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Generally every Budget comes with some changes in the income tax rules, but the budget 2021 came with few changes that effect every taxpayer and business. This document covers top 10 new tax rules.
This document covers
New Tax Regime was introduced during the Budget 2020 and is effective from April 01st 2020. The New Tax Regime is it is not only simply taxes and also reduces the tax rates it provide major relief to working class people Taxable Income up to 15L.
| Taxable Income | Old Regime | New Regime |
|---|---|---|
| <5L | 0% | 0% |
| 5L to 7.5L | 20% | 10% |
| 7.5L to 10L | 20% | 15% |
| 10L to 12.5L | 30% | 20% |
| 12.5L to 15L | 30% | 25% |
| >15L | 30% | 30% |
The amount of Interest paid on Employee Contributions to Provident Fund in excess of RS.2,50,000 will be taxable from 1 April 2021
The Income Tax act inserted a new section for providing Higher TdS for non-filing Income taxpayers.
Reducing Time Limit for Reopening of income tax assessment
Additional deduction up to Rs 1.5 lakhs for interest paid on loans taken for an affordable house (for up to 45 Lakhs) extended till 31st March, 2021. Earlier it was up to 31st March 2020 u/s 131 of IT Act 2025 (u/s 80EEA of IT Act 1961)
This will applicable to those senior citizens who have No Other income other than Pension and Interest Income from the bank Hosting Pension Account
Dividend Distribution Tax completely removed
Small Medium Business Tax Audit Threshold limit increased 5 Times to Rs.5Cr. This will remove third-party signatures and putting less control on those who want to start a business in India. Though the announcement is for those businesses whose cash revenue is less than 5%, it indirectly applies to most of the SME businesses.
There is A proposal to provide tax exemption to cash allowance in lieu of Leave travel Concession (LTC)
Instant PAN to be allotted thorough Aadhar
Disclaimer: This article provides an overview and general guidance, not exhaustive for brevity. Please refer Income Tax Act, GST Act, Companies Act and other tax compliance acts, Rules, and Notifications for details.