Union Finance Minister Nirmal Sitaraman during the presentation of Union Budget 2021 had announced few changes with respect to the Income Tax rules. These changes are set to come into effect from April 1st, 2021.
These changes will affect the employees, business and provide some relief to the senior citizens.
Let's take a look at 5 Significant Changes in Income Tax Effecting from April 1, 2021.
1. TDS at Higher Rate:
A couple of new sections in the Income Tax Act will be added which are Section 206AB and 206CCA as a special provision providing for a higher tax rate of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) respectively for those who are not filing for Income Tax Returns (ITR).
Under the proposed TDS, the rate in this section is higher than the followings rates:
Twice the rate specified in the relevant provision of the Act; or twice the rate or rates in force; or the rate of 5%.
2. Tax on Interest of EPF Contribution:
From 1st April 2021, Interest on the employee contribution to the Provident Fund (PF) above 2.5 lakh rupees per annum would be taxed. Nirmala Sitaraman said in her budget presentation that the move is aimed at taxing high-value depositors in the Employee Provident Fund (EPF). She also added that the EPF is aimed at the welfare of workers and any person earning less than ₹2 lakh per month will not be affected by the proposal.
3. No Tax Filings for Senior Citizens Above 75:
Senior Citizens whose age is above 75 years and has income source from Pension and interest from Fixed deposit which comes from the same bank hosting the pension and fixed deposit, they need not to file Income Tax returns. The Bank shall automatically deduct the tax amount and pay it to the Income-tax department. This move has been taken to ease the compliance burden on the senior citizens.
4. Pre-Filled ITR Forms:
For individual taxpayers in a bid to ease the filing of Income Tax Returns (ITR) Pre-Filled Income Tax Returns forms will be given. Details such as Salary Income, TDS deductions, Tax Payments, etc. will already come Pre-filled in the ITR portal. To further ease filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also be pre-filled.
In Budget 2021 the finance mister has proposed to provide tax benefits to the Individual who was not able to take benefits of the Leave Travel Allowance Scheme due to the Covid 19 pandemic and restrictions on travel. The center has proposed a new scheme that is Leave Travel Concession (LTC) Cash Voucher Scheme through which Individuals can take benefits of tax exemptions by providing GST invoices that contain GST Amount and GST Number.
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