Top 8 Key Issues for 2021 Tax Law Changes

 

1. EPF Contribution-

From the 1st April 2021, earn the interest on the employee's deposition to the Provident Fund above Rs 2.5 lakh per year will be taxable. The change was intended to tax high-income earners who contribute to the Employees ’Provident Fund (EPF), but the government argued that it would affect contributors less than 1%.

 

The benefit of EPF employees and those receiving below Rs 2 lakh per month will not be harmed by this move. 

2. Pre-filed income tax returns-

Individual taxpayers will receive pre-filled ITR forms. The move is aimed at making it easier to file returns. The department will introduce pre-filled Income Tax Return (ITR) forms for taxpayers with information on taxpayers' mutual funds, shares, dividend income and interest earned from banks.

Also, withholding tax (TDS) on dividend income above Rs 5,000 will be levied in 26 AS forms and will help in filling up the return forms in advance.

If you need this Excel Utility- Prepare at a time 50 Employees Income Tax Form 16 Part A&B Preparation in Excel for the F.Y.2020-21 as per new and old tax regime.

3. LTC Voucher:

The Holiday Travel Concession (LTC) The cash voucher scheme was announced by the central government in the 2021 budget. The scheme was launched last year to improve market demand and provide tax benefits to those who are unable to seek a standard LTC tax credit due to travel. Limitations in COVID-19.

 

Employees will still be able to get one-third of the cost set for the 2018-21 block on holiday travel discount (LTC) or less than 36,000 if they spend on goods purchased for GST @ 12%. Or more, the condition is paid through no cash mode and is spent between October 12, 2020, and March 31, 2021.

 4. Higher TDS:

Higher TDS for income tax return non-filers:

Non-filers with income tax returns will face higher TDS rates under the proposed section 206 AB of the Income Tax Act.

The relevant provision of the proposed TDS rate law in this section shall be the amount of double the fixed-rate, or double the rate of ball or rate, or 5%.

If you need this Excel Utility- Prepare at a time 100 Employees Income Tax Form 16 Part A&B Preparation in Excel for the F.Y.2020-21 as per new and old tax regime

5. Senior citizens over the age of 755 are not required to file a tax return:

People over 75 years of age with pension income and interest on fixed deposits of the same bank and pension income and interest with interest on fixed deposits of the same bank People over 75 years of age do not have pension income and interest rate

.

6. Unit Linked Insurance Plans (ULIPs)

The government has brought unit-linked insurance plans (ULIPs) under taxation. The redemption of ULIPs issued on or after February 1, 2021, where the individual premium exceeds Rs. 2.5 lakh will be brought under the equivalent capital gain of an equity-based mutual fund.

 

7. Delayed ITR timeline

Late ITR filing deadline reduced:

The last date for filing revised income tax returns or built-in returns on a voluntary basis will now be 31 December after the end of the financial year instead of 31 March 2022.

If you need this Excel Utility- Prepare at a time 50 Employees Income TaxForm 16 Part B Preparation in Excel for the F.Y.2020-21 as per new and old tax regime

8.. Extending interest tax break on home loan

To encourage first-time domestic workers, the interest rate on home loans of Rs 1.5 million for loans taken up to March 31, 2021, has now been increased by one year to March 31, 2022.

 

Claim denied:

Every effort has been made to avoid errors or deviations in these elements. However, errors may be miserly. Any errors, omissions or implications mentioned may come to our notice which will be taken care of in the next edition. In no event shall the author be liable for any direct, indirect, special or incidental damages relating to or in connection with the use of this information.

Download and Prepare at a time 100 Employees Income Tax Form 16 Part B Preparation in Excel for the F.Y.2020-21 asper new and old tax regime

 

On April 22, 2021 by www.taxexcel.net

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Press Information Bureau 
Government of India
Ministry of Finance

                                                                                        01-March-2016 15:16 IST

Clarification about Changes made in the Tax Treatment for Recognised Provident Fund & National Pension System (NPS) 

There seems to be some amount of lack of understanding about the changes made in the General Budget 2016-17 in the tax treatment for recognised Provident Fund & NPS.( No Changed in General Provident Fund) [ G.P.F.]

The following clarifications are given in this matter:- 

(i) The purpose of this reform of making the change in tax regime is to encourage more number of private sector employees to go for pension security after retirement instead of withdrawing the entire money from the Provident Fund Account. ( Not G.P.F)

(ii) Towards this objective, the Government has announced that Forty Percent(40%) of the total corpus withdrawn at the time of retirement will be tax exempt both under recognised Provident Fund and NPS. 

(iii) It is expected that the employees of private companies will place the remaining 60% of the Corpus in Annuity, out of which they can get regular pension. When this 60% of the remaining Corpus is invested in Annuity, no tax is chargeable. So what it means is that the entire corpus will be tax free, if invested in annuity. 

(iv) The Government in this Budget has also made another change which says that when the person investing in Annuity dies and when the original Corpus goes in the hands of his heirs, then again there will be no tax. 

(v) The idea behind this mechanism is to encourage people to invest in pension products rather than withdraw and use the entire Corpus after retirement. 

(vi) The main category of people for whom EPF ( Not G.P.F.) scheme was created are the members of EPFO who are within the statutory wage limit of Rs.15,000 per month. Out of around 3.7 crores contributing members of EPFO as on today, around 3 crore subscribers are in this category. For this category of people, there is not going to be any change in the new dispensation. 

(vii) However, in EPFO, there are about 60 lakh contributing members who have accepted EPF voluntarily and they are highly - paid employees of private sector companies. For this category of people, amount at present can be withdrawn without any tax liability. We are changing this. What we are saying is that such employee can withdraw without tax liability provided he contributes 60% in annuity product so that pension security can be created for him according to his earning level. However, if he chooses not to put any amount in Annuity product the tax would not be charged on 40%.

(viii) There is no change in the existing tax treatment of Public Provident Fund (PPF). [NOT GENERAL PROVIDENT FUND FOR GOVT EMPLOYEES]

(ix) Currently there is no monetary ceilings on the employer contribution under EPF with only ceiling being that it would be 12% of the salary of the employee member. Similarly, there is no monetary ceiling on the employer contribution under NPS, except that it would be 10% of salary. 

(x) Now the Finance Bill 2016 provides that there would be monetary ceiling of Rs1.5 lakh (Annul) on employer contribution considered with the ceiling of the 12% rate of employer contribution, whichever is less. 

(xi) We have received representations today from various sections suggesting that if the amount of 60% of corpus is not invested in the annuity products, the tax should be levied only on accumulated returns on the corpus and not on the contributed amount. We have also received representations asking for not having any monetary limit on the employer contribution under EPF, because such a limit is not there in NPS. The Finance Minister would be considering all these suggestions and taking a view on it in due course.

On March 05, 2016 by www.taxexcel.net

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1) Download Master of Form 16 Part B for the Financial Year 2014-15 and Assessment Year 2015-16 [Prepare at a time 50 employees Form 16 Part B]

2) Download Master of Form 16 Part B for the Financial Year 2014-15 [This Excel Utility can prepare at a time 100 employees Form 16 Part B]

Modified Income deduction Under Chapter VIA & 80C as per new Finance Budget 2014

HRA exemption = Least of (40% (50% for metros) of Basic+DA or HRA or rent paid - 10% of Basic+DA)

Transport allowance is exempt up to Rs.800/- per month during the month. (Expenditure incurred for covering journey between office and residence.)  For people having permanent physical disability, the exemption is 1,600/- per month.

Reimbursement of Medical bills are exempt for self and dependent family, up to Rs.15,000/- per annum u/s(5) LTA is exempt to the tune of economy class Train/ Air /Recognised public Transport fare for the family to any destination in India, by the shortest route.

LTA can be claimed twice in a block of 4 calendar years. The current block is from 01.01.2010 to 31.12.2013. For claim, it is must to provide originals tickets etc.

U/s 24 There is an Exemption for interest on housing loan. Exemption is limited to Rs. 2,00,000/- per year if the house is self-occupied; There is no limit if the house is rented out.

U/s 80C- Maximum Exemption up to  Rs. 150000/-  Investments up to Rs. 1.5 lac in PF, VPF, PPF, Employee contribution in NPS,Insurance Premium, Housing loan principal repayment, NSC, ELSS, long term bank Fixed Deposit, Post Office Term Deposit, etc. are deductible from the taxable income. Item wise 80C deduction is given below as per the latest amended by the Finance Budget 2014.

• Provident Fund (PF) & Voluntary Provident Fund (VPF) PF is automatically deducted from your salary. your contribution [12% of Basic] (i.e., employee’s contribution) is counted towards section 80C investments. You also have the option to contribute additional amounts through voluntary contributions (VPF). Current rate of interest is 8.5% per annum (p.a.) and is tax-free.
• Life Insurance Premiums: Any amount that you pay towards life insurance premium in Life Insurance Corporation (LIC) or any other Insurance CO.for yourself, your spouse or your children can also be included in Section 80C deduction. If you are paying premium for more than one insurance policy, all the premiums will be included. also premium paid for ULIP will also be treated as Premium paid for Life Insurance Policies.
• Unit linked Insurance Plan : ULIP stands for Unit linked Saving Schemes. ULIPs cover Life insurance with benefits of equity investments.They have attracted the attention of investors and tax-savers not only because they help us save tax but they also perform well to give decent returns in the long-term.

• Public Provident Fund (PPF) is one of the best. Current rate of interest is 8% tax-free and the normal maturity period is 15 years. Minimum amount of contribution is Rs. 500 and maximum is Rs. 1,50,000.(New Change) from Budget 2014
• National Savings Certificate (NSC): National Savings Certificate (NSC) is a 5-Yr small savings instrument eligible for section 80C tax benefit. Rate of interest is  8.58% compounded half-yearly, i.e. If you invest Rs.100, it becomes Rs.150.90 after five years. The interest accrued every year is liable to tax (i.e. to be included in your taxable income) but the interest is also deemed to be reinvested and thus eligible for section 80C deduction.
• Home Loan Principal Repayment & Stamp Duty and Registration Charges for a home Loan The Equated Monthly Installment (EMI) that you pay every month to repay your home loan consists of two components – Principal and Interest.The principal component of the EMI qualifies for deduction under Sec 80C. Even the interest component can save you significant income tax – but that would be under Section 24 of the Income Tax Act. The amount you pay as stamp duty when you buy a house, and the amount you pay for the registration of the documents of the house can be claimed as deduction under section 80C in the year of purchase of the house.
• Tuition  fees  for 2 children  Apart form the above major investments expenses for children’s education (Only Tution Fee (for which you need receipts)), can be claimed as deductions under Sec 80C.
• Equity Linked Savings Scheme (ELSS): There are some mutual fund (MF) schemes specially created for offering you tax savings, and these are called Equity Linked Savings Scheme, or ELSS. The investments that you make in ELSS are eligible for deduction under Sec 80C.
• 5-Yr bank fixed deposits (FDs): Tax-saving fixed deposits (FDs) of scheduled banks with tenure of 5 years are also entitled for section 80C deduction.
• 5-Yr post office time deposit (POTD) scheme: POTDs are similar to bank fixed deposits. Although available for varying time duration like one year, two year, three year and five year, only 5-Yr post-office time deposit (POTD) – which currently offers 7.5 per cent rate of interest –qualifies for tax saving under section 80C. Effective rate works out to be 7.71% per annum (p.a.) as the rate of interest is compounded quarterly but paid annually. The Interest is entirely taxable.
• Pension Funds or Pension Policies – Section 80CCC: This section – Sec 80CCC – stipulates that an investment in pension funds is eligible for deduction from your income. Section 80CCC investment limit is clubbed with the limit of Section 80C – it means that the total deduction available for 80CCC and 80C is Rs 1.5 Lakh.This also means that your investment in pension funds upto Rs.1.5 Lakh can be claimed as deduction u/s 80CCC. However, as mentioned earlier, the total deduction u/s 80C and 80CCC can not exceed  Rs.1.5 Lakh.
• Infrastructure Bonds: These are also popularly called Infra Bonds. These are issued by infrastructure companies, and not the government. The amount that you invest in these bonds can also be included in Sec 80C deductions.
• NABARD rural bonds: There are two types of Bonds issued by NABARD (National Bank for Agriculture and Rural Development): NABARD Rural Bonds and Bhavishya Nirman Bonds (BNB). Out of these two, only NABARD Rural Bonds qualify under section 80C.
• Senior Citizen Savings Scheme 2004 (SCSS): A recent addition to section 80C list, Senior Citizen Savings Scheme (SCSS) is the most lucrative scheme among all the small savings schemes but is meant only for senior citizens. Current rate of interest is 9% per annum payable quarterly. Please note that the interest is payable quarterly instead of compounded quarterly. Thus, unclaimed interest on these deposits won’t earn any further interest. Interest income is chargeable to tax.

  

U/s 80CCD -The Finance Act, 2011 provides that contribution made by the Central Government or any other employer to NPS (up to 10 per cent of the salary of the employee in the previous year)shall be excluded while computing the limit of Rs. 1,50,000.The contribution by the employee to the NPS will be subject to the limit of Rs. 1,00,000.

U/s 80CCG - Rajiv Gandhi Equity Savings Scheme is a new exemption available for investment in stock markets (direct equity). Avaialble only for those with gross income less than 12 lacs and only for first time investors in stock market. Exemption available at 50% of investment subject to maximum of Rs.50,000/- invested. Investments are locked-in for three years

U/s 80D Medical Insurance Premium (such as Mediclaim & Critical illness Cover)& Health Check up Upto Rs. 5000, premium is exempt up to Rs. 30,000/ per year (Rs.15,000/- for self,spouse and children ) (Rs. 15000/- for Parents. If the premium includes for a dependent who is (Senior Citizen) above 60 years of age, an extra Rs. 5,000//- can be claimed.

U/s 80DD Deduction in respect of medical treatment of handicapped dependents is limited to Rs. 50,000/- per year if the disability is less than 80% and Rs. 1,00,000/- per year if the disability is more than 80%

U/s 80DDB Deduction in respect of medical treatment for specified ailments or diseases for the assesse or dependent can be claimed up to Rs. 40,000/- per year. If the person being treated is a senior citizen, the exemption can go up to Rs. 60,000/-. but any amount received under Medical Insurance Policy will be reduced from the amount of deduction allowed. The Diseases and ailments specified under rule 11DD are.

1. neurological diseases being demetia, dystonia musculorum deformans, motor neuron disease, ataxia, chorea, hemiballismus, aphasia and parkisons disease,
2. cancer,
3. AIDS,
4. Chronic renal failure,
5. hemophilia, and 
6. thalassaemia.

U/s 80E Interest repayment on education loan (taken for higher education from a university of self & dependents) is completely tax exempt

U/s 80G Donations given for certain charities are tax exempt. Some(NGO,Trust etc.) are exempt to the tune of 50%, whereas Govt funds are 100%.

U/s 80GG If you are not getting  HRA, but living in rented house, an exemption is available. This will be calculated as minimum of (25% of total income or rent paid - 10% of total income or Rs. 24,000/- per year)

U/s 80U who suffers from not less than 40 per cent of any disability is eligible for deduction to the extent of Rs. 50,000/- and in case of severe disability to the extent of Rs. 100,000/-

U/s 80TTA introduced through Finance Act, 2012. Section 80TTA provides a deduction of up to Rs. 10,000 on your income from interest on saving bank accounts.

U/s 87A Tax Rebate Rs.2,000/- who's taxable income less than 5 Lakh.

Click to download Automatic All in One TDS on Salary for Govt and Non-Govt employees with Form 16 Part A&B and Part B for the Financial Year 2014-15

On December 21, 2014 by www.taxexcel.net

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