💰 How the 2021 Union Budget will affect your Income Taxes + Investments

Finance Minister Nirmala Sitharaman has announced several proposals for the benefit of depositors, investors and taxpayers. Here’s all you need to know:


  • Citing a celebration of 75 years of independent India, the Finance Minister stated that senior citizens above the age of 75 with only pension and interest income shall be exempt from filing income tax returns. Tax on such income shall be deducted by the paying bank itself.
  • Dividend payments to REIT / InvIT to be made exempt from TDS in a bid to reduce their compliance burdens.
  • Further, it has been proposed that advance tax liability on dividend income should only arise on the declaration or payment of dividends.
  • Keeping in line with the theme of encouraging foreign investment, an incentive to Foreign Portfolio Investors has been proposed to enable the deduction of tax on dividend income at a lower treaty rate.
  • The minimum turnover threshold for tax audit has been raised from ₹5 crores to ₹10 crores for companies that perform 95% of their transactions using digital channels. This has been done to promote digital transactions for more transparency, which in turn leads to reduced compliance requirements on such persons. This limit is still ₹1 crore for companies having less than 95% of their transactions completed digitally.
  • With an aim to further simplify the filing of income tax returns for the taxpayer, details of capital gains from listed securities, dividend income, and interest from banks, the post office, etc. will be prefilled in income tax returns.


  • To promote investor protection and to safeguard their interests, the Finance Minister proposed to introduce an Investor Charter as a right of all financial investors across all financial products.
  • Capital gains on ULIPs shall now be taxed in the same way as units of an equity mutual fund. (Applicable to policies issued on/after 1st Feb 2021 with annual premium exceeding Rs. 2.5 lakh)
  • The Finance Minister also confirmed that the anticipated IPO of Life Insurance Corporation of India is slated for FY 2021-2022.
  • The budget has wiped away some of the tax relief measures sought by high-salaried individuals. If an employee’s PF contribution in a year exceeds Rs 2.5 lakh then the interest earned thereon shall now be charged to tax at normal slab rates. (Note: Applicable only to employee’s contribution, not employer’s contribution)
  • The government is poised to start the process of privatisation of two more PSU banks (other than IDBI) and one general insurance company.
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