PERSONAL FINANCE
As the new financial year begins today (April 1), these new rules will also come into effect. Here's a look at how things will change.
In the Budget 2021 presentation, Union Finance Minister Nirmala Sitharaman had announced a slew of changes in the income tax rules. As the new financial year begins today (April 1), these new rules will also come into effect. Here's a look at the new rules
TDS
Higher TDS (tax deducted at source) and TCS (tax collected at source) rates were proposed in the Budget 2021 by the finance minister in a bid to make more people file income tax returns (ITR). The government had proposed new sections 206AB and 206 CCA in the budget as a special provision for the deduction of higher TDS and TCS respectively.
Choose from Old tax regime or New Tax regime
Last year, the Centre had implemented a new tax regime. However, the exercise of choosing one of these for the financial year 2020-2021 will be required starting April 1, 2021. Taxpayers were given time till March 31, 2021, to make tax-saving deductions. However, while filing their income tax returns for FY 2020-21, they will be able to opt for a beneficial regime.
Senior citizens above 75 years exempted from filing ITR
Sitharaman announced that senior citizens above the age of 75 years, whose source of income is only pension and interest, will be exempted from filing income tax returns. These senior citizens will be exempted from filing an ITR if they fulfill certain conditions. If the interest income is earned in the same bank where the pension is deposited, the senior citizen will then be exempted from filing ITR.
PF tax rules
In Budget 2021, Sitharaman had announced that the interest on the investment of up to Rs 2.5 lakh per annum in PF will be tax-free, but tax will be imposed on the interest earned on the investment made above the Rs 2.5 lakh limit. The government had taken this step to restrict those who earn interest by putting their surplus money in a PF account, whereas PF is seen as a retirement fund for the common people. The government has increased the exemption limit on interest on PF to Rs 5 lakh. Earlier, the limit was Rs 2.5 lakh. However, this is only for employees where no contribution is made on behalf of the employer.
Pre-Filled ITR forms
To make it easier for the taxpayers, details of salary income, tax payments, TDS, etc. individual taxpayers will now be given pre-filled Income Tax Returns (ITR). Information about capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also be pre-filled.
LTC scheme:
In 2020, the Centre had declared relaxation in the Leave Travel Concession (LTC) Scheme due to the COVID-19 outbreak. The relaxation allowed the central government employees to claim income tax benefits on expenses made between October 12, 2020, to March 31, 2021, on the purchase of items that attract a GST rate of 12 per cent or more instead of travel expenses.
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