Changes To Income Tax Rules From April 2021 That Every Tax Player Should Know
The 2021 Budget ushered changes to numerous financial rules which will directly impact the finances of the individual tax payer. These rules come into effect from April 1st 2021. Wiremesh is sharing a list of latest rules that have come into effect from 1st April 2021 and are being applied to all the income tax-paying individuals.
· Exemption for Senior Citizens above age 75 from Filing IT Returns: Senior citizens who have no other income except pension and interest income from the bank hosting the pension account.
· Pre-filled ITR forms: This is a key change ushered in by the government which will make life simpler for most tax payers. Starting this Financial year tax payers will get prefilled forms. The pre-filled fields will have details of salary income, tax payments, TDS, etc. Taxpayers can also expect the details like details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. to be pre-filled as per the sources.
· Tax Deducted At Source: In order to increase the number of Income tax Filers, the finance ministry has proposed higher TDS. This would be done through Sections 206AB and 206CCA inclusions in the IT act and would be considered as special provisions. The higher TDS or TCS rates will be applicable to the non-filing entities of income tax. "The non-filing entities will now be paying a minimum 5% of TDS or TCS and having an INR 50,000 or more TCS/TDS deduction in previous 2 years. Also, the responsibilities will be of a deductor to get the income tax return done for the furnishing."
· Changes To PF Tax Rules: The new changes to PF taxation has come has a surprise and raised many eyebrows. One of the many changes is that the interest on annual employee contributions to provident fund over Rs 2.5 lakh would be taxed from 1 April 2021. This will lead to additional tax liability, especially for HNIs, who make higher contributions, and will also discourage voluntary provident fund (VPF) contributions. If there is no employer contribution to the PF than the threshold limit gets revised to Rs 5 lakh per annum
· ULIP investment: ULIPS have enjoyed the status of EEE (exempt, exempt, exempt) category tax saving instrument. For the first time ULIPS come under the tax bracket. If your combined ULIP premiums exceed RS 2.5 Lakhs PA than they will come under the new tax regime. Now, if the aggregate annual premium value of the ULIP exceeds 2.5 lakh, then the tax exemption under Section 10(10D) upon maturity will not be available. Hence, relief under Section 10(10D) will not be available in case the annual premium is more than Rs 2.5 lakh for the ULIP plan even if the sum assured is more than 10 times the annual premium of the policy. This rule is only for Fresh Policies issued after 1st February 2021.
· Reduction in the Deadline for Filing Belated and Updated ITR of FY 2020-2021 to December 31, 2021: The deadline for filing belated and revised Income Tax Return has been reduced by 3 months. Under the last rule the deadline for filing belated and revised ITR for FY 2020-21 would be March 31, 2022. Under the new rule the deadline for filing belated and revised ITR for FY 2020-21 will become December 31, 2021. The New rule also comes with a maximum penalty of up to Rs 10,000.