April 1 will mark the beginning of a new financial year and will bring a slew of income tax changes. Some of the changes were announced by the Union Finance Minister Nirmala Sitharaman while presenting the Union Budget 2021 in February.
Here is a list of changes which will be introduced from the coming financial year.
-EPF tax rules :Finance Minister Nirmala Sitharaman in Budget 2021 proposed that the interest on employee contribution towards provident fund be exempt 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: The finance minister has proposed higher TDS (tax deducted at source) or TCS (tax collected at source) rates in budget 2021 in order to make more people file income tax returns (ITR). New Sections 206AB and 206CCA had been proposed in the budget 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’ instead of Old tax regime: The government had implemented the new tax regime last year in Budget 2020. However, the exercise of choosing one of the tax regimes for FY 2020-21 will be required to be made starting from April 1, 2021. Taxpayers still have time until 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.
-Non-filing of ITR by persons above 75 years of age: The Budget 2021 proposed that an individual who is of the age of 75 years or above having income from pension and interest from any account maintained in the same specified bank in which he/she is receiving pension are exempted from filing income tax returns (ITR). This proposal was made to reduce the compliance burden of the senior citizen.
-Pre-filled ITR Forms: The information which is auto-populated from external sources in the ITR is known as pre-filled data. The information which is currently pre-filled in the ITR form includes personal information, bank details, details of salary income as per form 16, details of TDS, TCS, taxes paid as advance tax, etc.
In the Budget 2021 it was announced that some more details including capital gain arising from the sale of listed securities, dividend income and interest income received from the bank or post office will be pre-filled in income tax return.
-LTC scheme: The scheme was announced by the government last year for individuals who were unable to claim their LTC tax benefit due to Covid-related restrictions on travelling. The central government in Budget 2021 has proposed to provide tax exemption to cash allowance in lieu of Leave Travel Concession (LTC).
-Advance tax liability: Only after the declaration or payment of the dividend, the advance tax liability on dividend income will arise.
-Last Date to file ITR for FY 2019-20 :The last date for filing ITR for FY 2019-20 is March 31 and those who will not be able to file the returns till March 31 will have to pay a late fee. While the last date for ITR revision is also March 31, 2021.
-Last date to make a tax-saving investment : The last date for making certain investments in FY 2020-21 which helps in tax savings under the ITR is March 31.