28 Jul 2021, 12:10 — 4 min read
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 have come into effect from 1 April 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.
Couple of new sections in the Income Tax Act will be added which are Section 206AB and 206CCA as a special provision providing for 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, rate in this section is higher of the followings rates:
Also read: New TDS rule from 1 July 2021 – Here’s what you need to know
From 1 April 2021, interest on the employee contribution to the Provident Fund (PF) above 2.5 lakh rupees per annum would be taxed. Nirmala Sitharaman 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.
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.
For individual tax payers 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 were not able to take benefits of Leave Travel Allowance Scheme due to Covid 19 pandemic and restrictions on travel. The central 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 which contains GST Amount and GST Number.
Also read: 5 common mistakes in filing Income Tax Returns
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Posted byParth Mishra
Helping SME's and Start-ups with Accounting, Compliance, Legal and Taxation
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