Some major changes are going to take place form 1st April 2021 which were announced by our Finance Minister Nirmala Sitharaman on 1st February 2021 while presenting the Union Budget.
So let us have a look on few significant changes which are going to give effect in Income Tax from 1st April 2021.
1. Pre-filled ITR Forms
A major change in ITR Form is expected as per Budget 2021 (Pre-Filed ITR) will be introduced. The Prefilled ITR Forms will have information of Capital Gains from Listed Securities, Dividend Income, Interest from Banks/Post Office, etc. Earlier Pre-filed ITR form was available for Salaried employees where Income was reflected on basis of Form 16, but now the scope has become wide. This is basically done for easing the filing of returns.
2. Tax on Interest on PF
Interest earned from the Provident fund is exempt from Income Tax. But Budget 2021 has proposed that Interest on Employee Contributions to Provident fund over Rs. 2.5 lakhs should Taxable. This is done for taxing high value depositors in the Employee Provident Fund (EPF).
3. Penalty for Non-Linking of Aadhaar & PAN
The Due Date for linking Aadhar and Income Tax PAN is 31st March 2021. In case of non-linking, your PAN Card would become in- operative. In case of Non-Linking, you may be Charged a Fine of Rs. 10,000 as per Section 272B of the Income Tax Act.
4. High TDS/TCS Rate for Income Tax Return (ITR) Non-Filers
A new sec 206AB has been inserted in Income Tax Act as a special provision providing for higher rate for TDS for the non-filers of income tax return (ITR). The Proposed Rate on Non-Filer is higher of the following: 5% Twice the rate specified in the relevant provision of the Act Twice the rate or rates in force Similarly, a new sec 206CCA has been inserted in Income Tax Act as a special provision providing for higher rate for TDS for the non-filers of income tax return (ITR). The Proposed Rate on Non-Filer is higher of the following: 5% Twice the rate specified in the relevant provision of the Act
5. Submission of bills under LTC Cash Voucher Scheme
To avail the tax benefit under the LTC Cash Voucher Scheme, ensure that required bills in the correct format containing GST amount and GST number of the vendor have been submitted to your employer (provided the employer is offering the scheme) on or before March 31, 2021. As per the scheme, an employee is required to spend three times the amount deemed as LTA fare on goods and services attracting GST of 12% or more.
6. 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.
7. Sovereign Wealth Fund (SWF) and Pension Fund (PF)
In the current scenario, Sovereign Wealth Fund (SWF) and Pension Fund (PF)
are restricted to invest through a holding company. Hence a proposal is put forward to allow the same provided some conditions are followed like
- Holding company should be a domestic company
- It should be set up and registered on or after 1st April, 2021
- It must have at least 75% of its investments in one or more infrastructure companies
- Exemption under this clause shall be calculated in proportion if the aggregate investment of holding company in infrastructure company or companies is less than 100%.
8. Time limit for completion of assessment and reassessment
For an order of assessment which pertains to the assessment year commencing on or after the 1st April, 2021, the provisions of this subsection shall have effect, as if for the words “twenty-one months”, the words “nine months” had been substituted
9. New Procedure introduced for Income escaping search assessments
If the Assessing Officer has any reason to believe that income chargeable to tax has escaped assessment for any assessment year then he has the authority to assess or reassess the total income of such related year under section 147 of the Income Tax Act by issuing a notice under section 148 of the Income Tax Act.
10. Depreciation of Goodwill
An amendment has been introduced in Section 55 which states that
“Provided that where the capital asset, being goodwill of a business or profession, in respect of which a deduction on account of depreciation under sub-section (1) of section 32 has been obtained by the assessee in any previous year preceding the previous year relevant to the assessment year commencing on or after the 1st day of April 2021, the provisions of sub-clauses (i) and (ii) shall apply with the modification that the total amount of depreciation obtained by the assessee under sub-section (1) of section 32 before the assessment year commencing on the 1st April 2021 shall be reduced from the amount of purchase price”
It means that in case of purchased goodwill, where depreciation has been claimed on it up to 31st March 2020, the cost of acquisition of such goodwill shall be Purchase Price Less Accumulated Depreciation on the same up to 31st March 2020.
These are some significant changes in Income Tax which will take place with effect from 1st April 2021. If in your knowledge any other major changes are going to take place please let us know!
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