All Income Tax, GST, PF Rules That Come Into Effect From April 1 2021

Income Tax Rules That Come Into Effect From April 1 2021

Last year Indian Government made so many new Rules That Come Into Effect From April 1, 2021. They announced many changes relating to income tax, GST, PF, TDS, etc. in Feb 2021 Financial budget.

The changes to income tax rules announced by Union Finance Minister Nirmala Sitharaman in the budget will also come into effect from April 1, 2021. Take a quick look at few changes that will come into effect from the new financial year.

Taxation on PF Interest or Contribution Rules

Finance Minister Nirmala Sitharaman announced that the interest earned on provident fund on a maximum of Rs. 2.5 lakh contribution in a year will attract taxes.

The limit for tax exemption on interest earned on provident fund contribution by employees has increased to Rs. 5 lakh per annum later in specified cases as against the proposed Rs. 2.5 lakh. The Rs. 5 lakh contribution does not include the employer’s contribution.

Senior Citizens over 75 years exempted from filing ITR

In the Last Union Budget, the government gave relief to all the senior citizens whose age reached 75 years are exempted from filing returns. However, this exemption will be available to only those senior citizens who have to depend on pension and interest income from the bank hosting the pension account and have no other income.

Choosing Between ‘new’ or ‘old’ tax regime

The government had introduced the new tax regime last year in Budget 2020. From April 1, 2021, individuals get the option of choosing one of the tax regimes for FY 2020-21. Taxpayers will be able to opt for a beneficial regime at the time of filing their tax returns for FY 2020-21.

Old Tax Slab

Income tax slabs for Individual aged below 60 years & HUF

Income Tax SlabIndividuals Below The Age Of 60 Years – Income Tax Slabs
Up to Rs 2.5 lakhsNIL
Rs. 2.5 lakh -Rs. 5Lakhs5%
Rs 5 .00 lakh – Rs 10 lakhs20%
> Rs 10.00 lakh30%

Income tax slab for Individual aged above 60 years to 80 years

Income Tax SlabTax Slabs forSenior Citizens (Aged 60 Years But Less Than 80 Years)
Rs 0-.00- Rs. 3.00 lakhNIL
Rs 3.00 lakh- Rs 5.00 Lakh5%
Rs 5.00 lakh – Rs 10 Lakh20%
> Rs 10 Lakh30%

Income tax slab for Individual aged more than 80 years

Income Tax SlabTax Slabs for Super Senior Citizens (Aged 80 Years And Above)
Rs 0.00 – Rs 5.00 Lakh*No tax
Rs 5.00 lakh – Rs 10 Lakh20%
> Rs 10 Lakh30%

New Tax Slab in New regime

Income tax slab rate applicable for New Tax regime – FY 2020-21.

Income Tax SlabNew Regime Income Tax Slab Rates for FY 2020-21
(Applicable for All Individuals & HUF)
Rs 0.0 – Rs 2.5 LakhsNIL
Rs 2.5 lakhs- Rs 3.00 Lakhs5% (tax rebate u/s 87a is available)
Rs. 3.00 lakhs – Rs 5.00 Lakhs
Rs. 5.00 lakhs- Rs 7.5 Lakhs10%
Rs 7.5 lakhs – Rs 10.00 Lakhs15%
Rs 10.00 lakhs – Rs. 12.50 Lakhs20%
Rs. 12.5 lakhs- Rs. 15.00 Lakhs25%
> Rs. 15 Lakhs30%

NOTE:

  • Please note that the tax rates in the New tax regime are the same for all categories of Individuals, i.e Individuals & HUF up to 60 years of age, Senior citizens above 60 years up to 80 years, and Super senior citizens above 80 years. Hence no increased basic exemption limit benefit will be available to senior and super senior citizens in the New Tax regime.
  • Individuals with net taxable income less than or equal to Rs 5 lakh will be eligible for tax rebate u/s 87A i.e tax liability will be nil of such individual in both – New and old/existing tax regimes.
  • The basic exemption limit for NRIs is Rs 2.5 Lakh irrespective of age.
  • Additional Health and Education cess at the rate of 4 % will be added to the income tax liability in all cases. (increased from 3% since FY 18-19)
  • Surcharge applicable as per tax rates below in all categories mentioned above:
    1. 10% of Income-tax if total income > Rs.50 lakh
    2. 15% of Income-tax if total income > Rs.1 crore
    3. 25% of Income-tax if total income > Rs.2 crore
    4. 37% of Income-tax if total income > Rs.5 crore

TDS Rules That Come Into Effect From April 1 2021

The budget proposed higher TDS (tax deducted at source) or TCS (tax collected at source) rates to make more people file income tax returns (ITR).

For these new Sections, 206AB and 206CCA were 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.

Pre-filled ITR forms

o ease compliance, individual taxpayers will be given pre-filled Income Tax Returns (ITR) that will have details of salary income, tax payments, TDS, etc.

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.

GST Annual Return Rules That Come Into Effect From April 1 2021

This is good news for all GST assesses, the government also removed the Annual Return section from the GST. So from the Current year Assesses need not file the annual returns of GST.

This rule is not applicable on the FY 2019-20 annual return.

Reduction in the time limit for filing belated, revised ITR, Rules That Come Into Effect From April 1 2021

Another Budget 2021 announcement was the reduction of the time allowed for filing belated and revised income tax returns (ITR) by three months. The new rule is effective for the income tax return (ITR) filing for FY 2020-21.

How does this impact you?

As per the earlier rule, if you had missed the deadline for filing ITR for FY 2020-21, you would have had time till March 31, 2022, to file the belated ITR, albeit by paying a maximum penalty of Rs 10,000. However, with the reduction in the time limit.

December 31, 2021, will also be the last date now to file revised ITR in case mistakes have been made at the time of filing of original ITR, instead of March 31, 2022, under the old law.

Penalty for not linking PAN with Aadhaar by the prescribed deadline

The government has decided to levy a penalty if an individual does not link his/her PAN with Aadhaar before the expiry of the due date. A new section 234H has been inserted in the Income-tax Act to levy a fee if the Aadhaar is linked with PAN after the expiry of the due date.

Though the government is yet to prescribe the exact amount of penalty that will be levied, however, the maximum amount cannot exceed Rs 1,000. The deadline for linking PAN with Aadhaar has been extended to June 30, 2021.

Timely payment of employer contribution to EPF account

If your employer does not make its own contribution to your EPF account on time, then the employer will not be eligible to claim the deduction available on this contribution. The aim is to provide more security to employees by ensuring that the employer makes the contribution on time.

The new rule comes into effect from April 1, 2021, and will be applicable to companies and other employers filing ITR for FY 2020-21. Thus, while filing ITR now, companies will not be able to claim the benefit, if the contribution has not been made on time to the EPF account.

Additional form to opt for a new tax regime

If you are planning to opt for a new tax regime at the time of filing ITR for FY2020-21, do keep in mind that you will need to fill out an additional form, called Form 10-IE. The new form was notified by the Central Board of Direct Taxes (CBDT) via a notification dated October 1, 2020.

If you forget to fill this form, the tax department will calculate your income tax liability based on the tax rates and slabs of the existing/old tax regime.

The new tax regime offers lower, concessional tax rates without most common tax-exemptions and deductions such as Section 80C, Section 80D, house rent allowance (HRA), etc.

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