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Improvements in Income Tax Rules as explained by William D King

William D King

The new financial year has arrived, and with that, new tax regulations have gone into force. Let us now look at the changes that affect individual taxes says, William D King. The Biden government has made some changes in the tax laws, which caused some changes. We will help you understand these changes, to know about some major changes read below,

In the first year, you will have the option of choosing between two tax schemes, says William D King

The cost estimate for 2020-21 has unveiled a novel tax regime, which an individual income tax account holder can choose, of lower taxation combined with very few exemptions and lesser deduct entitlements available, rather than the routine tax regime, in that you must pay tax at greater rates but also have the authority to claim numerous deductions and allowances. This is the year in which you must choose whether to stay in the existing tax regime or transfer towards the new tax regime. Salaried citizens have a right to select between old and new tax regimes every year, but those with company income cannot return to the old system once they opt for the new one unless they close their firm.

Salaried employees who have chosen a certain option with the company may choose another option. When submitting their ITR since the option acquired with the employers was only for a restricted purpose of tax reduction. If you do have business profits and do not desire to opt for the new tax system this year. You can do so in any following year; but, when you have shifted to the new tax system, you cannot return to the old regime.

Reduced time frame for submitting a late ITR or modifying a previously submitted ITR

Previously, if you did not file your ITR by its deadline of July 31st. You could still file this by March 31st with a late charge reported by William D king. Similarly, if you detect any omissions or mistakes after filing your ITR. You may modify it by March 31st that year. But not anymore. The finance plan for 2021-2022 proposes to shorten this time restriction by three months. Giving you until December 31st of the very same financial year to file your tardy ITR or modify your ITR. It essentially shortens the period you have to file a belated or amended ITR by three months. So, register your ITR as quickly as possible. So you’ll have enough time to modify it if there are any errors.

Removal Of The Exemption For Employees’ Provident Fund Voluntary Contributions

Previously, the interest earned on your defined contribution fund account concerning your contributions was entirely tax-free. Even if you contributed more than the necessary 12 percent of your basic pay. The finance minister suggested in the 2021-22 plan that this deduction on interest be reported to your EPF account. Would no longer be an option for annual payments above 2.50 lakhs per year. For payments made after April 1st, 2021. However, if your employer doesn’t contribute to your defined contribution savings fund, the plan proposes a greater contribution ceiling of Rs. 5 lakhs, over which the return on such contributions will be taxed every year.

We hope that the information above will assist you in making an educated decision.