The financial progress of any nation thrives on how strong its earnings tax system is. The finance ministry critiques the present guidelines and places them forth for dialogue within the Parliament. The Union Price range offered by the Finance Minister additionally comprises modifications within the earnings tax provisions, if any proposed by the earnings tax division.
The Union Price range 2021 made some modifications within the earnings tax guidelines, that are as follows:
Taxability of curiosity from Provident Fund
If we take a look at all of the provisions that acquired modified this 12 months, probably the most evident modifications was bringing PF’s extra contribution underneath the taxability web. PF has stayed as a favorite funding possibility for low and middle-income earners and high-income earners. Excessive-income earners used it as a protect for incomes tax-exempt earnings. Our finance minister had acknowledged that they noticed virtually crores of deposits in opposition to one PAN in only one month, as a result of which they launched a cap restrict of Rs.2.5 lakh. Accordingly, any curiosity earned from the PF on funding above Rs.2.5 lakh might be taxed in line with the person’s earnings tax slab. This provision applies to all deposits made on or after 1st April 2021.
Reduction to Senior Residents aged above 75
The Price range 2021 additionally launched a brand new provision to supply compliance aid to senior residents aged 75 or extra, who solely have a pension and curiosity earnings. These senior residents are exempted from submitting their earnings tax returns (ITR). It’s to be famous that the aid is just from return submitting. The authorised banks that get these senior residents’ pension and curiosity earnings will deduct TDS and submit it to the federal government supplied sure situations are fulfilled. This aid is relevant from the monetary 12 months 2021-22.
Selection of New Tax Regime
The federal government has launched a brand new tax regime within the earlier Price range 2020. A taxpayer might select between the brand new tax regime or the present/outdated tax regime ranging from the first of April 2020. A taxpayer choosing the brand new tax regime needed to forgo all main exemptions and deductions allowed within the current regime. As an example, home lease allowance, depart journey allowance, all deductions allowed underneath Part 80C like LIC premium, ELSS, Provident Fund funding, medical insurance coverage premium underneath Part 80D, and so on., will not be allowed within the new tax regime. Briefly, all deductions underneath Chapter VI-A will not be allowed underneath the brand new tax regime. (besides just a few, like employer contributions in direction of NPS underneath part 80CCD(2) might be claimed). The brand new regime was dropped at deliver ease of return submitting, particularly for the low-income earners.
Greater TDS for Non-filers
Finance Invoice 2021 additionally launched new provisions for deduction and assortment of tax at supply at larger charges if the receiver has not filed ITR. Accordingly, Part 206AB is launched, which mandates the deductor to deduct TDS at the next fee if the particular person receiving the cost (deductee)
—Has not filed ITR for the earlier two years.
—Has a TDS of greater than Rs.50,000 within the earlier two years.
An analogous provision (Part 206CCA) is launched for larger tax assortment.
The Finance Ministry of India has launched these sections to extend ITR compliance and curb tax evasion.
Tax on Unit Linked Insurance coverage Insurance policies (ULIPs)
The Union Price range 2021 additionally positioned ULIPs with larger premiums into the tax bracket. Accordingly, the redemption of ULIP insurance policies might be exempt provided that the cumulative premium paid for such insurance policies don’t exceed Rs.2.5 lakh ranging from 1st February 2021.
Therefore if an investor has a ULIP coverage purchased earlier than 1st February 2021, then the maturity proceeds are tax-free regardless of the premium paid. For insurance policies issued after 1st February 2021 and having an annual premium of greater than Rs.2.5 lakh (for all of the insurance policies in combination), these insurance policies could be topic to capital good points tax.
Due date of belated return prolonged
The Finance Atc 2021 completely modified the due date of submitting a belated return, lowering it by three months. The due date for late submitting has been modified to 31st December of the evaluation 12 months from this 12 months onwards.
Nevertheless, for the present monetary 12 months 2020-21, this date has been prolonged to 31st March 2022 as a result of new portal points and covid-19.
Launch of Annual Info Assertion (AIS)
The earnings tax division lately launched an Annual Info Assertion (AIS) on this new portal, step by step changing the present Kind 26AS. Presently, Kind 26AS, additionally a tax credit score assertion, provides particulars referring to the tax collected, tax deducted, self-assessment or advance taxes paid, and so on., associated to the taxpayers. Compared, AIS is like an expanded model of Kind 26AS.
Extra info like curiosity earned, dividend earnings, mutual fund transactions, overseas remittances, wage breakup, off-market transactions, and so on., will now be accessible within the AIS.
AIS has a characteristic to submit on-line suggestions for inaccurate or particulars not pertaining to the taxpayer. The suggestions characteristic will allow taxpayers to establish incorrect info mirrored within the AIS and supply suggestions for corrective motion. This can assist repair real errors rapidly and scale back the notices from the earnings tax division.
Change in a Penalty for Delayed Submitting of Returns
The unique due date of submitting returns for FY 2020-21 has been prolonged to 31st December 2021 for people not lined underneath audit. Until the earlier 12 months, if the taxpayer missed the deadline of 31st December of the evaluation 12 months, the utmost penalty was Rs 10,000. Nevertheless, the penalty quantity for delayed submitting has been diminished to Rs 5,000.
Disclaimer:Archit Gupta is the founder and CEO of Clear. The views expressed on this article are these of the writer and don’t characterize the stand of this publication.