New Delhi: From today (Thursday, April 1, 2021) several changes related to personal finance have kicked in. As we have entered into a new fiscal year (2021-22), new provisions regarding the income tax rules are going to govern us.
Most of this is because of the Union Budget 2021 announcement that has brought in several changes in matters of personal finance.
From April 1, these 5 new income tax rules have come into effect
Pre-filling of returns
Pre-filled returns are available on the Income Tax portal which had details like salary, TDS, tax payments etc. prefilled, in addition to the earlier details and to further ease the tax compliance FM announced that details like capital gains from listed securities, dividend income and interest from banks, post offices etc. will also be prefilled.
Leave Travel Concession
Tax exemption extended to cash allowances received in lieu of LTC, which can be opted by the employee and available for FY 2020-21 only. Lower of one third of the specified expenditure or Rs 36,000 per person exempt. Specified expenditure means expenditure on goods and services which are subject to a GST rate of 12% and above and have been purchased or procured from GST registered vendors or service providers during the period commencing from October 12, 2020 to March 31, 2021.
Senior Citizens exempted from filing Income Tax returns
Senior citizens above 75 years with only pension income have now been exempted from filing the Income Tax returns. A senior citizen is an individual resident between the age of 60 to 80 years. Senior citizens, depending only on pension, will no longer have to file the I-T returns now. To reduce instances of tax harassments of the elderly, the government has also announced reducing the time frame for reopening of income-tax assessment cases from 6 years to 3 years. For reopening of serious tax evasion cases up to 10 years, the government has put in a monetary limit of cases involving over Rs 50 lakh in a year.
Higher TDS for Non-filing of Return by Deductee/Collectee
In order to discourage the practice of not filing returns by the persons in whose case substantial amount of tax has been deducted/collected, it is proposed to provide that a person in whose case TDS/TCS of Rs 50,000 or more has been made for the past two years and who has not filed return of income, the rate of TDS/TCS shall be at the double of the specified rate or 5%, whichever is higher. This provision shall not be applicable for the transactions where full amount of tax is required to be deducted e.g. salary income, payment to non-resident, lottery, etc.
Tax on annual provident fund
FM had also proposed to tax interest earned on annual provident fund contribution of over Rs 2.5 lakh effective from April 1, 2021. This restriction shall be applicable only for the contribution made on or after April 1, 2021. However, on March 24, FM announced to raise the limit for tax exemption on interest earned on provident fund contribution by employees to Rs 5 lakh per annum in specified cases (where there is no employer contribution to EPF).