personal Finance?

Elderly people with an age of 75 or more do not have to file IT return

Budget 2021 introduces an exemption from paying income tax returns for elderly people who are 75 years of age or older and have only retirement and interest income in a fiscal year. They will no longer be required to file income tax returns (ITR) as per the provisions under Budget 2021. The bank giving them income will subtract from their bank account the required tax. According to the descriptive memorandum, the gain will only be possible if the following criteria are met:

  • Elderly people residing in India and are 75 years of age or older in the previous year.
  • That being said, he or she may also get interest income from the same bank where he earns his pension income, in contrast to his pension benefit.
  • The Government shall inform the designated bank of a few banks that are a banking company, and the Government shall be obliged to provide a request to the specific bank.
  • The statement shall provide such details in such a form and shall be checked in such conditions as may be determined. Once the statement has been prepared, the bank in question will have to measure the income of such a senior citizen after granting access to the deduction permissible under Chapter VI-A and the refund allowable under Section 87A of the Act for the relevant year of taxation and to subtract income tax on the grounds of the rates in effect. After this is completed, there will be no provision for those senior citizens to have income return for this appraisal year. This move will take place on 1 April 2021.

Deposit Insurance Cover to become more regulated

The finance minister stated that the government and the Reserve Bank of India will formulate a better regulatory mechanism for bank investors to seek deposit insurance benefits when their banks face a difficult situation. The deposit insurance cover for bank depositors has raised from Rs 1 lakh to Rs 5 lakh in the Budget last year. So far, though, this is applicable only to banks when they go into bankruptcy. And before the bank went bankrupt, a better and revamped process will now support investors. This may be an optimistic move and prevents depositors from the sort of circumstances we have seen in the recent past where banks and poor accessibility to deposits is enforced by the RBI moratorium.

Social security advantage expanded to many other employees

A few tax-payers who lost their employment due to Covid-19 last year and had to undertake freelancing jobs are getting some support from Budget 2021. In her budget speech today, finance minister Nirmala Sitharaman introduced the release of a platform to gather specific information on gig, buildings and construction workers, among others, to assist the unorganized labour market, in particular migrant workers. She also stated that the government has introduced a One Nation One Ration Card mechanism from which recipients in every part of the country can seek their rations. This will especially benefit migrant workers. Sitharaman noted that 32 states and UTs are introducing the One Nation One Ration Scheme, touching nearly 69 crore recipients, covering a total of 86 percent of recipients.

In the coming months, the leftover states and UTs will be incorporated. For the first time internationally, social security benefits will apply to gig and platform employees, said FM. Some measures to assist workers have been further developed by the government. In her budget statement, the Finance Minister clarified that minimum pay will extend to all types of employees and will be supported by the Employee State Insurance Corporation. She also declared that with single authorisation, and online returns, the compliance pressure on employers will be minimized.

New investor charter for investor protection

On Monday, Union Finance Minister Nirmala Sitharaman declared a raise in the insurance cap for Foreign Direct Investment (FDI) from 49 percent to 74 percent. Chairing the Union budget for 2020-21, she added, “We are proposing to modify the 1938 Insurance Act and introduce a new investor charter for investor protection. A securities market code that covers the SEBI Act, the Government Securities Act and the Depositories Act will also be introduced.

Faceless tax dispute resolution mechanism for small taxpayers

In her speech on Budget 2021 on February 1, finance minister Nirmala Sitharaman stated that the government will establish a faceless tax dispute settlement system for small taxpayers. The FM declared that for those transacting 95 per cent online, the limit for tax audit has been raised to Rs 10 crore vs Rs 5 Cr. For taxable income up to Rs 50 lakh and disputable income of Rs 10 lakh, the faceless dispute resolution committee will be liable. I propose to establish a dispute resolution board to help minimize lawsuits for small taxpayers, which will be faceless in order to ensure consistency and efficiency. For the approach committee with a taxable income up to Rs 50 Lakhs & disputed income up to Rs 10 Lakhs individuals with a taxable income up to Rs 50 Lakhs & disputed income up to Rs 10 Lakhs will be eligible. FM said in her Budget speech. Sitharaman had founded a tax dispute settlement and faceless appeals tribunal in Budget 2020 and had waived off interest and penalty on the disputed tax prior to 31 March 2020.

Pre-filled Income-Tax Return (ITR) forms for taxpayers

On Monday, during the presentation of the Union Budget 2021-22, Union Finance Minister Nirmala Sitharaman stated the Union Finance Ministry will incorporate pre-filled Income Tax Return (ITR) forms for taxpayers with details regarding their mutual fund capital gains, shares, dividend income and interest earned from banks. Last year, via the Finance Bill, the government has also incorporated amendments to the Income Tax Act, which will enable the government to seek information from banks, brokers, depositories on a taxpayer’s annual financial transactions. The tax deducted at source (TDS) on dividend income above Rs 5,000 will also be specified in the Form 26AS and will assist in pre-filling your IT returns. All personal details, taxes paid and bank account details are available in the new pre-filled form that taxpayers can download the form using their permanent account number (PAN).

Additional deduction of Rs 1.5 lakh on home loan interest is extended till March 2022

On Monday, the government extended by one more year to March 31, 2022 the additional tax deduction of Rs 1.5 lakh on interest charged on housing loans for the purchase of affordable homes, a bid to improve demand in the stagnant real estate market. The additional Rs 1.5 lakh exemption over and above Rs 2 lakh was incorporated in the budget for 2019. This was permitted for the first time for those purchasing homes for up to Rs 45 lakh. Finance Minister Nirmala Sitharaman stated the government sees ‘Housing for All’ and affordable housing as focus areas in the budget speech for the fiscal year 2021-22. Today, a person buying a reasonable house is going to get an increased interest exemption of up to Rs 3.5 lakh. Ms Sitharaman stated, “Further, to maintain the availability of subsidized houses, I introduce that subsidized housing projects can receive a tax holiday for one more year – till 31st March 2022,” She also stated that the government is geared to incentivising the provision of migrant workers with affordable rental accommodation.

Tax-efficient zero-coupon bonds for infra debt funds

Zero-coupon notes, also called discount bonds, do not pay the bondholders any interest. They get a special offer on the bond’s face value respectively. On maturity, the bondholder earns his or her investment’s principal amount. On Monday, while unveiling Budget 2021, Finance Minister Nirmala Sitharaman revealed tax-efficient zero-coupon bonds for infra-debt funds.

Relaxation for non-resident Indians (NRIs)

Relaxation for non-resident Indians (NRIs) is declared on Monday by Union finance minister Nirmala Sitharaman while proposing the Union Budget 2021. Sitharaman stated that they face problems relating to their accrued earnings in their overseas retirement accounts whenever NRIs return to India, which mostly happens due to mismatches in taxation dates. She also emphasized their challenges in receiving credit in international jurisdictions for Indian taxes, resulting in double income tax. As per the circular outlining the parameters of the Finance Bill, 2021, a mismatch on withdrawals from retirement funds that were established while staying in foreign countries was reported in the year of taxation. Presently, withdrawals may be taxed in overseas nations on a receipt basis, whereas in India on an accrual basis. The Government also introduced a new section 89A of the Income Tax Act, 1961, to resolve the discrepancy in the taxation of income from the approved foreign retirement fund.



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Government sets-up DFI looks to disburse Rs 5 lakh crore in three years, BFSI News, ET BFSI

Personal Finance

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The central government has announced setting up of a Development Finance Institutions to boost infrastructure financing.

Finance Minister Nirmala Sitharaman said, “Infrastructure needs long term debt financing. A professionally managed Development Financial Institution is necessary to act as a provider, enabler and catalyst for infrastructure financing. Accordingly, I shall introduce a Bill to set up a DFI. I have provided a sum of `20,000 crores to capitalise this institution. The ambition is to have a lending portfolio of at least `5 lakh crores for this DFI in three years time.”

She added, “Debt Financing of InVITs and REITs by Foreign Portfolio Investors will be enabled by making suitable amendments in the relevant legislations. This will further ease access of finance to InVITS and REITs thus augmenting funds for infrastructure and real estate sectors.”

S Viswanatha Prasad, Founder and Managing Director- Caspian Debt said, “The setting up of a new DFI for providing infrastructure capital and leveraging it is a welcome move, however it should focus on providing capital only to the private sector and non-profits. Another DFI lending to Government entities will not create any differentiator.”

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Budget 2021: Full List of Cheaper and Costlier Items

Personal Finance

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Spending

oi-Olga Robert

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On Monday, Finance Minister Nirmala Sitharaman presented the Union Budget for the financial year 2021-22, also the first budget of the decade. In her speech, the finance minister said that this year’s budget lays down the vision for an Atmanirbhar Bharat.

“This Budget provides our economy with every opportunity to race and capture the pace that it needs for a sustainable growth,” Sitharaman said.

While budget allocations were made for various departments and ministries, a common person in India focuses on the Union Budget to see how the announcements made will affect his/her earnings and expenditures.

Budget 2021: Full List of Cheaper and Costlier Items

As FM Sitharaman concluders her Budget 2021 speech, here are things that got costlier or cheaper for the upcoming financial year 2021-22:

What got costlier?

  • Electronic items
  • Mobile Phones: some parts of mobiles will move from the ‘nil’ rate to a moderate 2.5%
  • Chargers: a few exemptions on parts of chargers and sub-parts of mobiles will be removed.
  • Synthetic Gemstones
  • Imported leather items
  • Solar invertors: duty raised from 5% to 20%.
  • Solar lanterns: duty raised from 5% to 15%.
  • Auto parts: customs duty on certain auto parts to be increased to 15%.
  • Steel screws: Duty raised from 10% to 15%
  • Plastic builder wares: Duty raised from 10% to 15%
  • Cotton: Customs duty to be raised from ‘nil’ to 10%
  • Raw silk and yarn silk: Customs duty to be raised from 10% to 15%.
  • Gold, Silver and dore bars
  • Alcoholic beverages (falling under chapter 22)
  • Crude palm oil
  • Crude soyabean and sunflower oil
  • Apples
  • Coal, lignite and peat
  • Specified fertilizers (Urea etc)
  • Peas
  • Kabuli Chana
  • Bengal Gram/Chick peas
  • Lentil (Mosur)

What got cheaper?

  • Iron
  • Steel: customs duty reduced uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels. Duty on steel scrap exempted up to 31 March 2022. ADD and CVD revoked on certain steel products.
  • Nylon clothes: BCD rates on caprolactam, nylon chips and nylon fibre & yarn reduced to 5%.
  • Copper items: Duty on copper scrap reduced from 5% to 2.5%.
  • Insurance
  • Shoes
  • Naptha: Customs duty on Naptha reduced to 2.5% to correct inversion.
  • Tunnel boring machine: customs duty reduced to 7.5%.

– to be updated



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Budget 2021: No Tweak In Personal Income Tax For FY 2021-22

Personal Finance

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Taxes

oi-Roshni Agarwal

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In her budget speech, Sitharaman said that the tax system should put minimum burden on the taxpayers. And there has been made no overhaul in tax rates for FY 2021-22. Earlier tax experts and professional bodies recommended the government to increase 80C deduction limit.

Also, there has been no Covid 19 cess introduced as was being feared by the markets to cover up the cost of Covid 19 vaccination drive.So, the existing tax slab and rate for the new tax regime and old one would continue.

In the previous Budget, Finance Minister Sitharaman came up with a new tax regime that offered taxpayers a choice to pay tax under the new structure at lower rates but forego deductions or pay tax as per the current tax laws and claim available deductions and exemptions.

Budget 2021: No Tweak In Personal Income Tax For FY 2021-22

Budget 2021: No Tweak In Personal Income Tax For FY 2021-22

Income tax Slabs for FY 2021-22 as per the new tax regime introduced last year

Income slab Tax rate
Income up to Rs. 2.5 lakh Tax exempt
Rs. 2.5 lakh- Rs. 5 lakh 5%
Rs. 5 lakh- Rs. 7.5 lakh 10%
Rs. 7.5 lakh- Rs. 10 lakh 15%
Rs. 10 lakh- Rs. 12.5 lakh 20%
Rs. 12.5 lakh- Rs. 15 lakh 25%
Rs. 15 lakh and above 30%

The new tax regime did not allowed deductions under Section 80C. Other exemptions such as home loan, insurance and standard deductions are also not offered as part the new regime.

Tax slabs as per the old tax regime:

Income slab Tax rate
Income up to Rs. 2.5 lakh Nil
Rs. 2.5 lakh- Rs. 5 lakh 5% (Rebate under section 87A of Rs. 12500)
Rs. 5 lakh- Rs. 10 lakh 20%
Rs. 10 lakh and above 30%

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