From the new income tax website to changes in ITR forms, the income tax department has made several adjustments and announcements this year. In order to prepare or file a correct income tax return, a taxpayer should be aware of these changes before filing IT returns this year. The tax department has announced the availability of ITR forms for AY22 and has pushed the ITR filing window till September 30. That being said, it is preferable to start preparing for tax filing early and submit it. But if you are a taxpayer, you need to consider the below facts, before filing IT returns this year.
In order to determine the genuine tax burden of employees, they are responsible to furnish their investment proof in December or January to their employers. If you were unable to furnish documentation of your investments and TDS was already withheld from your salary, you may be eligible for a refund when you file your return. Tax experts recommend taxpayers stay on hold until July 15 to ensure that all TDS withheld or TCS paid in their favour is recorded on their Form 26AS. It should be remembered that the deadline for filing TDS and TCS taxes has been postponed till June 30.
Updated tax forms
The tax department has recently notified about the new ITR forms. As a result, to choose the appropriate ITR form you need to know about these changes. Certain adjustments have been made to the eligibility conditions in ITR 1, which is utilised by salaried individuals, this year. This year, the ITR 1 form will not be relevant to anyone who paid TDS for a cash withdrawal under Section 194N. Employees who have unpaid tax on employee stock options (ESOPs) are likewise unable to utilise the ITR 1 form. Therefore, before submitting your return, make sure you use the correct form.
The tax regime for business owners
According to tax professionals, selecting a tax regime is more important for business owners since they are only allowed to make this decision once. They cannot modify their tax regime once they have chosen it. Salaried persons with earnings from salary, residential property, and other sources, on the other hand, can modify it in every assessment year. Business owners should also keep in mind that the deadline for submitting a tax audit report is September 30th of the assessment year, the deadline for submitting a return if a tax audit is pertinent is September 30th of the assessment year, and the deadline for submitting a return if a tax audit is not relevant is July 31st of the assessment year.
New and old tax regime
Individual taxpayers will be able to select between two tax regimes beginning in the fiscal year 2021. Under the new regime, implemented in Budget 2020, tax is payable on income up to Rs. 15 lakh at lower slab rates than the old regime, but the taxpayer will relinquish several deductions and exemptions available under the previous regime. Since it is recommended that a taxpayer select the regime at the outset of the year, he can also do it while lodging his IT return if he was unable to make the scheduled investments or expenditures for which he might seek a tax exemption under the old tax regime. Taxpayers should also bear in mind that under the new regime, tax slabs of 5%, 10%, 15%, 20%, and 25% are payable on each subsequent rise of Rs. 2.50 lakh from the initial deduction of Rs. 2.5 lakh up to 15 lakhs of overall income. Salaried individuals can't make use of important advantages such as standard deduction, House Rent Allowance (HRA), Leave Travel Assistance (LTA), and so on under the new tax regime.
New extended deadline
In light of the Covid-19 epidemic, the deadline for submitting ITR has been postponed to September 30 this year. Therefore, if any advance tax is owed, pay it as soon as possible to minimize penal interest. If self-assessment tax is submitted after the due deadline of submitting ITR, penal interest under section 234A is usually charged. The interest is charged at 1% each month or part of a month. This financial year, the CBDT has made an exclusion for such interest payments if the self-assessment tax due after TDS, advance tax, and other deductions should not surpass Rs 1 lakh. That being said, interest will be charged under Section 234B if the taxpayer has not submitted advance tax or if the advance tax paid is less than 90% of the overall tax amount. According to tax professionals, if the taxpayer fails to submit the advance tax in the specified quarterly instalments, penal interest under Section 234C would apply.
Deadline for PAN-Aadhaar linking
The income tax department has set a June 30th, 2021 timeframe for the PAN-Aadhaar linking. If this is not done, one's PAN card will become inoperative. All transactions that need a PAN cannot be undertaken in this circumstance. Furthermore, owing to the incomplete KYC (Know Your Customer), you would be barred from subsequent transactions. The income tax department may levy Rs 10,000 as a penalty on individuals who use inoperative PAN cards. According to tax law, if Aadhaar is not linked to a PAN, taxpayers would be unable to perform certain financial transactions. This may also result in Rs 10,000 as a penalty under Section 272B of the Income Tax Act. In order to link your PAN with Aadhaar on the new income portal, please click here.