Year Ender 2021: From launch of ITR e-filing portal 2.0 to incentives to startups, key decisions that impacted Income Tax payers

The year 2021 is about to end. Throughout the year, certain decisions were being taken that impacted the taxpayers. One of them is certainly the launch of the ITR e-filing 2.0 portal for all the taxpayers on June 7, 2021.

The Ministry of Finance has put up a number of tweets from its official Twitter handle informing the major decisions undertaken. 

The key decisions undertaken that impacted the taxpayers are as follows:

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Reduction in time for Income Tax proceedings

The Ministry of Finance informed that the time limit to re-open IT assessment cases has been reduced to 3 years from 6 years. The assessment can be reopened upto 10 yrs, only when there is evidence of concealment of income of more than Rs. 50 lakh in a year with approval of Pr. CCIT.

Faceless Penalty Scheme

Another important decision is the Faceless Penalty Scheme that eliminates interface between the IT Department & taxpayers. Provides a team-based mechanism with dynamic jurisdiction. Taxpayer can submit replies at their convenience without the need for visiting IT Office.

Relaxation for NRIs

It has to be noted that the Finance Act, 2021 has inserted specific section in the IT Act, 1961 to provide relief to NRI taxpayers who have an issue with respect to their accrued incomes in their foreign retirement accounts due to mismatch in taxation period.

No ITR for specified senior citizens

In a relief, the Ministry of Finance undertook the decision of exempting ITR for specified senior citizens. A new section 194P, inserted in the Income Tax Act, 1961, provides that senior citizens above the age of 75 years, who have only pension and interest from the bank account in which they receive the pension, shall be entitled to IT Exemption from filing of return.

Integrated e-filing and CPC 2.0

Another initiative by the Ministry of Finance is Integrated e-filing & CPC 2.0. The Integrated e-filing and CPC 2.0 Project will radically transform and scale-up e-governance capability and performance of the IT Department in delivering taxpayer services.

Taxpayers’ Charter

The Taxpayers’ Charter launched by Prime Minister Narendra Modi reflects certain principal commitments of the IT Department towards the taxpayer. It is expected that the the Charter will go a long way in strengthening the trust between the taxpayer and the tax administration.

Pre-filing of ITR

It has to be noted that the pre-filled ITRs to individual taxpayers make filing of ITRs easier and encourage compliance. Initial pre- filled data includes salary income. The Finance Ministry informed via its tweet that the scope of data for pre-filling is being expanded to include interest, dividend and others.

Reduction in compliances

The Ministry of Finance has informed in one of its tweet that the subsequent to a comprehensive study of Income-tax Act and Rules to identify compliances that can be reduced, out of 271 compliances 74 compliances were reduced; 152 of the balance are online and the rest are being made online.

Relief to small trusts

The Finance Ministry tweeted that in order to increase ease of compliance of small charitable trusts running educational institutions and hospitals, tax exemption relief to such trusts is provided by the Finance Act, 2021 by raising existing threshold of annual receipts from Rs 1 crore to Rs 5 crore.

Incentives for startups

The Finance Ministry informed that to incentivize start-ups in the country, the eligibility for claiming tax holiday for start-ups extended for start- ups incorporated till March 31, 2022. The threshold limit for eligible start-ups was earlier raised to Rs 100 crore as well from Rs 25 crore.

International Financial Service Centre

The tax incentives and exemptions for relocating foreign funds into IFSC to make it a hub for financial services in world, informed the Finance Ministry. Tax exemption provided for investment division of foreign banks located in IFSC; aircraft lease rentals paid to foreign lessor, etc.

In this context, the Income Tax (IT) payers must note that the IT Department extended the IT return filing date. Taxpayers can now file ITR till December 31, 2021. The decision was taken considering the difficulties reported by the taxpayers and other stakeholders in the filing of Income Tax Returns and various reports of audit for the Assessment Year 2021-22 under the Income-tax Act, 1961.