Generally, 1st April of every year promises new beginnings for taxpayers in India, as it marks a new financial year. New schemes, new tax rates, new deductions, and new investments are some of the areas where Indian citizens are looking to maximise their earning potential and ease their compliance burden in the year ahead.
Let’s take a look at what changes in the lives of Indians this fiscal year, i.e. from 1st April 2021.
- Passbooks/cheque books of seven banks to become inoperative
Seven Indian banks, i.e. Dena Bank, Corporation Bank, Vijaya Bank, Andhra Bank, Allahabad Bank, United Bank of India, and Oriental Bank of Commerce, have recently merged with other banks. Due to this, the passbooks and cheque books of any of these banks’ customers will become inoperative.
Until 31st March 2021, interest earned on the Employee’s Provident Fund (EPF) contribution was tax-free irrespective of the amount. From 1st April 2021, interest earned on any PF contribution exceeding Rs.2.5 lakh per annum will be liable to tax in the employee’s hands, similar to the way bank interest is taxed. A recent amendment to this new rule states that the Rs.2.5 lakh limit will be extended to Rs.5 lakh in cases where the employer is not making a PF contribution.
- TDS on bank deposits to become double if ITR is not filed
Union budget 2021 proposed to charge a higher TDS and TCS for persons who do not file income tax returns (ITR). If any individual has tax deducted or collected at source in the past two years that exceeds Rs.50,000, then the rate of TDS/TCS applicable for those persons would be double the specified rate or 5%, whichever is higher. Two new sections, 206AB and 206CCA, have been introduced under the Income Tax Act in this regard.
- Pre-filled ITR forms for ease of return filing
Pre-filled income tax return forms will be made available to individual taxpayers to reduce their compliance efforts. So far, only salary details and details of TDS and taxes paid would be pre-filled. From now onwards, even details of capital gains from listed securities, bank interest, post office interest, dividend income, etc., will also be pre-filled. This will make income tax return filing easier and faster.
- Senior citizens above 75 years are exempt from filing ITRs
To ease the compliance burden of senior citizens above 75 years of age, Budget 2021 has exempted them from filing income tax returns in certain cases. The new provision is only applicable to those senior citizens who have no income other than pension and bank interest, provided the bank interest is from the same bank that is hosting their pension account.
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