Income Tax Rules: 5 new rules set to come in force from April 1; know all about them

Representative image

Representative image

A slew of changes in the income tax rules, announced by the Union Finance Minister Nirmala Sitharaman on February 1 while presenting the Union Budget will come into effect from fom April 1.

People of and over the age of 75 with income from pension and interest from fixed deposit in the same bank would be exempted from filing the annual ITR from April 1, according to the new rules.

The Finance Minister proposed higher TDS (tax deducted at source) for those who are not filing their ITR and announced to tax people contributing above Rs 2.5 lakh annually to the EPF account.

Here are the 5 changes that will come into effect from April 1

PF tax rules: From 1 April, interest on annual employee contributions to provident fund over Rs 2.5 lakh would be taxed. The govt said that the move is aimed at taxing high-value depositors in the Employee Provident Fund (EPF).

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, Finance Minister Nirmala Sitharaman said.

TDS: The finance minister has proposed higher TDS (tax deducted at source) or TCS (tax collected at source) rates in budget 2021 in order to make more people file income tax returns (ITR).

The insertion of new Sections 206AB and 206CCA in the Income Tax Act has been proposed in the budget as a special provision for the deduction of higher rates of TDS and TCS, respectively for the non-filers of an income tax return.

Senior citizens above 75 years exempted from filing ITR: Finance minister Nirmala Sitharaman, while presenting Budget 2021, had exempted individuals above 75 years from filing income tax returns (ITR)  To ease the compliance burden on senior citizens.

The exemption will be available to only those senior citizens who have no other income but depend on pension and interest income from the bank hosting the pension account.

Pre-filled ITR forms: In order to ease compliance for the taxpayer, details of salary income, tax payments, TDS, etc. Individual taxpayers will be given pre-filled Income Tax Returns (ITR). To further ease filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also be pre-filled. The move is aimed at easing the filing of returns.

LTC: Tax exemption to cash allowance in lieu of Leave Travel Concession (LTC) had been proposed by the central government in Budget 2021. Individuals who were unable to claim their LTC tax benefit due to COVID-related restrictions on travelling for those this scheme was announced by the government last year.