This year there are changes to income tax system of India which affect common people like you and I. Also, two weeks are left for the change in financial year, and this is good time to know and update about the changes.
1. Following the so-called progressive tax concept (in which the wealthy are taxed more than those who are able to report less income), the government has decided to tax high-value depositors in employee provident fund (EPF).
If your contribution to EPF is more than ₹2.5 lakh, then the interest on the same will be taxed.
The rationale presented by the government is that this change is for the welfare of the workers.
2. More taxation at source i.e. more TDS (Tax Deducted at Source) and TCS (Tax collected at Source). To recover these, the person has to file income tax return (ITR).
The reason presented for this action is that the government thinks this will encourage return filing and thus bring more and more income generation under the purview of the government.
3. No tax filing for senior citizens aged above 75 years.
The government, in this move, wants to relieve the filing burden on a certain section of the common people.
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However, there is a qualifier. Only those senior citizens who earn only from pension and interest income are eligible to this relief.
4. Leave Travel Concession (LTC) to have facility of tax exemption to cash allowance.
The reason behind this move as presented by the government is to encourage spending by government salaried individuals.
5. To make the tax filing convenient, the process has been updated to pre-fill ITR forms.
The details which will be pre-filled include salary income, tax payments, TDS, etc.
Further, details like capital gains from listed securities, dividend income, and interest from banks, post offices, etc too will be pre-filled.
So, dear taxpayers get ready to abide by the old and the new rules from April 1, 2021.