As it is amid the raging Covid 2.0 wave in India, the finance ministry have allowed some relaxations in respect of some of the filings. And now the relaxation has also been extended to GST matters with the centre allowing businesses to verify their GSTR 1 via EVC until May 31. So considering this and other changes or points that you need to remember for FY22, here we summarise all such taxation aspects that you need to make a note of:
1. At the onset of the financial year, you can decide on choosing between old and new taxation regime:
New taxation regime with lower tax rate offers no deduction and exemption as allowed in the case of older tax regime. It is to be noted that once the taxpayer decides on going with the new tax regime, reverting to the old taxation shall not be allowed.
2. Pre-filled ITR forms shall be available:
As mentioned in the Union Budget 2021, there will be a seamless shift to pre-filled ITR forms that will both reduce the efforts and also probability of errors. So, consequently the processing for the ITR shall also be hastened.
The pre-filled ITR form will contain mapped details of your capital gains from listed securities, dividend Income, interest from banks / post offices etc. The service shall also be extended to the non-salaried.
3. Dividend income taxable for investors:
For any stocks or mutual funds investment, dividends are now taxable in the hands of investors. And now as the dividend is taxable as other income there shall not be any dividend distribution tax (DDT) deducted by the company. If in a case the dividend income is above Rs. 5000, the payer shall deduct the TDS and pay the balance amount.
This dividend income is also to be shown while filing income tax return as the gross amount received after the TDS has been cut.
4. Your EPF is tax-free up to a limit:
Beginning financial year, contribution to EPF or employee provident fund up to Rs. 2.5 lakh shall be tax free with respect to proportionate interest. And any interest accrued on any contribution above this time shall be added to other income and taxed at peak incremental tax rate.
Effective interest on any contribution above this limit will be added to other income and taxed at peak incremental rates of tax.
5. Tax return filing exempted for senior citizens:
For senior citizens aged above 75 years, the government amid the pandemic has relaxed guidelines and waived all such taxpayers from filing ITR if their only income source is from pension and bank interest. In such cases the bank will pay the tax payable and pay it to the government. And in most cases there is already TDS deduction if the pension income exceeds Rs. 5 lakh and they would need to file the return if they want to claim refunds.
6. Timeline to file belated return has also been reduced:
The Finance Bill 2021-22 proposed to reduce the timeline allowed to file belated return by three months i.e. beginning FY22, the belated return of the previous year can be filed only until December 31 of the following year.
7. Higher TDS shall be payable in case ITR not filed:
In Budget 2021, there has been added Section 206AB as per which higher rate of TDS shall apply to those not filing ITR.
In case of non-filers, the applicable TDS rate will be 5% more or twice the original applicable rate; whichever is higher.
8. ULIPs tax free only with respect to some condition:
Effective new fy 2021-22, as against the current regime, the exemption allowed i.e. maturity proceeds shall be tax exempt if the premium paid is not more than 10% of sum assured shall not be the case if the aggregate annual premium across all ULIPs by an individual exceeds Rs2.50 Lakh. Note this shall not be applicable for old policies.