Welcoming the New Financial Year: Here's What Will Change for You from April 1st
April 1st marks the beginning of the new financial year. While presenting the Union Budget 2021, FM Nirmala Sitharaman had announced a plethora of changes in the income tax rules. The changes announced on that day are set to come into effect from tomorrow, 1 April 2021. Let's do a rewind and take a look at the changes announced in the Union Budget in February for income tax which will be effective from tomorrow.
TDS: To motivate more people to file income tax returns (ITR), the finance minister has introduced higher TDS (tax deducted at source) or TCS (tax collected at source) rates in the budget 2021. The budget 2021 had put forward the proposal for the introduction of new Sections 206AB and 206CCA in the Income Tax Act as a special provision for the deduction of higher rates of TDS and TCS, respectively for the non-filers of an income tax return. Archit Gupta, Founder and CEO of Cleartax said, "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".
One may choose between 'New tax regime' and Old tax regime: Last year in Budget 2020, the government of India had implemented the new tax regime. “However, the exercise of choosing one of the tax regimes for FY 2020-21 will be required to be made starting from 1st of April 2021. Taxpayers still have time until 31st March 2021 to make tax-saving deductions, however, they will be able to opt for a beneficial regime at the time of filing their tax returns for FY 2020-21," Archit added.
Senior citizens above 75 years exempted from filing ITR: Senior citizens above 75 years exempted from filing ITR: While presenting Budget 2021, finance minister Nirmala Sitharaman made sure to ease the compliance burden on senior citizens. The budget made provisions that individuals above 75 years are exempted from filing income tax returns (ITR). The exemption will be applicable to only those senior citizens who have no other income except the pension and interest income from the bank hosting the pension account.
Reformed PF tax rules: As per the Budget for 2021-22, FM Nirmala Sitharaman limited the tax-free interest grossed on provident fund contribution by employees and employers together to a maximum of 2.5 lakh in a year. Later, she increased the limit for tax exemption on interest earned on provident fund contribution by employees to 5 lakh per annum in unique cases as against the proposed 2.5 lakh. The tax exemption up to 5 lakh contribution excludes the employer's contribution.
Pre-filled ITR forms: A pre-filled Income Tax Returns (ITR) will be providing to individual taxpayers. With the aim to relieve agreement for the taxpayer, details of salary income, tax payments, TDS, etc. will already be pre-filled in income tax returns. Moreover, to simplifying the filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also be pre-filled. This step is targeting at reducing the complication while filing of returns.
LTC scheme: According to the Budget 2021, the central government projected to give tax exemption to cash allowance instead of Leave Travel Concession (LTC). The government had declared the scheme in last year. It was for the individuals who were unable to claim their LTC tax assistance because of covid-related limitations on travelling. The scheme will be valid till 31st March 2021 that is amount must be expended by the date to reward of the scheme.
