Income Tax Changes for the Financial Year 2021-22

The budget proposals presented by the Honorable Finance Minister would be given effect for the financial year 2021-22. 5 such significant changes in Income Tax are discussed in this review

1. Interest on Provident fund contributions was exempt from income tax till the year ended 31st March 2020. From the coming year, such interest as in excess of contributions above Rs.2.5 lakhs would be exempt from tax thereby impacting the tax payers in higher tax bracket. This threshold amended to Rs.5 lakhs on 23^rd March 2021.

2. Another major change is on the income tax returns filing forms. Earlier the salary related information was prefilled in the form ITR 1. From the next year the income-related information on Capital Gains from listed securities , Dividend income , Interest on deposits with banks/post offices, etc would also be prefilled in the respective forms which needs to be verified and filed accurately by the assessee.

3. Exemption is now granted to senior citizens above 75 years of age from filing IT returns. This is subject to the condition that he should be having only pension income and interest income and this is maintained in the same bank.

4. An additional compliance requirement has been imposed by the Income Tax Act through new sections 206AB and206 CCA on the TDS front. The individuals who have not filed the income tax returns, however, have a TDS or TCS deduction of more than ₹50,000 in the last 2 years, will have to pay TDS or TCS subject to a minimum of 5%. Here the deductor will now become responsible for collecting the ITR proof from the individuals for compliance. It may also be noted that the reduced TDS rate of 0.75% of the original rate given in the current financial year would cease and the original rates to apply from April 1, 2021.

5. The Due Date for linking Aadhaar and Income Tax PAN is 31st March 2021. In case of non-linking, your PAN Card would become in-operative. This requirement was extended on various occasions by the apex court, but now enforced through the amendments in the Income Tax Act0. You may be charged a penalty of Rs.10,000/- in case of continued non-linking.

To understand these provisions as well as other amendments in detail as well as other amendments, the impact it could have on your direct taxes and for filing the Income Tax returns you may get in touch with the Tax Consultants in Kochi. Contact us at vbvassoc@gmail.com or call us at +91 980 901 2123 for further assistance.