Major income tax provisions applicable from current financial year for individual taxpayers

There are sure income tax provisions which have change into applicable for the transactions carried out from the current financial year, which taxpayers ought to pay attention to.

The current financial year goes to finish quickly and the subsequent financial year will begin from April 1. There are sure income tax provisions which have change into applicable for the transactions carried out from the current financial year, which taxpayers ought to pay attention to.

Let us focus on some main adjustments which can have an effect on an individual taxpayer from FY 21-22.

Changed taxation guidelines for Unit Linked Insurance Policies (ULIP)

Money acquired beneath a life insurance coverage coverage, together with ULIPs, is mostly exempt topic to situations of premium for the year not exceeding sure percentages of the sum assured relying on the year when the coverage was purchased. Since long-term capital beneficial properties on fairness mutual funds have change into taxable at 10% after preliminary exemption of Rs 1 lakh, ULIPs had benefit over fairness mutual funds and other people used to put money into ULIPs and luxuriate in tax-free income. In order to make sure stage enjoying discipline, the Finance Act 2021 has made money acquired in respect of sure ULIPs issued after 1st February 2021 taxable within the palms of the coverage holders. However, any money acquired on demise of the coverage holder will likely be tax free within the palms of the recipients.

The amended rule will apply in case the premium paid for any year throughout its tenure exceeds Rs 2.50 lakh. Insurance firms will deduct tax on the distinction on the rate of 5% in case the quantity payable exceeds Rs 1 lakh in the course of the year. The ULIPs which have minimal of 65% investments in fairness merchandise throughout their tenure will likely be taxed like fairness mutual funds whereas for different ULIPs the distinction between the premiums paid and the money acquired will get taxed.

Tax on curiosity earned on contribution made in direction of provident fund in extra of specified quantities

Presently your steadiness in your provident fund earns you curiosity at round 8.50% yearly. This is larger than another secure debt product. Such larger returns and security of investments made many excessive wage earners like promoters and key personnel in huge firms to contribute large sums of money to their provident fund past what they have been mandatorily required to do. In order to discourage such misuse, the regulation was amended to supply that curiosity earned by you year after year in your provident fund contribution in a year, whether or not obligatory or voluntary, over Rs 2.50 lakh will now not be exempt and will likely be taxed in your palms. In case the employer doesn’t contribute in direction of your EPF, you take pleasure in a better annual restrict of Rs 5 lakh.

In order to provide impact to this provision, the provident fund workplaces will keep two separate provident fund accounts of the member the place the curiosity is tax free and second the place full curiosity is taxable for all of the annual contributions over Rs 2.50 lakh or Rs 5 lakh because the case could also be.

Extended interval for availing the unique tax profit on residence mortgage for reasonably priced housing

You are entitled to avail tax profit in respect of curiosity upto Rs 1.50 lakh each year, paid on a house mortgage sanctioned between 1st April 2019 and 2021 for a home having stamp responsibility valuation not over Rs 45 lakh over and above deduction out there beneath Section 24(b). The deadline for getting the house mortgage sanctioned has now been prolonged until thirty first March 2022 from the sooner deadline of thirty first March 2021.

No requirement to file ITR for senior residents on satisfying sure situations

In order to supply aid to senior residents over the age of 70 years from the burden of getting to file their Income Tax Returns (ITRs), the regulation has been amended to supply that the senior residents who obtain pension won’t should file their ITRs in the event that they furnish a declaration to the financial institution from the place the pension is disbursed about their curiosity earnings offered they don’t have a checking account with another financial institution besides the financial institution disbursing the pension and would not have another income. The financial institution will deduct acceptable tax on such income together with the pension after giving advantages of deductions and rebate beneath part 87A which can absolve the eligible senior citizen from legal responsibility to file his ITR.

Higher TDS/TCS for non-filing of your ITR for two years

In case you don’t file your income tax returns for two consecutive years instantly previous the year of deduction, by the due date of submitting the ITR and whole tax deducted in your income is greater than fifty 1000’s in these two years, the payer must deduct tax at larger rate than what’s applicable in your case.

(The creator is a tax and funding knowledgeable and could be reached at [email protected]

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