Income Tax Rules Are Changing from April 1, Here's a Look at New Norms
April 1 will mark the beginning of a new financial year and will bring a slew of income tax changes. Some of the changes were announced by the Union Finance Minister Nirmala Sitharaman while presenting the Union Budget 2021 in February. Here is a list of changes which will be introduced from the coming financial year.
EPF tax rules
Finance Minister Nirmala Sitharaman in Budget 2021 proposed that the interest on employee contribution towards provident fund be exempt up to the maximum of Rs 2.5 lakh, and any interest income from the contribution above this limit will be taxable in the hands of the employee. This provision will come into force from or after April 1, 2021.
TDS at a higher rate
Higher tax deducted at source (TDS) or tax collected at source (TCS) was proposed by FM Sitharaman to make more people file income tax returns (ITR).
The Budget 2021 proposed that an individual who is of the age of 75 years or above having income from pension and interest from any account maintained in the same specified bank in which he/she is receiving pension are exempted from filing income tax returns (ITR). This proposal was made to reduce the compliance burden of the senior citizen.
Pre-filled ITR Forms
The information which is auto-populated from external sources in the ITR is known as pre-filled data. The information which is currently pre-filled in the ITR form includes personal information, bank details, details of salary income as per form 16, details of TDS, TCS, taxes paid as advance tax, etc.
In the Budget 2021 it was announced that some more details including capital gain arising from the sale of listed securities, dividend income and interest income received from the bank or post office will be pre-filled in income tax return.
LTC cash scheme
To provide tax exemption to an employee receiving a cash allowance in lieu of Leave Travel Concession (LTC) subject to incurring the specified expenditure has been proposed for the FY 2020-21.
Advance tax liability
Only after the declaration or payment of the dividend, the advance tax liability on dividend income will arise.
Last Date to file ITR for FY 2019-20
The last date for filing ITR for FY 2019-20 is March 31 and those who will not be able to file the returns till March 31 will have to pay a late fee. While the last date for ITR revision is also March 31, 2021.
Last date to make a tax-saving investment
The last date for making certain investments in FY 2020-21 which helps in tax savings under the ITR is March 31.