Year 2021 sees noteworthy changes in Income Tax Law

YEAR 2021 SEES NOTEWORTHY CHANGES IN INCOME TAX LAW

PAN and Aadhaar link is a must

According to the report of the Central Board of Direct Taxes (CBDT), the deadline to connect Permanent Account Number (PAN) with Aadhaar has been stretched to June 30, 2021. The taxpayers without the link may face harsh steps of the Government. The report further states that if an employer finds an employee failed to link by June 30, no salary will be paid from the next month.

Duly filled ITR offered

Previously filled ITR forms available by the Department in the new website, help taxpayers to file very conveniently. Few specific details updated by the taxpayers like salary, house property, business, or profession, help using in pre-filling their ITR.

PF interest beyond INR 2.5 lakh, chargeable, includes GPF covered government employees

Pramod Chandra Mody, Chairman, CBDT informed that based on Budget, the interest is chargeable on employee assistances beyond Rs.2.5 lakh per annum to the Employees' Provident Fund (EPF). It is valid for all the government employees covered by the General Provident Fund (GPF) as well.

Non-Filers ITR, double TDS Collection

Under Section 206AB and 206CCA of the Income Tax Act, 1961, CBDT allotted the Circular regarding the functionality usage. Since 1st July 2021, the Finance Act, 2021 has introduced sections like 206AB and 206CCA respectively in the Income Tax Act 1961. Tax deduction or tax collection for certain non-filers at an increased rate with respect to tax deductions and tax collections are the orders of the sections.

Senior Citizens: Filing of ITR exempted

Senior citizens above 75 years, freed from filing the income tax return, subject to the various conditions according to Union Budget 2021. Based on Section 139 of the Income Tax Act rules the filing of income tax returns with income beyond the basic exemption boundary.

LTC Cash voucher scheme introduced

LTC/LTA cash voucher scheme introduced to support LTC/LTA eligible employees to claim tax-free refund of equal amounts with certain restrictions and cost conditions. This has been introduced as employees are unable to travel due to the pandemic.

EPF contribution

On or after 1st April, 2021 interest on employee's share of contribution to Employees' Provident Fund (EPF) will be chargeable if it exceeds INR2.5 lakh in any year.

Especially for High Networth Individuals (HNIs), it will lead to extra tax accountability who make higher aids, will dampen voluntary provident fund (VPF) contributions as well. Introduced in 2020,

EPF, an even less attractive retirement scheme, with the taxation of aggregate employer's contributions surplus of INR7.5 lakh to EPF, NPS and superannuation fund and interest.

Tax deduction extended on reasonable housing

To simplify buying of affordable homes, the government has extended the extra tax deduction of INR1.5 lakh on interest paid on housing loans to March 31, 2022. Introduced in the 2019 budget, the additional deduction of INR1.5 lakh over INR2 lakh for the first-time home buyers up to INR45 lakh cost.

Income Tax Dispute Resolution Committee established

Since 1st April 2021, the Finance Bill, 2021 has inserted Dispute Resolution Committee. Under the Act, a policy was adopted by the Central Government to make the processes, fully faceless, which require interface with the taxpayer. New schemes for faceless assessment, faceless appeal and the faceless imposition, the penalty have already been operational. Furthermore, the Taxation and Other Laws Act, 2020 has allowed the Central Government to present similar schemes for other functions being achieved by the income-tax authorities.

Opting new tax regime, Form 10-IE filing

According to section 115BAC of the Income Tax Act, the taxpayer may file Form 10-IE on or before the due date of ITR u/s 139(1) of the Income Tax Act on new tax regime for Individuals and HUFs.