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The current financial year is about to end in few days. Although the Indian Businesses and taxpayers warmly welcomed the recent budget, there wasn’t much flutter about Income Tax.
FM kept the Income Tax slabs unchanged, and no significant relief was announced. So it is easy to overlook some critical Income Tax changes introduced in the budget. So here I am with the top 5 Income-Tax changes that will kick-in from 1st April 2021.
Let’s get started
Changes in TDs
In this budget, the Finance Ministry has decided to tighten the noose around those not filing their Income Tax returns. With the introduction of sections 206AB & 206CCA, the Government is going after such non-compliant individuals. The finance ministry has decided to levy a higher TDS rate on individuals who are not filing their Income Tax Returns. The same goes with TCS, as any failure to file an ITR will lead to higher TCS (Tax Collected at Source).
As per the new law, Finance Ministry has set two conditions for a higher Tax Deduction rate:
- Any individual who has not filed Income Tax Return in the past two years will have to pay double the applicable TDS rate or 5%, whichever is higher.
- The other condition is the tax deducted from such an individual should be 50,000 or more for the past two years.
In short, if you are not filing a return from the past two years and the TDS of more than 50,000 is deducted from you in the last two consecutive years, you are liable to pay for TDS.
New PPF rule
This is probably one of the most talked-about Income Tax changes from the present Union Budget. As per the new rule, the Finance Ministry has decided that the annual Contribution of more than INR 2.5 lakh will be taxable in the next financial year.
Let’s understand the profound impact of this decision. For years, PF has been considered one of the safest and most sought-after investment options for retirement planning. The reasons are many, including assured returns, safe investment option, secured benefit, lump-sum withdrawal at the time of retirement & tax-free withdrawals.
This prompted employees to contribute more towards the PF investments every year.
The latest amendment has raised questions in front of employees whose PF salary, i.e., Basi + DA + Retaining allowance, is INR 20 lakh or more. Such individuals will now have to look for other investment options for better & tax-free returns.
Relief for pensioners
The new budget change has brought some much-needed relief to the senior-citizens above the age of 75. As per the recent changes, senior citizens above the age of 5 who rely solely on pension income 7 rent income will not have to file an ITR.
But here, it is vital to note that these benefits are available to only those senior citizens whose interest income comes from the pension account.
Pre-filled ITR forms
The Finance Ministry has decided to ease the compliance burden of the individual taxpayer. To do so, the taxpayer will get a pre-filled ITR form. This form will contain all the necessary information like TDS, salary details, tax payment & much more.
It will also have information about Long-term & Short-term capital gains from dividends and securities. This will make the task of ITR filing straightforward, easy and quick.
LTC (Leave Travel Concession)
Under this new rule, the Government has decided to give tax exemption on the cash allowance offered to any employee for Leave Travel Concession.
Conclusive thoughts
Although not game-changers, these new rules undoubtedly will impact taxpayers in some way. To reap the maximum benefits and avoid higher TDS rates, it is recommended that you file your returns on time with an expert’s help.
Assistance from an expert will definitely save you from paying higher taxes & penalties.
If you need any help filing your Income Tax Return or any other Business issues, feel free to reach us.
Our experts at Probal Consulting Group will help you quickly.
For any more details, visit our website.
Global Consulting Group is a leading Taxation, Accounting, and Compliance firm that helps individuals, MSMEs, and other businesses manage their accounting, taxation regulatory compliance affordably.
