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New IT Rules Of 2021 You Must Need To Know

July 29, 2021by irfan1
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Filing income tax returns or ITR can be an irritant for many who do not have the proper knowledge of rules governing income tax in India. Adding misery to that, many of these rules change or frequently update with the presentation of the annual union budget.

However, with the introduction of the e-filing system, filing income tax return is no longer a tedious process. You don’t have to be a tax wizard to file your returns successfully. A little awareness on your part is all that is needed to sail through the complete process of filing your tax returns.

Check this post to know the basic income tax rules and why you should consider e-Filing your income tax return.

Basic Terms Related to Income Tax

Following are some basic terms that you need to understand before delving deeper into rules of income tax return and e-filing:

● Financial year and assessment year

A financial year (FY) starts from April 1 and ends on March 31. The assessment year (AY) is the year following the financial year.

For example, all income earned between the period April 2020 to March 2021 falls under the FY 2020-21 and the AY 2021-22. Hence, filing ITR for FY2020-21 and AY2021-22 is the same.

● Income

The total earnings of any individual or firm from any sources in a financial is considered as income from that financial year. This may include income from salary, rent, selling of property, dividends from shares, bank interests, pensions, profits from businesses, or any other legitimate source.

● Income tax

Income tax is one of the primary sources of revenue for the government. Every person in India whose taxable income exceeds the tax-exemption limit requires paying income tax and filing income tax returns. However, individuals whose collective income from all sources in a financial year does not exceed the tax-exemption limit must not pay income tax.

● Income tax slabs

Depending upon their income in a financial year, taxpayers are categorized under different tax slabs with varying income tax rates.

● Income tax return (ITR)

An income tax return is a form that an individual or a firm is supposed to submit to the Income Tax Department of India for each financial year. The ITR contains information about the income and the corresponding taxes to be paid, if any, by that person or firm.

New Income Tax Rules of 2021:

The government has changed some rules of income tax. The income tax new rules are effective from April 1, 2021. Take a look at these rules before filing your ITR;

● Deadline

The deadline for filing late and revised ITR has been reduced by three months. For instance, the deadline for filing late or revised ITR for FY2020-21 is December 31, 2021, instead of the usual March 31, 2022.

● Cap on PF exemption

The exemption on interest credited on EPF or VPF accounts will be limited to an annual contribution of Rs 2.5 lakhs. Any amount higher than this threshold limit will attract income tax.

● Pre-filled ITR forms

To help individuals file their ITR in a hassle-free manner, the ITR forms will now come pre-filled with details like salary, tax payment, TDS, etc.

● No ITR filing for Senior citizens

Senior citizens are exempted from filing income tax returns if

  • their age is 75 years or above.
  • they only have income from pension and interests.

● Higher TDS for not filing ITR

The government will levy higher TDS (Tax deducted at source) and TCS (Tax collected at source) to non-ITR filing individuals to discourage the practice of not filing TDS or TCS.

● Tax exemption on LTC

Many salaried employees get a Leave travel concession (LTC) allowance from their employer. However, they were unable to avail this facility in FY 2020-21 due to the pandemic. Such persons can claim a tax exemption of up to Rs 36,000 per family.

● Option to choose new tax regime

The union budget 2020 introduced a new tax regime under section 115BAC. This gives an option to taxpayers to pay taxes at lower rates; however, taxpayers will not be eligible to claim various deductions and exemptions available to those who choose the existing tax regime.

The difference in tax slabs between the existing and new tax slabs is as follows.

tax slabs between the existing and new tax slabs

Benefits of E-Filing of ITR

Following are some points explaining the numerous benefits of e-filing of ITR;

● Convenience of filing

The process of e-filing is straightforward and user-friendly. Anyone can e-file their ITR from the convenience of their home. Good internet connectivity is all that one needs.

● Tracking ITR status

The taxpayer can log into his/her account with the income tax department website and track the status of the ITR submitted.

● Quick refund

You can get quick refunds, if any, on e-filing. The refund amount can be sent to your bank account within 30 days of filing your return

● Access to previous records

All ITRs filed online are archived and can be accessed by the individual at any time.

Having discussed the income tax rules and benefits of e-filing in detail, you may have, by now, realized the importance of timely filing of ITR. Contrary to popular belief, it is no more a cumbersome task that you should dread. So, move toward e-filing of your ITR and be a part of the government initiative of Digital India.

 

FAQs Regarding Filing ITR

Following are some common queries related to ITR

1. Is filing ITR is mandatory?

  • For firms: – Firms must file ITR regardless of income
  • For individuals: –
    • Filing ITR is mandatory for any Indian citizen with a total gross income exceeding Rs 2,50,000 in a financial year, even if they do not have any taxable income after deductions.
    • Filing ITR is not mandatory for a person whose gross total income in a year is below Rs 2,50,000. However, such a person can still voluntarily file ITR. This is known as a nil income tax return.

2. What are the documents required?

An individual only needs an Aadhar-linked PAN card. No other documents are required.

3. What kind of disclosure is to be made?

Proper disclosure should be given for all types of income in the financial year for which ITR is to file. This should also include exempt income.

4. What is the easiest way to file ITR?

The new website of the Income Tax department was launched on June 7, 2021. It facilitates online income tax returns in an easy and hassle-free manner. One should always consider e-filing of the income tax return through this website.

If you don’t feel comfortable filing income tax returns yourself, you can always take help from professional tax consultants or CAs.

irfan

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