The new Income Tax rate will be effective from April 1, 2021. As per the new rate no income tax is leviable where the total income does not exceed Rs.2,50,000; 5% tax is applicable if total income exceeds Rs. 2,50,000 but does not exceed Rs. 5,00,000; Rs.12,500 plus 20% of income tax is applicable on total income exceeds Rs. 5,00,000 but does not exceed Rs. 10,00,000; and Rs. 1,12,500 plus 30% of income tax is applicable on total income exceeds Rs.10,00,000.
The Finance Bill 2021 has inserted second proviso in clause 5 of section 10, so as to provide that, for the assessment year beginning on the 1st day of April, 2021, the value in lieu of any travel concession or assistance received by, or due to, an individual shall also be exempt under this clause subject to fulfilment of conditions to be prescribed.
It is also proposed to clarify by way of an Explanation that where an individual claims and is allowed exemption under the second proviso in connection with prescribed expenditure, no exemption shall be allowed under this clause in respect of same prescribed expenditure to any other individual.
The Finance Bill 2021 inserted proviso to clause(11) and clause (12) of section 10 of the Act, providing that the provisions of these clauses shall not apply to the interest income accrued during the previous year in the account of the person to the extent it relates to the amount or the aggregate of amounts of contribution made by the person exceeding Rs.2,50,000 in a previous year in that fund, on or after 1st April, 202, computed in such manner as may be prescribed.
Presently, SWF/PFs are not allowed to invest through a holding company. It is proposed to allow the same subject to the various conditions namely Holding company should be a domestic company, it should be set up and registered on or after 1st April, 2021, it should have minimum 75% investments in one or more infrastructure companies and exemption under this clause shall be calculated proportionately, in case if the aggregate investment of holding company in infrastructure company or companies is less than 100%.
Section 55 explains the cost of acquisition of capital asset has been amended to Provided that where the capital asset, being goodwill of a business or profession, in respect of which a deduction on account of depreciation under sub-section (1) of section 32 has been obtained by the assessee in any previous year preceding the previous year relevant to the assessment year commencing on or after the 1st day of April 2021, the provisions of sub-clauses (i) and (ii) shall apply with the modification that the total amount of depreciation obtained by the assessee under sub-section (1) of section 32 before the assessment year commencing on the 1st April 2021 shall be reduced from the amount of purchase price;”
The provisions related to income escaping assessment provide that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may assess or reassess or re-compute the total income for such year under section 147 of the Act by issuing a notice under section 148 of the Act. However, such reopening is subject to the time limits prescribed in section 149 of the Act.
In respect of an order of assessment relating to the assessment year commencing on or after the 1st April, 2021, the provisions of this subsection shall have effect, as if for the words “twenty-one months”, the words “nine months” had been substituted.
With effect from 1st April 2021 the Finance Bill, 2021 has inserted the new chapter namely Dispute Resolution Committee.
The Central Government has consciously adopted a policy to make the processes under the Act, which require interface with the taxpayer, fully faceless. In this backdrop, new schemes for faceless assessment, for faceless appeal at the level of Commissioner (Appeals), and for the faceless imposition of penalty have already been made operational. Further, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 has empowered the Central Government to introduce similar schemes for other functions being performed by the income-tax authorities.