New Income Tax Rules to come into effect from 1st April 2021.
With the new financial year comes a new rule. As announced by Nirmala Sitharaman (Union Finance Minister) in the budget the changes will commence from this Financial year 21-22.
In budget 2021, the finance minister proposed higher TDS (tax deducted at source) or TCS (tax collected at source) rates in order to encourage more citizens to file income tax returns (ITR).
The budget proposes adding new Sections 206AB and 206CCA to the Income Tax Act as a special provision for the deduction of higher TDS and TCS rates for non-filers of an income tax return, respectively.
Archit Gupta, Founder and CEO of Cleartax said “Any person who has not paid ITR but has a TDS or TCS deduction of more than Rs. 50,000 in the last two years will be anticipated to pay TDS or TCS at a rate of at least 5%. The deductor will now be in charge of obtaining ITR evidence from individuals in order to ensure compliance."
Mentioned below are few changes applicable from the new financial year.
Individuals over 75 years of age are exempted from filing the ITR. This exemption is only for senior citizens who solely depend on pension as income and have no other means of income.
Interest earned on PF contribution by the employee has increased from 2.5 Lakhs/annum to 5lakhs/ annum. The 5 lakhs contribution excludes the employee contribution.
Irrespective of tax filers or non-filers a specific provision for deduction of higher rates on TDS & TCS was proposed for a new section i.e. 206AB & 206CCA.
To facilitate compliance and pre-filled ITR having incomes, TDS, etc. will be provided to the taxpayers. To further ease interest from savings, investments, post office, dividend, etc. will also be pre-filled.
Alert for all who have not filed ITR 19-20…..Act fast!!!
The tax department issued an alert to levy penalties on taxpayers who are yet to file their returns. The deadline for the same was extended due to the pandemic yet many did not manage to file.
Until assessment year 17-18, there was no penalty. In the AY 18-19, the penalty was applicable under section 234F of the Income Tax Act 1961.
To file a belated return is the same as filing on or before the due date return,. One will need to select “Return filed under section 139(4)” in the drop-down list in the applicable box.
To avoid a big penalty, the department urges to file return at the earliest.