Union Finance Minister Nirmala Sitharaman, while presenting Union Budget 2021 had announced a new simplified income tax regime to bring some relief to the salaried class. The income tax changes, that have an impact on the salaried class will come into effect from April 1, 2021. For the uninitiated, Sitharaman in her February 1 speech had stated that senior citizens of 75 years and above having pension income and interest from fixed deposit in the same bank would not be required to file income tax returns for the financial year beginning April 1.
Besides, FM Sitharaman also made various announcements regarding pre-filed ITR forms, TDS deduction at higher rates for those not filing their ITR and notified LTC scheme and EPF contributions above 2.5 lakh.
EPF Contribution: Interest on employee contributions to provident fund over Rs 2.5 lakh per annum would be taxed from 1 April 2021. The move aimed at taxing high-value depositors in the Employee Provident Fund (EPF). Sitharaman said the EPF is aimed at the welfare of workers and any person earning less than Rs 2 lakh per month will not be affected by the proposal.
Pre-filled ITR Forms: Individual taxpayers will be given pre-filled Income Tax Returns (ITR). The move is aimed at easing the filing of returns. The pre-filled ITRs will have an automatic upload of data on income and other vitals of a taxpayer.
LTC Scheme: The central government in Budget 2021 had notified the Leave Travel Concession (LTC) cash Voucher scheme. In 2020, the Narendra Modi-led government had announced the scheme last year to boost consumer demand and to provide tax benefit to individuals who were unable to claim the usual LTC tax benefit due to covid-related travel restrictions.
TDS at a Higher Rate: A new section 206AB will be inserted in the Income Tax Act as a special provision providing for a higher rate for TDS for the non-filers of an income tax return.
No Tax Filing For Senior Citizens Above 75: “Persons whose age is above 75 years and who has pension income and interest from fixed deposit comes in the same bank and who has only interest income, they need not file income tax return. Bank will deduct the income tax which he has to pay and deposit to the government. The condition is the person should have only pension income and interest from fixed deposit should accrue in the same bank,” Finance Secretary Ajay Bhushan Pandey had said at the post-Budget press conference.
© 2018 CA Chandan Agarwal. All rights reserved.