Changes in I-T rules that you need to know

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Finance Minister Nirmala Sitharaman in her Budget speech announced a slew of changes that were set to come into effect from April 1.

Here we take a look at the changes that have come into effect:

Filing ITR or revised ITR

Previously taxpayers were allowed to file ITR till March 31 with a penalty if they missed filing it on July 31 this year. In Budget 2021, Nirmala Sitharaman decreased the time limit by three months. This means now the late ITR can be filed only till December 31, 2021.

Rolled back tax exemptions to ULIPs

Unit Linked Insurance Plan (ULIP) is a tax saving instrument that was earlier exempted under income tax at the time of investment and the receipt of the amount. Even the passive income was also exempted. With the new Finance Bill, tax exemptions to ULIPs have been rolled back if the annual premium exceeds the amount of ₹2.5 lakh.

Changes in EPF taxation

From April 1, interest on EPF exceeding the limit of Rs 2.5 lakh in any year will be taxable during withdrawal. This step was taken for high-salaried individuals who were earlier contributing a lot towards Voluntary Provident Fund.

Higher TDS or TCS for non-filers

There is a new provision of higher TDS and TCS for the non-filers. For individuals who have a TDS or TCS deduction of more than Rs 50,000 in two years and have not filed an ITR, the rate of TDS/TCS will be double of the specified rate or 5%, whichever is higher

Dividend Income

Earlier tax on dividend income was paid by the company itself. As per the new Financial bill, the dividend income is taxable in your hands. If the dividend paid to you exceeds the limit of Rs 5,000, then the company will deduct the tax at the source before crediting the amount. In case the amount reflects on Form 26AS, you have to file it in the ITR.

Tax exemption to cash allowance on LTC scheme 

This scheme was announced by the government last year. Those who spend the LTC money by March 31, 2021, are only allowed to avail the benefits. People who were unable to claim their tax benefits under this scheme last year due to the pandemic are the beneficiaries.

Pre-filled ITR

To simplify the process of filing ITR, Income Tax return forms will come pre-filled with details of dividend, mutual funds, interest earned, etc.

Individuals above 75 years exempted from filing ITR

Senior citizens who are dependent on pension and interest on the pension account are exempted from paying tax. This step was taken to reduce the burden on those above 75 years of age.