The Union Finance Minister Nirmala Sitharaman presented the Union Budget 2021 on the 1st of February. The tax rules listed in the budget will come into force from April 1st, 2021. This means that you still have a few days to understand which of the new rules apply to you.
Income Tax Return Forms
With the aim of making the process of filing returns easy and fast, pre-filled ITR forms will be provided to individual taxpayers. In the past, individuals had to fill in details pertaining to salary income, TDS deductions, and other tax payments. These details will now be pre-filled to encourage compliance with ITR form rules.
In addition, details such as dividend income, bank account interest earnings, post office account interest payments, and capital gains made from listed securities will also be pre-filled and ready for filing for individual taxpayers from the 1st of April, 2021.
Senior Citizens Taxation
Many senior citizens in the country only have a pension and interest returns to bank on. During the budget presentation, Sitharaman announced that senior citizens who are 75 years old and above will be getting some relief post-April 1st.
According to this new rule, seniors who are 75 and above, earning only pension and income from interest will no longer be required to file ITR. It is important to note that this rule is only applicable to senior citizens who do not have an alternative source of income, except pension and interest accrued in their pension account.
Provident Fund Tax Rules
In a move that stands to affect high-value employees depositing funds in the Employee Provident Fund (EPF), the Union Finance Minister has introduced a rule pertaining to annual contributions. Post-April 1st, the interest earned on yearly employee contributions to PF account over Rs. 2.5 lakhs will be taxable.
Leave Travel Concession Rule
In view of the coronavirus travel restrictions, the government had announced an LTC voucher for those who could not claim an LTC tax benefit last year. Under Budget 2021, last year’s proposal has been renewed. A tax exemption can be availed of on the cash allowance that is offered against the LTC amount.
Tax Deducted at Source
Addressing the problem of non-payment of taxes, the Union Finance Minister has proposed higher TDS/TCS rates after April 1st. Under the newly created insertions of Sections 206AB and 206CCA in the IT Act, it has been proposed that those who have not filed ITR by deadlines for the last two years but have paid TDS of over Rs. 50,000 during these two years will have to pay a higher tax deducted at source and tax collected at source. As per this rule, TDS that is equivalent to twice the applicable rate under the IT Act or 5%, whichever is higher, will be deducted for those who have not paid taxes but paid TDS as described.
These new changes will come into effect from the 1st of April, 2021. Stay informed about the changes that apply to you, so you can make adequate provisions for yourself in advance.
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