With effect from April 1, 20201, a new financial year is going to begin. Union Finance Minister Nirmala Sitharaman, while presenting Union Budget 2021, had announced a slew of changes in the income tax rules (ITR). Here is a list of changes that will come in place in the coming financial year.
Tax rules on Employee Provident Fund:
In budget 2021, Finance Minister Nirmala Sitharaman put forth the tax-free interest on employee and employer contribution towards provident fund, together to a maximum of ₹2.5 lakh in a year. Limit for tax exemption on interest earned on provident fund contributions by employees has been raised to ₹5 lakh per annum in specified cases as against the proposed ₹2.5 lakh. The contribution made up to ₹5 lakh does not include the employer’s contribution.
Higher TDS (tax deducted at source) or TCS (tax collected at source) rates have been proposed by the Finance Minister in budget 2021 so that more people file income tax returns (ITR). As proposed in the budget, New Sections 206AB and 206CCA has been added as a special provision for the deduction of higher rates of TDS and TCS, respectively for the non-filers of an income tax return.
Option to choose ‘New tax regime’ over “Old tax regime”:
The government had implemented the new tax regime in last year’s Budget. However, the exercise of choosing one of the tax regimes for FY 2020-21 will be essential to be made starting from April 1, 2021. Still, the taxpayers have the time window till March 31, 2021, to make tax-saving deductions, however, they will be able to opt for a beneficial regime at the time of filing their tax returns for FY 2020-21.
Senior citizens above 75 years exempted from filing ITR:
Finance minister Nirmala Sitharaman in Budget 2021 announced that individuals above 75 years are exempted from filing income tax returns (ITR). But, This exemption is only applicable to those senior citizens who have no other source of income but pension and interest income from the bank hosting the pension account.
Pre-filled ITR forms:
Pre-filled Income Tax Return (ITR) will be given to the individual taxpayers. To ease compliance for the taxpayer, details such as salary income, tax payments, TDS will already come pre-filled in income tax returns. To further facilitate return filing, details of capital gains from listed securities, dividend income, and interest from banks, post offices, etc. will also be pre-filled.
Last year, This scheme was announced by the government for those individuals who were not able to claim their LTC tax benefit owing to the covid-19 related restrictions on travelling. The central government in Budget 2021 proposed to provide tax exemption to cash allowance in place of Leave Travel Concession (LTC).
Last Date to file Income Tax Return (ITR) for FY 2019-20
The last date for filing Income Tax Return (ITR) for FY 2019-20 is March 31.For those who failed to file the returns till March 31 will have to pay a late fee.
The last date for ITR revision is also March 31, 2021.