Taxpayers are all set to step into the new financial year 2021-2022. Last year, the government announced a new Faceless assessment scheme, where the taxpayer could transparently get his tax assessment done and get his tax files evaluated without physically involving any tax office or any legal officer.
The coming year is also about to bring new tax schemes, rebates, and policy changes that are going to benefit every taxpayer, as the Budget 2021 says.
With days passing, the taxpayer has to get informed of the policy decisions so made by the Finance Ministers through the Finance Act, 2021 and has to get a grip over all necessary measures to implement them before its too late.
Below we have listed out some crucial tax changes which will be implemented from 1st April 2020.
- Provident Fund Tax Limits raised: Till FY 2020-21, the interest earned on employees contribution to EPF (Employee provident fund ) to any extent was exempted as per Section 10(11) and 10(12). From 2021 onwards, interest earned on the contribution made by employees to EPF above Rs 2.5 lakh would be charged to Income tax.
For this, if taxpayer contribution to EPF is above Rs 2.5 lakh, he should plan wisely to reduce those taxes by making some new tax-free investments in the coming year.
- New TDS Rates for non-ITR filers: With the insertion of new TDS section 206AB and 206CCA, the Finance Minister has proposed deduction of TDS at a higher rate than usually applicable, if the taxpayer fails to file his Income-tax return of the last two preceding assessment years before their respective due dates.
This will be applicable to all taxpayers who fail to furnish their return before the due date prescribed under Section 139(1) and if aggregate TDS in their case is more than 50,000 of the preceding two financial years.
The rates of TDS applicable will be higher of -‘2x of the relevant tax section or slab rate applicable’ or ‘5%’. Hence wise tax planning along with compliance with due dates is necessary for the taxpayer to take care of.
- Exempted filing of IT Return by Senior Citizens: With effect from 1st April, for senior citizens with age above 75 years, the exemption for non-filing of IT return has been granted. This means it would not be compulsory for Senior citizens above age 75, to file an Income tax return if they have only two income sources – income from bank interest and pension income.
While the tax would be deducted by the bank on such income and will be deposited to the government on behalf of senior citizens and the taxpayer need not file any return of income.
- Pre-Filled ITR Returns: From FY 2021-22, the tax returns along with the faceless assessment scheme would be automated by the Income-tax department where all details from the department would be pre-filled.
Hence, it will become necessary for the taxpayer to keep better records of all receipts, expenses, deductions claimed in ITR which can be questioned in case any mismatch happens of entered values with ITR values pre-filled.
- Extension of Tax rebate on House Loan Interest permitted: The tax deduction provided last year on housing loan interest for up to Rs 1.5 lakh, has now been extended by the government till March 2022. This is allowed for first-time house building or purchasing with cost up to Rs 45 lakh.
So taxpayers, those excited to buy their own home in 2021-22 can avail of this deduction.
It’s time to leave your tax worries behind.
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