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Budget 2021: 5 important proposals related to tax, Know what will change


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New Delhi : Finance Minister Nirmala Sitharaman has announced several proposals in her Union Budget 2021 for the benefit of depositors, investors and taxpayers. Sitharaman said that minimum burden should be imposed on the taxpayers regarding the tax system. However, the Finance Minister has surprised the taxpayers by not announcing any change in the income tax slab rates. She has not announced any proposal regarding Covid cess.

Let’s look at five important proposals presented in Budget 2021…

1. No rebate on interest if PF contribution exceeds Rs 2.5 lakh
If you contribute more than 2.5 lakh rupees, then the Finance Bill 2021 proposes a tax on income on interest. The government notices that some employees are misusing the exemptions and are claiming full interest earned or received on such contributions for tax exemption on income.

The budget stated, ‘To rationalize tax exemption for income earned by high-income employees, it is proposed to withhold tax exemption on returns earned from annual contribution of 2.5 lakhs for various provident funds of employees. Till now the returns on Provident Fund (PF) were kept exempted from tax. This proposed change will come into effect from 1 April 2021.

2. Senior citizens exempted from filing ITR
Finance Minister Nirmala Sitharaman have proposed that senior citizens (above 75) will not be required to file income tax returns only to earn interest income from pension and deposits.

According to the proposed budget, only those who get pension will get this benefit. Senior citizens can get benefits if they are earning interest income from the same bank where they were getting pension. This change will also be effective from 1 April 2021.

3. Income tax settlement commission ended
Finance Minister Sitharaman also abolished the disputed body Income Tax Settlement Commission with immediate effect. An interim board has been proposed for disposal of pending cases in the budget. The Tax Settlement Commission is a legal-judicial body that deals with tax liabilities in complex cases to avoid endless litigation. These changes became effective from 1 February 2021.

4. High TCS rate for non-filers
Finance Minister Nirmala Sitharaman has proposed new special provisions in the Income Tax Act, 1961 to punish non-filers of income tax returns. The government wants to discourage such people from whom tax of Rs 50,000 or more has been collected in the last two years, through deducted at source (TDS) or tax collected at source (TCS) and in filing income tax returns. This new system will be effective from July 1, 2021.

5. Reduction in the time of late return filing
If you missed making a tax return or want to amend it again, you will have less time now. The government has proposed that the last date for filing delayed returns or revised returns, as the case may be, has been reduced by three months.

Delayed or revised returns can now be filed before the end of the respective assessment year or three months before the completion of the assessment, whichever is earlier. These changes will also be effective from 1 April 2021.

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