Changes in income tax rules to come into force from 1st April

Union Finance Minister Nirmala Sitharaman had announced some changes in the income tax rules, while presenting the Union Budget 2021-22, which are set to come into force from Thursday, April 1, 2021.

With the start of the new financial year starting today, senior citizens of the age 75 and above with income from pension and interest from fixed deposit in the same bank would be exempted from filing an income tax return (ITR).

From today onwards, the interest earned on Provident Fund contributions above Rs 5 lakh in a year will be taxable. In the Budget for 2021-22, the Finance Minister had capped the tax-free interest earned on Provident Fund contributions by employees and employers together to a maximum of Rs 2.50 lakhs in a year.

She then raised the limit for tax exemption on interest earned on provident fund contributions by employees to Rs 5 lakh per annum in specified cases.

To ease the filing of returns and to facilitate taxpayers, it has been announced that in the fiscal year 2021-22 the individual taxpayers will be given pre-filled ITR forms. In order to ease compliance for the taxpayer, details of salary income, tax payments and TDS already come pre-filled in income tax returns. To further ease the filing of returns, details of capital gains from listed securities, dividend income, and interest from banks and post offices will also be pre-filled.

These steps are likely to boost revenue along with ease in the filing of returns leading to better tax compliance.