Personal Finance Changes after Budget 2021

On the 1st of February, the Indian Finance Minister Mrs. Nirmala Sitharaman presented the much-awaited for 2021 Budget. This budget was awaited by people all across India especially due to the effect of last year’s pandemic. Last year, the coming of the pandemic named Covid-19 played havoc on the economy all around the world. India was affected as well. All industries felt the effect of the pandemic and the lockdowns that came soon to control it. Jobs were lost around the country. Some industries like Travel and Tourism were especially hit the hardest due to the lockdowns. 

Due to all this, everyone had since then waited for the Union Budget 2021, to see what measures and changes the government would bring to tackle the effects of Covid-19 on both social and economic fronts. 

The 2021 Budget had mixed responses. The Finance Minister herself kept her address “short and sweet.” The middle class however was not happy with the budget completely because of several reasons. Firstly, it was hoped that there would be some changes in the income tax slabs this time. Secondly, it was hoped that there shall be some exemption limits on a number of expenses. 

Neither of these happened this time. But some new measures and proposals were introduced to ease taxpayer’ compliance. Additionally, areas of personal finance like banking and affordable housing were simplified.

Here are the highlights of changes from the Union Budget 2021

Increase of deposit cover

The deposit insurance cover is now enhanced from Rs. 1 lakh to Rs. 5 lakh. Depositors shall now get this amount if the concerned bank is unable to fulfil its agreed-upon obligations, or in other words if it is too stressed. Such a measure shall give added security to depositors. 

Benefit for home buyers

People can now claim more deduction on interest till Rs. 1.5 lakhs on home loans. The time for claiming the deduction is also extended till 31st March 2021. Additionally, there is a tax exemption for various notified affordable rental housing projects around the country.

Help for senior citizens

According to this budget, people who are at and beyond the age of 75 and who have just interest income and pension as their only income in a financial year, shall be exempt from filing income tax returns. The concerned bank paying their income shall themselves deduct the tax from the customer’s bank account.

Tax scrutiny time limit decreased

The time limit for the reopening of income tax assessment is not reduced to three years. Till now, it has been six years. However, if the case is special, tax authorities can take 10 years for this.

Advance tax payment only post-dividend payment

The advance tax liability of dividend income shall now be payable after the payment or declaration of payment of dividends. This shall help taxpayers as they won’t have to pay interest on advance tax of dividend income.