On 23 March 2021, the Lok Sabha passed the Finance Bill, 2021 with certain amendments. The adopted Finance bill has proposed that the consideration related to equalisation levy shall not include for sale of such goods/ provision of services which are owned/provided by an Indian or by a Permanent Establishment (PE) in India of a person non-resident in India, if sale of such goods/ provision of such services is effectively connected with such PE. The tax limit for real estate circle (safe harbor) has been increased from 10% to 20% during the period from 12 November 2020 to 30 June 2021, subject to certain conditions.

The eligibility period for claiming the tax holiday for start-ups and for claiming the capital gains exemption for investments made in start-ups is extended by one year to 31 March 2022. The tax exemption will be provided on income by way of royalty or interest on account of lease rentals paid to foreign enterprises if the IFSC unit has commenced operations on or before 31 March 2024. The exemption will be provided for income of investment division of offshore banking unit in IFSC which commenced its operations on or before 31 March 2024. The exemption for audit turnover threshold is increased from INR 50 million (5 crore) to INR 100 million (10 crore) for persons undertaking 95% of their transactions digitally. A Dispute Resolution Committee is established for small taxpayers with taxable income of up to INR 5 million (50 lakh) and disputed income up to INR 1 million (10 lakh).

The measure of the Finance Act, 2021 entered into force on 1 April 2021.