April 1 will mark the beginning of a new financial year and will bring a slew of income tax changes. Some of the changes were announced by the Union Finance Minister Nirmala Sitharaman while presenting the Union Budget 2021 in February.
Here is a list of changes that will be introduced from the coming financial year.
The finance minister has proposed higher tax deducted at source (TDS) or tax collected at source (TCS) rates in budget 2021 in order to make more people file income tax returns (ITR). New Sections 206AB and 206CCA had been proposed in the budget as a special provision for the deduction of higher rates of TDS and TCS, respectively for the non-filers of an income tax return.
The New Tax Regime will apply for income earned during the financial year 2020-21 or assessment year 2021-22, for those opting for it. As there is an incidence of tax deducted at source (TDS), the concern with many taxpayers and TDS deductors was about the timing of exercising of this option by the taxpayers.
There may be an instance when the employee declares to the employer that he will stick with the Old New Tax Regime but at the time of filing ITR, he or she chooses to go with the New Tax Regime. The employers were unsure as to how the TDS will be deducted.
In a bid to make individual taxpayers’ life easier, Finance Minister Nirmala Sitharaman, in the Union Budget 2021, announced that senior citizens above the age of 75 years, who only have pension and interest as a source of income will be exempted from filing the income tax returns.
The way you save, invest, insure and pay tax will witness some key changes from the next financial year 2021-22. Some of the new rules in taxation and the re-structuring of the salary structure of employees will impact your take-home pay from April 1, 2021 . At the same time, new standard insurance products will help you in making a better buying decision. Overall, the rules and regulations are here to stay and one will have to make them work to one’s advantage.
In order to ease compliance for the taxpayer, details of salary income, tax payments, TDS, etc. individual taxpayers will be given pre-filled Income Tax Returns (ITR). To further ease filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also be pre-filled. The move is aimed at easing the filing of returns.
The Leave Travel Concession (LTC) Voucher scheme has been notified by the government in Budget 2021. The scheme was announced by the Finance Minister Nirmala Sitharaman in October 2020 to boost consumer demand and to provide tax benefit to individuals who are unable to claim the usual LTC tax benefit due to covid-related travel restrictions.
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