Key Highlights of Union Budget 2021-22

Union Finance Minister Smt. Nirmala Sitharaman today presented the Union Budget for the year 2021-22 which was proclaimed as first every digital budget presented through 'Make in India Tablet'. The key highlights of Union Budget 2021-22 from taxation and company law perspectives are as follows:-

Company law Proposals:

• Decriminalization of Limited liability Partnership (LLP) Act, 2008
• To ease compliance requirement of small companies, the definition under Companies Act, 2013 to be revised by increasing threshold paid up capital from "not exceeding Rs. 50 Lakhs" to "not exceeding Rs. 2 crores" and turnover from "not exceeding Rs. 2 crores" to "not exceeding Rs. 20 crores".
• Following amendments proposed for incorporation of One Person Companies (OPCs) for promoting start-ups and innovators:
  (a) Allowing Non Resident Indians to incorporate OPCs in India
  (b) Reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days
  (c) Allowing the conversion of OPCs into any other type of company at any time
  (d) No restriction on paid up capital and turnover
• Implementation of e-courts in NCLT
• MCA21 Version 3.0 to be launched in 2021-22 which will be based on artifical intelligence and machine learning

Direct Tax Proposals:

• Exemption given to senior citizens over 75 years of age and having only pension and interest income from filing tax returns
• Time limit for re-opening cases reduced to 3 years from 6 years. However, in the cases where income concealment is Rs. 50 Lakhs or more in a year, the cases may be re-opened upto 10 years with approval of Principal Chief Commissioner
• National Faceless Income Tax Appellate Tribunal Centre to be established
• Dispute Resolution Committee to be set up for taxpayers with taxable income up to Rs. 50 Lakhs and disputed income up to Rs. 10 Lakhs
• Limit of turnover for tax audit increased from Rs. 5 crores to Rs. 10 crores for those entities who are carrying out transactions digitally to the extent of 95% or more
• Advance tax payment liability on dividend income shall be only after the declaration or payment of dividend
• Dividend payment to REIT/InvIT to be exempt from TDS
• For promoting affordable housing, additional interest deduction of upto Rs. 1.5 Lakhs for purchase of an affordable house for loans taken till March 2022
• Tax holiday for affordable housing projects extended till March 2022
• Tax exemption for notified Affordable Rental Housing Projects
• With a view to ease return filing process, details of capital gain from listed securites, dividend income, interest from banks and post office etc. to be pre-filledin returns
• Threshold exemption limit under section 10(23C) increased from Rs. 1 crore to Rs. 5 crore for small charitable trusts which are running schools and hospitals
• For start-ups, eligiblity for tax holiday has been extended by one more year. Similarly, capital gain exemption for investment in start-ups has been extended up to 31st March 2022
• In case of late deposit of employees' contribution (PF/ESI) by the employer, such contribution shall not be allowed as a deduction to the employer

Indirect Tax Proposals:-

• Customs duty on certain parts of mobiles revised to 2.5% from 'nil' rate
• Customs duty on steel scrap exempted up to 31st March 2022
• Customs duty on copper scrap reduced from 5% to 2.5%
• Anti Dumping Duty and Counter-Veiling Duty revoked on certain steel products and also reduction in customs duty to 7.5% on non alloy, alloy and stainless steel
• Customs duty on tunnel boring mahcine at 7.5% and its part at 2.5%
• Customs Duty on certain auto parts increased to 15%
• Exemption on imports of certain kind of leathers withdrawn
• Increase in customs duty on prawn feed from 5% to 15%
• Customs duty on finished synthetic gem stones increased to encourage domestic processing
• Customs duty on steel screws and plastic builder wares increased to 15%
• Duty on solar invertors raised from 5% to 20% and on solar lanterns from 5% to 15% to motivate domestic production
• Basic Customs Duty on caprolactam, nylon chips and nylon fiber & yarn reduced to 5%
• Duty on Naptha decreased to 2.5%
• Customs duty on cotton increased from nil to 10% and on raw silk and silk yarn from 10% to 15%
• Turant Customs initiative for faceless, paperless and contactless Customs measures