New Delhi: The new financial year will start on April 1 and will bring a number of income tax changes. Some of them were announced by the Union Finance Minister Nirmala Sitharaman during her presentation of the Union Budget 2021 in February.
This is a list of changes which will come into effect from the coming financial year:
Employee Provident Fund Tax Rules
In this year’s budget, Finance Minister Nirmala Sitharaman proposed that there should be no interest in employee contribution towards provident fund 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
Finance Minister Sitharaman also proposed an increase in the tax deducted at source (TDS) or tax collected at source (TCS) to increase the number of people who file their Income Tax Returns (ITR).
Exemption of ITR for people above 75 years of age
This year’s budget also proposed that an individual whose age is 75 years or above with income from pension and interest from any account maintained in the same specified bank in which they are receiving their pension does not have to file their income tax returns (ITR). This proposal was made to reduce the compliance burden of the senior citizen.
Pre-filled data in ITR Forms
The information which is auto-populated from external sources in the ITR is known as pre-filled data. The auto-populated information in the ITR form so far includes personal information, bank details, details of salary income as per form 16, details of TDS, TCS, taxes paid as advance tax, etc.
But, in the Budget 2021 it was announced that some more details will be auto-filled in the ITR including capital gain arising from the sale of listed securities, dividend income and interest income received from the bank or post office.
Leave Concession
Another proposal is to provide tax exemption to an employee receiving a cash allowance in lieu of Leave Travel Concession (LTC). Concession is subject to incurring the specified expenditure has been proposed for the FY 2020-21.
Advance tax
The advance tax liability on dividend income will arise only after the declaration or payment of the dividend.
Last Date to file ITR for FY 2019-20
The last date to file ITR for FY 2019-20 is March 31 and those who will cross the deadline will have to pay a late fee. The last date for ITR revision is also March 31, 2021.
Tax-saving investment deadline
The last date for making certain tax-saving investments under the ITR in FY 2020-21 is March 31.
