5 key modifications in revenue tax guidelines it is best to know

New monetary 12 months has begun and with this sure new revenue tax guidelines have come into impact. Let us talk about the modifications relevant to particular person tax payers.

First 12 months for Option to select from Two tax regimes

The funds for 2020-21 has launched a brand new tax regime, which a person tax payer can choose, of decrease tax charges coupled with a only a few deductions out there and fewer exempt allowances out there as an alternative of the common tax regime the place it’s a must to pay tax at increased charges however have proper to assert varied exemptions and deductions. This is the primary 12 months when it’s a must to train the choice whether or not to stay within the outdated tax regime or migrate to new tax regime. The salaried individuals have proper to decide on between outdated tax regime or new tax regime yearly however the particular person with enterprise revenue can not return to the outdated regime as soon as he opts for brand new regime until you discontinue what you are promoting. So one with enterprise revenue has to make this selection between these two various tax regime bearing in mind long run implications.

For the salaried who’ve exercised a selected possibility with the employer can go for an alternative choice whereas submitting their ITR as the choice exercised with the employer was just for restricted goal of tax deduction. If you’ve got enterprise revenue and don’t want to go for new tax regime this 12 months, you’ll be able to go for new tax regime in any subsequent 12 months however as soon as migrated to new tax regime, you can’t return to outdated regime.

Reduced interval for submitting the belated ITR or for revising your filed ITR

Earlier, for those who did not file your ITR by the due date of thirty first July, you could possibly nonetheless file it by thirty first March with late payment. Likewise, after having filed your ITR, for those who seen any omission or mistake, you could possibly revise the identical by thirty first March of the identical 12 months. But not any longer. The finance invoice for 2021-2022 has a proposal to scale back this time restrict by three months and subsequently you should have time to file your belated ITR or revise your ITR until thirty first December of the identical monetary 12 months. It successfully reduces the time out there with you to file the belated ITR or revised ITR by three months. So file your ITR as quickly as potential so that you’ve got adequate time to revise it in case any mistake is seen.

Inclusion of dividend revenue in ITR for the 12 months ended thirty first March 2021

Till thirty first March 2020, the dividend acquired from Indian Companies in addition to mutual fund schemes have been tax free in your palms because the tax was on the dividend or revenue distributed was paid by the Company or the mutual fund. However, the funds of 2020 had eliminated the exemption on dividend revenue and has made the identical taxable in your palms. In case the quantity of dividend paid to you exceeded Rs. 5,000/- the Company or the mutual fund homes would have deducted tax whereas crediting the dividend to financial institution your account. Please confirm the quantity of tax deducted on dividend paid to you from Form no 26AS. In case any TDS is reflecting in your kind No. 26AS, you should gross up your dividend revenue by including the quantity of tax deducted to the quantity of dividend credited in your account for correct and proper disclosure of your taxable dividend revenue. This train needs to be carried out nicely upfront for making certain well timed submitting of the ITR.

Removal of exemption for Voluntary contribution of Employee Provident Fund

Hitherto the Interest acquired in your provident fund account in respect of your individual contribution was absolutely exempt even for the contributions made past the necessary 12% of you primary wage. In the funds of 2021-22, the Finance minister has proposed that this exemption on curiosity credited in your EPF account will not be out there for annual contribution made past 2.50 lakhs yearly for contributions made after 1st April 2021. However in case the employer doesn’t contribute to your provident fund account, the funds has proposed the next threshold restrict for contribution of Rs. 5 lakhs past which the curiosity on such contribution will entice tax 12 months after 12 months.

Changes efficient on investments made in ULIP after 1st February, 2021.

The maturity proceeds acquired from any life insurance coverage product together with a ULIP (Unit Linked Investment Plan) is exempt if the premium paid on such coverage doesn’t exceed 10% of the sum assured. The funds for 2021-2022 proposed to be withdraw this exemption in case the mixture annual premium for all of the ULIP insurance policies taken collectively by a person exceeds Rs. 2.50. This will impression just for these ULIP insurance policies that are purchased after 1st February, 2021. So watch out whereas shopping for a brand new ULIP coverage. Moreover, the earnings if any realized on such ULIP on the time of maturity might be handled like fairness merchandise on which flat tax at 10% with out indexation is allowed. These concessional tax guidelines of 10% will apply just for these ULIPs which adjust to minimal share of investments in Indian listed firms.

I’m positive the above dialogue will provide help to take knowledgeable choice.

The author is a tax and funding skilled and may be reached on jainbalwant@gmail.com

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