Even though the Budget 2021 has not announced relief in tax exemption or deduction, there have been about 15 such significant changes related to income tax which will have a direct impact on taxpayers.
There have been many such announcements in Budget 2021 which are constantly in discussion. Especially on the tax front it is being said that the common people could not get anything. But about 10 such tax rules have changed in the budget, which can have an impact on your pocket. If you are aware of the new rules, then it will be easier to do tax planning and the individual taxpayer will be able to save more money from his salary.
In this budget, Finance Minister Nirmala Sitharaman brought EPF (Employee Provident Fund become taxable) under the tax net. Now if you deposit more than 2.5 lakhs annually in EPF, then the interest income on the additional fund will be taxable. Earlier the interest income on EPF was completely tax free. A report has come about HNI (High Networth Individuals), according to which on an average they earn 50 lakh rupees from interest. Till now it was completely tax free. Talking about salary class, if your salary is more than Rs 21 lakh, then your EPF contribution will be more than Rs 2.5 lakh. Public Provident Fund i.e. PPF has been kept separate from this. Employee Provident Fund and Voluntary Provident Fund ie VPF will be included in the range of 2.5 lakhs. This rule will be applicable from 1 April 2021. Currently, EPF offers a fixed return of 8 per cent.
Advance tax rules changed
2. Now the government has also changed the rules regarding advance tax. Investors will no longer have to estimate the earnings from the dividend. Earlier, investors had to pay advance tax on their potential earnings. Now the government has said that till the dividend is declared on behalf of the company or the payment is not made, advance tax will not be paid on it. If the taxability of a taxpayer becomes more than 10 thousand, then he has to pay advance tax. Four times in a financial year, on June 15, September 15, December 15 and March 15, it has to be submitted as per rules.
Investment in ULIP will also be taxable
3. The government has taken a big decision regarding ULIP (Unit Linked Insurance Plan). Earlier, there were three types of tax benefits on investment in ULIP plans. Both the benefit of deduction on investment and the earnings and maturity of interest were completely tax free. Now its limit is 2.5 lakh rupees. If the annual premium of an investor is 2.5 lakh or more, then he will get 10% tax on capital gains. If the capital gain is less than 1 lakh, then it will not be taxed like long term capital gains.
Relief from filling returns to senior citizens
4. Senior citizens have been given great relief in this budget. If a taxpayer is over 75 years of age and his income is only pension and interest income, then he will not need to file a return. The bank where he will be getting pension will deduct TDS after calculating bank tax.
Pre-filled income tax returns form for earning from other sources
5. In order to make it easy for taxpayers to file returns, now information about income from other sources, such as dividend income, capital gains income, bank deposit interest income, post office interest income, will be pre-filled. Till now taxpayers had to calculate it separately. Due to forgetting this many times, he used to have trouble. Now all this information will come to Phil.
Tax relief increased in affordable housing
6. In order to promote Affordable Housing, the government has extended the deadline of section 80EEA from 1 year. Now it can be availed by 31 March 2022. Under this section, there is a discount of 1.5 lakh on interest payment. This exemption is different from the rebate of up to 2 lakh on interest repayment under section 24B.
Relief for Overseas Retirement Fund
7. Government has also announced new rules in this budget regarding Overseas Retirement Fund. Under this, what will be the rule of tax and according to which year the calculation will be done, the information will be shared in detail. Currently, individuals who retire in overseas due to double taxation face a lot of trouble.
Bilated return limit reduced from 3 months
8. The deadline for filing delayed returns has also been reduced for the financial year 2020-21. Assessment year for the current financial year will start from 1 April 2021 which will run till 31 March 2022. After the budget announcement, now there will be a chance to file a bilated return till 31 December 2021. According to the earlier rule, the entire financial year was considered as assessment year (ie from 1 April 2021 to 31 March 2022). Now it has been reduced from three months.
Re-open limit on old tax dispute reduced from 3 years
9. The deadline has also been reduced to reopen the old tax dispute. The first six-year old tax cases could also be re-opened. Now the time limit has been reduced to 3 years. If this case is related to serious tax fraud, meaning income of more than 50 lakhs has been hidden, then 10 year old case can also be re-opened. Dispute resolution committee will be announced very soon to resolve disputes involving taxable income up to 50 lakh.
10. To solve the second level case, it has been announced to create a National Faceless Income-tax Appellate Tribunal Center in this budget.
No TDS on dividend in REITs and InvITs
11. In order to promote investment in real estate and infra sector, the government has announced that TDS, ie tax deduction at source, is not deducted on the dividend received for investing in REITs (Real estate investment trusts) and InvITs (infrastructure investment trusts). Will go. Explain that in the budget 2020, the government abolished the dividend distribution tax i.e. DDT. Also, when the dividend is issued, the shareholder, the receiver, has to pay tax.
Double TDS from non-returners
12. In order to motivate taxpayers to pay taxes, it has been announced to add section 206AB in the Income Tax Act 1961. Under this, double TDS will be deducted from those who do not file income tax returns.
13. Employees can still avail tax exemption on Leave Travel Concession (LTC). Its limit will be maximum 36 thousand rupees or one third of the expenditure, which will be less. This rule will be applicable for the financial year 20-21 in the 2018-21 block.
Tax holiday deadline extended for startups
14. In order to encourage startups, the government has decided to increase the tax holiday limit. Now startups starting by 31 March 2022 can take advantage of the tax holiday. Apart from this, the deadline for tax free capital gains has been extended to attract investors in startups. Now by March 31, 2022, the capital gains on investing in startups will be tax free. Shortly before 12 months, short-term capital gains are taxed at 15 per cent. After 12 months, long-term capital gains tax is 10%. Up to 1 lakh capital gains are tax free.
PPF will not be taxed
15. EPF’s interest income has been brought under the tax net in the budget. If you invest more than 2.5 lakhs in Employee Provident Fund, then the interest income on additional funds will be taxable. However, this rule will not apply to PPF. A maximum of Rs 1.5 lakh can be deposited in PPF in a financial year. The calculation of such PPF and EPF will be different.
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