Union Finance minister Nirmala Sitharaman announced new Income Tax rules during the Union Budget-2021, the new rules bringing unexpected changes into the regular regime, will come into force from April 1, 2021.
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- Higher TDS (Tax deducted at source) or TCS (Tax collected at source) proposed by the Finance Minister to encourage more people to file ITR(Income Tax Returns).
- This has been proposed by introducing Sections 206AB and 206CCA in the Income Tax Act as a special provision, especially for the non-filers of an ITR.
Option to choose a new tax regime instead of the old
- Taxpayers have an option to choose between the new tax regime and the old one, which came into an exercise in Union Budget 2020, people can opt for a beneficial regime at the time of filing ITR.
- If people are opting for the new tax regime, they are required to fill a new form called ‘Form 10-1E,
- Defaulters who missed filling the form will be calculated with your Income Tax liability based on the tax rates and slabs of the existing/old tax regime.
- Comparatively, the new tax regime is said to offer lower, concessional tax rates.
Exemption of ITR for Senior Citizens above 75 years
This exemption is available to only those who solely depend on pension and interest from the bank and who have no other income other than that.
EPF Tax rules
Finance Minister Nirmala Sitharaman curbed the tax-free interest earned on PF contributions to a maximum of Rs 2.5 lakh in a year. She then raised the limit for tax exemption on interest earned on PF contribution to Rs 5 lakh per annum.
To make the ITR filing less complicated, Taxpayers must also include the filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. along with the personal details, salary income, tax payments, TDS, etc.
The Central Government has proposed to exempt tax to cash allowance in place of Leave Travel Concession (LTC), this scheme was announced for individuals who could not receive their LTC benefits due to Covid-19 travelling restrictions.