The new fiscal year will start from April 1, 2021. With this, many rules and laws related to tax will come into force. Come, let us know about all such changes that will affect your money and money.
1. Tax on PF interest
If an employee deposits more than 2.5 lakh rupees in a financial year in EPF and Voluntary Provident Fund (VPF), the interest on the amount of more than 2.5 lakh rupees will be taxable. Apart from this, if the company does not make any contribution to the EPF account, the tax rebate will be available only on the interest received from deposits up to Rs 5 lakh. This was announced in Budget 2021.
2. Reduced deadline to file billeted, revised ITR
Another important announcement was made in Budget 2021. In this, the deadline for filing late or revised Income Tax Return (ITR) was reduced. It has been reduced for three months. That is, instead of 31 March of any assessment year, now it has to be filed by 31 December. Generally income tax returns for a financial year have to be filed by 31 July of the next financial year (called the assessment year). Once the deadline is over, he needs to file by 31 March of the assessment year. Now it has to be done by 31 December.
Currently, the bilated and revised ITR is submitted at will. ITR cannot be filed even if the March deadline passes. In this case it is allowed to file ITR only after the notice of the tax department. A bilated return is filed after the original deadline for filing Income Tax Return (ITR) for a financial year is over. For this, the taxpayer has to pay a penalty.
A taxpayer files a revised or revised ITR if there is a mistake while filing the original tax return. This includes mistakes like forgetting the claim of deduction, not reporting income or bank account etc. The filtered ITR is filed under section 139 (4) of the Income Tax Act, 1961. At the same time, revised ITR is filed under section 139 (5).
3. Filing ITR Penalty
The government has also amended section 234F of the Income Tax Act, along with reducing the deadline for filing a bilated ITR. This amendment has been made in the context of clarifying the penalty to be levied on filing the filtered ITR.
As per the change in section 234F, if the ITR is filed after the deadline (normally 31 July) but ends on or before 31 December 2021, the taxpayer will have to pay a late filing fee of Rs 5,000. Earlier, such ITR could have been filed by 31 March. By December 31, a penalty of Rs 5,000 was levied for filing a bilated ITR. From January 1 to March 31, a fine of Rs 10,000 was imposed.
4. Tax on ULIPs
In Budget 2021, it was proposed that units linked insurance plans (ULIPs) with a premium of more than Rs 2.5 lakh would not be eligible for tax exemption. In other words, if the annual premium for two or more ULIPs in a year is more than Rs 2.5 lakh, then their maturity amount will come under the tax net. The new law will only apply to ULIPs issued on or after 1 February 2021. Therefore, the current ULIPs, whose annual premium is more than 2.5 lakh rupees, will not have any effect on this change.
Naveen Wadhwa, DGM Chartered Accountant of Taxman.com, says that the new tax rules on ULIPs will be applicable on aggregate basis. This means that if you have an annual premium of all ULIPs above Rs 2.5 lakh, then at the time of maturity you will have to pay tax.
5. Penalty if PAN is not linked with Aadhaar
March 31, 2021 is the last date to link PAN with Aadhaar. By this date, if PAN and Aadhaar are not linked, then the PAN will be inoperative. Apart from this, penalties will also be employed. A new section 234H has been added to the Income Tax Act, 1961. Under this, a provision for fine has been made. The government has done this through the Finance Bill 2021, passed from the Lok Sabha on 23 March. The new law will come into effect from 1 April. By the way, the government has not given the exact amount of penalty to be recovered. But, it will not be more than Rs 1,000.
6. Advance Tax Penalty Expense on Dividend
The dividend which came into the hands of shareholders from April 1, 2020 was made taxable. From the perspective of advance tax, it was impossible for the taxpayer to transfer the dividend distribution beforehand. Due to this, it used to come under interest under section 234C. Suitable amendments have been made in section 234C to make advance tax liability on the dividend only when it is actually received. This is news of relief for taxpayers.
7. Deadline for reopening of ITR cases decreased
The Income Tax Department has given another relief to taxpayers. He has decided that he will not reopen it after three years of filing ITR except in certain special cases. According to the announcement of the budget, old tax cases will not be opened after 3 years of filing the return. Earlier, the tax department has been sending notices even in 6-year-old cases. Such provisions are covered under section 149 of the Income Tax Act.
8. Senior citizen exempted from filing ITR
In view of the challenges of filing tax returns for the elderly every year, they have been given great relief in the budget 2021. Those aged 75 years or more, whose income is only from pension and bank interest, will not need to file ITR. They can claim exemption by filing a declaration to the bank.
9. The company will have to make the contract in EPF account on time.
Institutions that delay submitting their contributions to the EPF account of employees will not be able to claim tax deduction. It was proposed in Budget 2021. This will increase the pressure on institutions / companies to submit the employee’s PF contracts on time. This will ensure that the institutions will not be able to use this money for other purposes. Not only this, the employees will not have to bear the loss of interest on this amount. The new rules will come into effect from 1 April 2021.
10. Tax exemption limit increased under Affordable Housing
In the Budget 2021, the deadline for availing the additional deduction available under section 80 EEA has been extended till 31 March 2022. It is available on the loan interest paid on Affordable Housing. Till now it was available on loan taken till 31 March 2021. With this, the government has hit two targets with one stone. While this will support the real estate sector, it will provide financial help to the new home buyer. This exemption is other than deduction of Rs 2 lakh available under section 24. In this way deduction up to Rs 3.5 lakh is available for those who buy affordable homes in a year.
11. Additional forms for adopting new income tax regime
While filing ITR for the financial year 2020-21, you have to adopt the new income tax regime, so keep in mind that you will have to fill an additional form. The name of this form is Form 10-IE. The Central Board of Direct Taxes has notified this form. Tax rates are lower on the new system of income tax. But for this, you will have to wash your hands mostly from tax exemption and deduction.
