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buyers of affordable homes (under employee’s contribution by the employ-
Section 80EEA). er would henceforth not be allowed as a
Rationalisation of taxation of unit-linked deduction for the employer. This should
insurance plans (ULIPs): The finance induce employers to deposit employee
minister has rationalised the taxation contributions in a timely manner,
of gains from ULIPs, thus bringing thereby safeguarding their interests.
them on a level-playing field with mutu- Rationalisation of tax-free income on
al funds to some extent. She has pro- provident funds: It has been proposed to
posed tax exemption for maturity pro- restrict the tax exemption for the inter-
ceeds from ULIPs having an annual pre- est income earned on the employees’
mium of up to `2.5 lakh. Those exceed- contribution to various provident funds
ing this premium amount will be sub- (except the PPF) to the annual contribu-
ject to the same capital-gains taxation tion of `2.5 lakh per annum. This will
regime as that of mutual funds. This be applicable for all contributions made
tax rationalisation of ULIPs will only on or after April 1, 2021. The reason for
be applicable for the policies taken on doing this is to rationalise the tax
or after February 1, 2021. However, the exemption for high-income employees.
proceeds received in an event of the Dividends from a REIT/InvIT exempted
death of the insured will continue to from TDS: The dividends received from
remain exempt, irrespective of the real estate investment trusts (REIT)
annual premium. and infrastructure investment trusts
Easy access to deposit insurance for (InvITs) have been exempted from TDS.
bank depositors: In a bid to protect Advance tax on dividends: Since the divi-
investor interest, the government had dend declared is the prerogative of
last year announced an increase in the businesses, the amount of dividend
deposit insurance cover from `1 lakh to income cannot be estimated correctly
`5 lakh for bank customers. Now, the by the shareholders for the purpose of
finance minister proposes to streamline paying advance tax. Thus, with the new
the provisions. This would help the tax regime, any tax liability on divi-
depositors get easy and time-bound dend would arise only after the declara-
access to their deposits in case a bank tion/payment of dividend.
is temporarily unable to fulfil its obli- Dispute Resolution Committee: In the
gations. Given the circumstances faced last year’s Budget, the Government had
by the customers of a few stressed come up with the ‘Direct Tax Vivad Se
banks in the recent past, this provision Vishwas Scheme’ to provide taxpayers
can save small depositors from a lot of
an opportunity to settle long-pending
anxiety. disputes, relieving them of strain on
Late deposit of employees’ contribution their time and resources. The FM
to provident fund no longer a deduction: informed that around 1,10,000 taxpayers
Certain employers were noted to be had opted to settle tax disputes amount-
deducting the contribution of employ- ing to more than `85,000 crore under
ees towards provident funds, superan- this scheme. This time around, in order
nuation funds and other social-security to provide further relief to small tax-
funds but were not depositing these payers, a Dispute Resolution Committee
within the specified time. Due to this, has been proposed to be constituted
the employees had to suffer a loss of which would ensure efficiency, trans-
interest income. Also, in cases where parency, and accountability in resolv-
an employer became financially unvia- ing disputes, that too anonymously.
ble, such non-deposits resulted in a per- Individuals with a taxable income of up
manent loss for the employees. Thus, to to `50 lakh and having a disputed
ensure timely investment of employees’ income of up to `10 lakh will be eligible
contributions, the late deposit of to approach this committee.

5 BUDGET & YOU

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