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Income Tax new rules from tomorrow: All You Need To Know

The new financial year begins on April 1. Introducing the federation's budget for 2021, Federal Finance Minister Nirmala Sitharaman announced a series of changes to income tax rules. These changes are scheduled to go into effect tomorrow, April 1, 2021. So, let's take a look at the changes announced to the Union budget in February for income tax that will go into effect tomorrow. 

Let's look at the changes in income tax that will take effect from April 1:

TDS: To get more people to file their income tax returns (ITR), the Minister of Finance proposed higher rates for TDS(tax deducted at source) or TCS (taxes collected at source) in the budget of 2021. The proposed budget introducing new tax Articles 206AB and 206CCA of the Income Tax Law as a special provision to deduct higher rates of taxes payable and TCS, respectively, for taxpayers who are not taxpayers. "People who have not filed income tax returns, however, who have a TDS or TCS deduction of more than Rs 50,000 in the last two years, will have to pay TDS or TCS subject to a minimum of 5%. Here the deductible will now be responsible for collecting the ITR test from people to meet, ”said Archit Gupta, founder, and CEO of Cleartax.

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The option to choose a “new tax regime” instead of the old tax system: the government implemented the new tax regime last year in the 2020 budget. “However, the practice of choosing one of the tax systems for the FY 2020-2021 As of April 1, 2021. No Taxpayer still has time until March 31, 2021, to make tax savings deductions, however, they will be able to choose a beneficial system when filing their tax returns for the Financial year 2020-2021 ”, added Archit.

Exemption for Senior Citizens above the age of 75+ from Filing ITR: To ease the compliance burden on seniors, Finance Minister Nirmala Sitharaman, introducing the 2021 budget, exempted seniors of age 75+ from filing tax returns on income (ITR). The exemption will be available only to seniors who have no other income but are dependent on pension income and interest from the bank hosting the pension account.

PF Tax Rules: In the 2021-22 budget, FM Nirmala Sitharaman capped the tax-free interest earned on the provident fund contribution by employees and employers together to a maximum of ₹ 2.5 lakh per year. She then raised the maximum tax exemption on interest earned on contribution to the provident fund by employees to ₹ 5 lakh per year in specific cases against the proposal to ₹ 2.5 lakh. The contribution up to ₹ 5 lakh does not include the employer contribution.

Pre-filled ITR Forms: Individual taxpayers will be given pre-filled Income Tax Returns (ITR). In order to facilitate compliance for the taxpayer, details of salary income, tax payments, TDS, etc. They come prepackaged in income tax returns. To further facilitate returns recording, details of capital gains of listed securities, dividend income, interest from banks, post office, etc. will also be completed in advance. This step is to facilitate the filing of returns.

LTC Scheme: The central government proposed in the 2021 budget to introduce a tax exemption for the cash allowance in lieu of the Leave Travel  Concession (LTC). The plan was announced by the government last year for people who were unable to claim their LTC tax benefits due to covid-related travel restrictions. This scheme is only available until March 31, 2021, that is, funds must be spent before this date to benefit from the scheme.

Also Read: Visa moves to allow payment settlements using cryptocurrency

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