Major changes in Income tax from 1st April 2021

Finance Minister while presenting Budget 2021 has announced some significant Changes in Income Tax that will come With Effect From 1st April 2021 that includes Pre-filled ITR Forms, Tax on Interest on PF, Penalty for Non-Linking of Aadhaar & PAN, High TDS/TCS Rate for Income Tax Return (ITR) Non-Filers, Submission of bills under LTC Cash Voucher Scheme and No Tax Filing For Senior Citizens Above 75. So let us have a look on few significant changes which are going to give effect in Income Tax from 1st April 2021.

Below are the significant changes which will come into effect from 1st April 2021:

1. Introduction of 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 contain the 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 from the coming assessment year the scope has been widened.

2. No Tax Filing For Senior Citizens Above 75

From 1^st April 2021 persons whose age is above 75 years and who total income includes only pension and interest income, then they are not required to file the income tax return. Bank must deduct the income tax which further has to be deposited in the government account. Hence, the only condition is the assessee should have only pension income and interest from fixed deposit should accrue in the same bank.

3. Penalty to be imposed for Non-Linking of Aadhar & PAN

The last date for linking Aadhaar and Income Tax PAN is 31st March 2021.where the assessee or PAN holder fails to Link his PAN to Aadhaar no than such PAN Card would become in-operative.

In case of Non-Linking then the Income tax department may impose a penalty of Rs.. 10,000 as per Section 272B of the Income Tax Act

4. Interest earned on Provident Fund to be taxed

Earlier, Interest earned from the Provident fund is exempt from Income Tax. But, in Budget 2021 has proposed that Interest on Employee Contributions to Providend fund over Rs. 2.5 lakhs should Taxable.

It is proposed to insert a proviso that exemption shall not apply to the income by way of interest accrued during the previous year in the account of a person to the extent it relates to the amount or the aggregate of amounts of contribution made by that person exceeding two lakh and fifty thousand rupees in any previous year in that fund, on or after the 1st day of April, 2021 and computed in such manner as may be provided by rules.

5. Submission of bills under LTC Cash Voucher Scheme

In order to avail the tax benefit under the LTC Cash Voucher Scheme, the assessee must ensure that required bills must be in correct format and must contain 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 Leave Travel Cash Voucher 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. High TDS/TCS Rate for Income Tax Return (ITR) Non-Filers

Budget 2021 has introduced a new sec 206AB under the Income Tax Act as a special provision providing for higher rate for TDS for the non-filers of income tax return.

The Proposed flat 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.