New Delhi: From today (April 1, 2021) financial year 2021-22 begins and it brings a slew of income tax changes that will impact your savings, financial planning. 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 come into effect from today.
EPF tax rules
Interest on employee’s share of contribution to EPF from April 1, 2021, will be taxable at the stage of withdrawal if it exceeds 2.5 lakh in any year. This will lead to additional tax liability, especially for HNIs, who make higher contributions, and will also discourage voluntary provident fund (VPF) contributions. If employer of a taxpayer does not contribute to the provident fund of the employee then the tax-free limit will be Rs 5 lakh.
Non-filing of ITR by persons above 75 years of age
Resident senior citizens, aged 75 or above, earning only pension and bank interest income (from the same bank where pension is credited) are not required to file income tax return. On the basis of declaration submitted by such a taxpayer, bank has to compute taxable income and deduct tax thereon.
Pre-filled ITR Forms
For the new financial year that starts from today, income-tax return forms will come pre-filled with capital gains from listed securities and mutual funds, dividend income, interest from banks, post office etc. in addition to salary income, bank accounts, tax payments and TDS details. This will ease the ITR filing process for taxpayers.
TDS at a higher rate
FM Sitharaman had proposed higher TDS (tax deducted at source) or TCS (tax collected at source) rates in the Union Budget 2021-22 in order to make more people file ITRs. The finance minister had proposed new sections 206AB and 206CCA as a special provision for the subtraction of higher rates of TDS and TCS, respectively for the non-filers of an ITR. These new TDS rules are applicable from today.
Advance tax payment
From this new financial year, taxpayers are not be required to estimate their dividend income while making advance tax payments. Advance tax will now be payable only when dividend is declared or paid by the company. Till now taxpayers used to pay the interest due to underestimation of dividend income in advanced tax calculation. But now taxpayers will get relief on this front.
Change in LTC cash voucher scheme
In October, the government had announced the leave travel concession (LTC) cash voucher scheme, allowing government employees and private sector employees to claim tax benefits through the purchase of goods and services in lieu of LTC for travel. The LTC cash voucher scheme was only available till March 31, 2021, i.e, money must be spent by this date to avail of the scheme.