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The new Financial Year begins on 1st of April every year and ends on 31st March of the following year. Every year on April 1, the consumers witness some significant changes in the Income Tax rules.
The changes in the rules were announced by the Indian Finance Minister, Nirmala Sitharaman, during the presentation of Budget 2020-21 in February.
The article talks about all the significant changes made in the Income Tax w.e.f 1st April, 2021.
The Finance Minister of India introduced two sections, i.e., 206AB & 206CCA, in the Income Tax Act, 1961. These are the special provision for the deduction of higher TDS & TCS from those not filing ITR. The aim behind the insertion of sections was to make more people file ITR.
In the budget 2021, the Indian Finance Minister lifted the exemption over the interest earned on PF is no more tax-free. However, the interest earned over Rs 2.5 lakhs in PF is taxable.
LTC stands for Leave Travel Concession. This scheme was proposed in the Budget 2021 to provide relief to the employees that there will be LTC cash vouchers equivalent to the leave travel concession. This scheme was introduced because no one could travel due to Covid-19 pandemic and had to forfeit their benefits of LTC Tax.
To avail this benefit, the employee must submit a detailed bill including the GST No. of the vendor, GST amount to the employer (provided the employer is offering the scheme).
Budget 2021 gives relaxation to senior citizens above the age of 75 years. The persons who are above 75 years are not required to file ITR. The bank will deduct the amount that the person is supposed to pay the Government.
This applies only to the senior citizen who earns income from their pension or the Fixed Deposit interest in the bank.
The Budget 2020-21 introduced the concept of pre-filled ITR forms for all kinds of income earned out of Capital Gains from Listed Securities, Dividends, etc.
Earlier, these forms were available only to the income earned from salary under Section 16 of the Income Tax Act, 1961.
The forms were introduced with the aim to make people file ITR at ease.
Budget 2021 made it mandatory to link Aadhar & PAN and the due date to link the same is 31st March 2021. The PAN will become inoperative from 1st April 2021, if not linked with the Aadhar.
Under Section 272B of the Income-tax Act, 1961, a penalty of Rs. 10,000 will be levied if it fails to comply with the above provision.
Significant changes in the income tax rules w.e.f 1st April 2021 in a tabular form
|S.No.||Particulars||Changes w.e.f 1st April 2021|
|1||Tax Deducted at Source (TDS)||Section 206AB is introduced in the Income Tax Act for the higher rate for TDS for those who don’t file the ITR. The proposed rate for them is 5%, twice the rate specified earlier.Section 206CCA is introduced in the Income Tax Act for the higher rate for TDS for the ones who don’t file the ITR. The proposed rate for them is 5% twice the rate specified earlier.|
|2||PF Tax Rules||The budget 2021 proposed the lifting of exemption from the Provident Fund. Earlier, interest earned from the PF was exempted from Income tax. However, from 1st April 2021, the interest on Employee Contributions to the PF above Rs. 2.5 lakhs should be taxable.|
|3||LTC Scheme||The benefit is available to the employees. To avail of this, the employee needs to submit a proper bill with GST No. of the vendor, the GST amount, to the employer on or before 31st March 2021 (provided that the employer is offering the scheme). The employee must spend 3 times the amount deemed as LTA fare on the goods & services, attracting 12% of GST or more.|
|4||ITR Filing exemption for Senior citizens above 75 years||The citizens whose age is more than 75 years need not file ITR, who is having income from the pension & the interest from the Fixed deposit only. The bank will deduct the income tax that he is liable to pay to the Government.|
|5||Pre-filled ITR forms||The Government has introduced pre Filed ITR forms in Budget 2021. These forms will have information on Dividend Income, Capital Gains from Listed Securities, etc. Earlier, the pre-filled forms were available only for the Salaried Employees under Section 16 of the Income Tax Act.|
|6||Penalty for non-linking of Aadhar Card & PAN Card||It has become mandatory to link the Aadhar card with the PAN, and the due date to link is 31st March 2021. Failure to comply, you may be charged with a fine of Rs. 10,000 under section 272B of Income Tax Act.|
It is important to remember that every year in the month of February budget is presented by the finance minister. In February 2021, budget 2020-21 was presented and some of the key points from the budget are:
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