All about new Income Tax rules that come into effect on April 1

With the new financial year beginning on Thursday, a set of
new rules too will be implemented within the existing income tax regulations. The
new rules were introduced by Union Finance Minister Nirmala Sitharaman during
the Union Budget presentation back in February.

Here is all you need to know about the new regulations:

1.     
TDS (Tax deducted at source): As a move to make more
individuals file their Income Tax Returns, the budget back in February proposed
insertion of sections 206AB and 206CCA into the Income Tax Act: two sections that would
aim at higher rates of TDS and TCS deductions for non-filers of an income tax
return.

2.     
The option between new and old tax regime:
Introducing the new tax regime during 2020 Union Budget, the government had
noted that citizens had time till March 31, 2021 to make deductions and decide
the better option for themselves, but they would have to pick a specific option
starting from April 1.

3.      Leave Travel Concessions: The budget 2021 saw the government providing tax exemptions to cash allowances instead of Leave Travel Concessions (LTC). This new provision was announced by central government to those who could not avail the LTC benefits due to COVID-19 related restrictions in 2020. The cash allowance in question, however, would have to be spent by March 31 to avail the scheme.

4.     
Provident Fund cap: the FM had earlier selected
a cap of Rs 2.5 lakh/year for tax-free interest gained through a contribution
into the provident fund by an employee or a group of employees, before proceeding
to raise the tax exemption limit on the interest gained from a provident fund to Rs 5 lakh/year
in specific cases. The latter, however, does not include the employer’s contribution.

5.      Exemption of tax filing for those over 75: Sitharaman, during her 2020-2021 budget presentation, had exempted citizens over the age of 75 years to rid them of economic compliance. The provision, however, would be available for only those who have no source of income other than a pension and interest from the bank while holds the concerned account.

6.     Income tax forms: For the benefit of taxpayers and
ease through the process, details such as gains from listed securities,
dividend income, interest gained from banks and post offices would now be
pre-filled. Earlier, salary, TDS, tax payment etc. would come pre-filled.