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April 1 marks the start of the new fiscal year 2020-21. And as per the Union Budget announced by our Honorable Finance Minister Nirmala Sitharaman, many new I-T rules will now come into force.
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Change in income tax slab April 1 marks the start of the new fiscal year 2020-21. And as per the Union Budget announced by our Honorable Finance Minister Nirmala Sitharaman, many new I-T rules will now come into force. Given the situation of the COVID-19 pandemic lockdown, the government has extended the deadline for some rules and procedures so that people do not face difficulties at the start of the new financial year. This includes an extension in the deadline for filing income tax returns for 2018-19 to 30 June and similarly, linking PAN card with Aadhaar card has also been extended till 30 June. Nevertheless, there are some income tax changes that you should be aware of – Changes in Income Tax Slab: New tax slabs come into effect from 1 April. However, old tax slabs will also remain in effect and taxpayers are free to choose between old and new tax slabs as per their convenience.
Key features of the new tax slab: • Is zero tax for income up to 2.5 lakhs; • From 2.5 lakhs; 5% for income between 5 lakhs; • 10% for income between ₹ 5 lakh to ₹ 7.5 lakh; • From 7.5 lakhs; 15% for income between 10 lakhs; • 20% for income between 10 lakh and lakh 12.5 lakh; • From 12.5 lakhs; 25% for income between 15 lakhs; • And,. 30% for income above 15 lakhs. • But the most important thing here is that if someone opposes the new tax slab, they will have to make a lot of cuts. Therefore, they will not be able to deduct taxable income which was made under standard deduction, such as exemption in section 80C, exemption on house rent allowance, travel allowance (LTA) and interest paid on home loans. Cut down on. • Therefore, it can be said that the new tax regime will provide benefits to most young taxpayers as they will not have many investments like insurance, children’s tuition fees, home loans etc. • Dividends of mutual funds and domestic companies should be taxable: • Dividends (profits) received from mutual funds and domestic companies are now taxable in the hands of the recipient from 1st April. This is a major change in the new tax regime, because the dividends that recipients will earn from their mutual fund investments will now be taxed at the recipient’s slab rates.
Relief for first time homebuyers: The new income tax regime has given relief to homebuyers for the first time. But this only applies to those who are buying a house with a value of up to ₹ 45 lakh for the first time. As per the new rules, the government has extended the additional tax benefit for one year to March 31, 2021. Therefore, now these home buyers will be able to claim an additional tax deduction of ₹ 1.5 lakh on interest, on top of the current deduction of ₹ 2 lakh. ESOP to make start-up employees tax-free According to the new income tax rules, employees of start-up companies are exempt from paying tax on shares allotted within the ESOP (Employee Stock Ownership Scheme). Contribution above ₹ 7.5 lakh in NPS and EPF is taxable This amount will now be taxable if the employer’s contribution towards NPS, Superannuation Fund and EPF exceeds 7.5 lakhs. This special change in the income tax rule will apply to both the old and new tax regimes. However, it should be noted that even if a person opposes the new tax slab, he can claim income tax deduction on the employer’s contribution for the employee’s NPS account.
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