As the Financial Year 2020 comes to an end, there are 6 new Income Tax rules that every tax payer should keep in mind. In India a financial year starts from 1 April each year and ends on the subsequent 31 March. In 2021, Union Finance Minister Nirmala Sitharaman presented a new Union Budget in which slew of changes were introduced in the income tax rules. All of these changes will be put to effect starting tomorrow, 1 April 2021. Indian tax payers should complete certain tasks before the completion of the current financial year to avoid heavy penalty and keep in mind new rules Sitharaman introduced. With that said, let’s take a look at
6 Important newly introduced Income Tax Rules:
Exemption of ITR filing for Senior Citizens above 75:
In the Budget 2021 announcement, Finance Minister Sitharaman announced a new rule that is aimed to ease the burden on senior citizens. According to the new rules, any senior citizen above the age of 75 years will be exempted from filing their Income Tax Returns (ITR). It should be noted that the policy applies to only those senior citizens that only rely on pension and interest income from bank that hosts their pension account. They should not have any other income to avail the exemption.
Ease of ITR filing through pre-filled ITR forms:
In a first, Sitharaman had announced that Indian taxpayers will be given a pre-filled Income Tax Returns form to ease the burden of compliance. This includes crucial details such as salary income, tax payments, TDS, capital gains, dividend income, and bank interests will be pre-filled in the ITR forms. The new policy was introduced keeping in mind the ease of return filing as for some people filing the ITR has been a cumbersome and tedious process.
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Revised filing in case of error:
Although the way all the digital accounts and finances are connected seamlessly to make the process less error prone, there are times when some errors are made during ITR filing. To combat the situation, a new policy states that one can file a revised ITR by March 31. Additionally, if an ITR has not been filed as of March 31, 2021, one can file the delayed ITR for the financial year 2019-20. Although, if a person fails to file the revised ITR before the stipulated date of March 31, they would need to pay a fee up to Rs, 10,000. For people whose income is only up to Rs. 5 lakhs, the penalty fee is dropped down to Rs. 1,000.
New Provident Fund Tax rules:
This year, while announcing the Union Budget 2021, Indian Finance Minister Sitharaman put a cap on the tax-free interest that’s earned on a PF contribution by the employees and employers to Rs. 2.5 lakh/year. The limit for tax exemption on interest earned on PF contribution was also increased to Rs. 5 lakhs/annum in cases against that of Rs. 2.5 lakh.
Choose between ‘New tax Regime’ or ‘Old tax regime’:
In budget 2020, the Indian government had implemented a completely new tax regime. However, Indian tax payers are given the option to choose between either of the tax regimes for the Financial Year 2020-21 starting the new Financial Year from April 1.
PAN to Aadhaar card linking:
The last date of linking one’s PAN card to Aadhaar card has been set to March 31, 2021. Although the final date of linking has been extended multiple times, the last date remains confirmed more or less. If the two cards are not linked by the end of the Financial Year 2020, that is, March 31st, the PAN cards will be considered inoperative. This not only means that the holder of the PAN card won’t be able to open new bank accounts, or trade in mutual funds or stocks, but also means that the government will assume that the PAN card is not made as required by the law. This will hold a person responsible for giving a penalty fee of Rs. 10,000 according to the Section 272B of the Income Tax Act.
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