New Income Tax Rules

New Income Tax Rules

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By Gobindpreet Singh Sethi

There may be many news items which could have an impact on your money in FY21-22 however one of the major events that could severely impact your finances are the new income tax rules announced in the union budget 2021-22.Here is a glimpse at the new tax and financial rules that shall impact your money in FY 2021-22. The latest rules have come in effect from 1st April 2021 and are being applied to all the income tax-paying individuals. These rules are:-

1. Reduction in the Deadline for Filing Belated and Updated ITR of FY 2020-2021 to December 31, 2021

The deadline for filing belated and revised Income Tax Return has been reduced by 3 months. This can be understood with the instance:

Last Date if Previous Rule is applicable: The deadline for filing belated and revised ITR for FY 2020-21 is March 31, 2022

New Rule that is Applicable: Along with a maximum penalty of up to Rs 10,000, the deadline for filing belated and revised ITR for FY 2020-21 is December 31, 2021, i.e. the time span for filing has been reduced by 3 months.

2. Modification in Interest Rate of Provident Fund

In the new financial year 21-22, to ensure tax saving on the provident fund, kindly assure that deposits in your EPF account does not exceed the below-mentioned limit. As per new Rules, If “deposits in the Employees’ Provident Fund and Voluntary Provident fund contributed by the employee”  is more than Rs 2.5 lakhs in the FY 2021-22, then the Finance Ministry shall lower the burden of individual’s tax by exemption.

3. Raising TDS Filings

The finance ministry has eyed some measures to hike up the income tax return filed for the years, and this would be done by raising the TCS (tax collected at source) or the TDS (tax deducted at source). This would be done by the Sections 206AB and 206CCA inclusions in the IT act and would be considered as special provisions.

The higher TDS or TCS rates will be applicable to the non-filing entities of income tax.The non-filing entities will now be paying a minimum 5% of TDS or TCS and having an INR 50,000 or more TCS/TDS deduction in previous 2 years. Also, the responsibilities will be of a deductor to get the income tax return done for the furnishing.

4. ITR Forms Now Comes Filled up in Advance

The government has decided to give a pre-filled form to the taxpayers in order to execute the filing of income tax returns in a quick manner. Also, the fields which are set to be pre-filled are details of salary income, tax payments, TDS, etc. Taxpayers can also expect the details like details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. to be pre-filled as per the sources.

5. No Income Tax Filing for Senior Citizens Above 75 Years

The finance minister had been concerned with the senior citizens having an age of more than 75 years and for this, Nirmala sitharaman has brought down the income tax filing process to exemption. However, this exception will be applicable to pension and the related interest on that pension while having no other income apart from that source.

6. Leave Travel Concession (LTC) Exemption

Although the scheme was only available till 31st march 2021 and the availment was to be calculated on the money spent till this date only, however, the government had given a good benefit to all the claimants who were unable to claim the tax benefits on LTC. The actual scheme was to give the tax exemption to the cash allowance on the leave travel concession.

This is an outlook on the changes the government has made.The government has made the changes in order to facilitate the general public as well as the taxpaying entities. These changes may leave a deep scar on the income of an individual making it one of the most impactful news carrying on throughout the course of the entire financial year 2021-22.