tax Archives -

Income Tax Due Date Extended for Financial Year 2020-21

Fri, 21 May 2021 09:36:11 +0000

The Buyt Desk

Income Tax return filing gets an extension of 2 months. The severe second wave of COVID-19 has been the reason behind this move. To provide relief to taxpayers they can file their income tax return for the financial year 2020-21 till 30th September 2021. The last date was 31st July which has now moved further by two months. Apart from the return filing extension, there have been many changes in various tax compliances to ease the stress on common taxpayers.

Here are the 7 new extended deadlines to file your income tax returns

1)For the financial Year 2020-21 for which the assessment year is 2021-22 tax return can be filed till 30th September. The taxpayers whose accounts are not audited and usually file their return in form ITR-1 and ITR-4 will benefit from this extension.

2)The companies and firms whose accounts are audited are also allowed for an extension. Earlier they had to file their return by 31st October but now they have time until 30th November.

3) Central Board of Direct taxes has given an extra time of one month to companies to furnish the Form-16 to its employees by 15th July 2021. The companies are required to give this by 15th June of every year but now there is a relaxation of one month.

4) Those who have to file a tax audit report as well as the transfer pricing certificate gets a date extension by a month and can do so till 31 st October and 30th November, respectively.

5) The dates for filing belated or revised return has been also pushed by a month to 31st January 2022, from 31st December 2021.

6) The financial institutions have also seen an extension of the deadline for furnishing the Statement of Financial Transaction or SFT report. It is extended till June 30, 2021, from May 31, 2021.

7) The Statement of Deduction of Tax for the last quarter of the Financial Year 2020-21 which is required to be furnished on or before 31st May 2021 can now be furnished on or before 30th June 2021.

The government has already notified the income tax return forms for the financial year 2020-21 on 1st April itself. These forms are pretty much the same as the last year. The Central Board of Direct Taxes has ensured that the process of return filing remains easy in pandemic times and that is why there have been no significant changes in the return form as compared to the last year’s ITR forms.

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How to Save Tax through Your Family Members?

Fri, 16 Apr 2021 06:32:28 +0000

The Buyt Desk

Does it hurt when you give away a hefty amount of your hard-earned money as tax? Section 80C of the Income Tax Act offers tax deduction up to Rs.1.5 lakhs for some investments such as PPF, ULIP, tax saving FD, ELSS, etc. Section 80D of the Income Tax Act offers a tax deduction for the premium paid towards health insurance. Section 80TTA of the Income Tax Act gives a tax deduction for the interest earned from a savings account. Despite certain tax benefits offered by the Income Tax Act, you may be paying a substantial amount as tax.

Here, we discuss possible ways to save tax over and above these sections of the Income Tax Act.

Divide the business invoices between self and spouse: In case your spouse is skilled and helps in your occupation/profession/business, it is only fair to share the client invoices between both the company (self) and your spouse. This way you can avail the income tax slab benefit for both of you.
Investment in equity for self and spouse: When you invest in equity funds, as per Section 112A of the Income Tax Act, the long-term capital gains up to Rs.1 lakh are exempt from taxation. Moreover, the long-term capital gains (LTCG) are not taxed as per the income tax slab, but only a 10% LTCG tax applies. One way for you to enjoy tax exemption every year is by making equity investment for self as well as the spouse. You can also invest in equity funds in the name of your child. However, do understand that gains up to Rs.1 lakh only are exempt from taxation.
Exemption under section 80C in name of your child: You can make investments, which are exempt under 80C, even in name of your child. Moreover, tuition fees that you pay for your child’s education are also exempt under section 80C.
Exemption under Section 10(32) of the Income Tax Act: Interest earned up to Rs.1500 in the savings account of your child also enjoys tax exemption. You can avail of this benefit for two children.
Exemption under Section 80E of the Income Tax Act: EMI that you pay for an education loan of your child can be deducted from your taxable income under section 80E. As per the rule, this benefit is valid for 8 years since the EMI starts.
Loan to spouse or child: Giving interest-free loan to your spouse or child can reduce your taxable income.
Tax benefit of paying rent to your parents: If you enter into a rental agreement with your parents and have proper payment proof then you can claim tax exemption of HRA (house rent allowance).
Tax-free gift to parents: You can transfer money to your parent’s account. It will be treated as a tax-free gift. Your parents can invest this money in senior citizen schemes, which mostly enjoy a higher interest. This method is useful when your parents fall in a lower income tax slab. In the same manner, you can gift money to your parents-in-law as well.

Tax planning is essential for fulfilling your and your family’s financial aims. Use the above pointers to avail all the probable-tax saving opportunities.

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How to Choose Between the Old and New Tax Regime?

Fri, 02 Apr 2021 04:19:46 +0000

The Buyt Desk

If you are a salaried individual then with every new financial year you need to be prepared to choose between the new and the old tax regime. Alongside the existing tax regime government introduced a new tax regime in Budget 2020. The new tax regime gives more tax rates as compared to the old tax regime. If you wish to continue with the old tax regime which you have been already following then you need not inform your employer. But if you want to shift to the new regime you must intimate this to the HR of your company.

This chart explains the way tax rates are applicable in the new and the old tax regime.

INCOME TAX SLABS	OLD REGIME (WITH EXEMPTIONS AND DEDUCTIONS)	NEW REGIME (WITHOUT EXEMPTIONS AND DEDUCTIONS)
UPTO 2.5 LAKH	NIL	NIL
2.5 – 5 LAKH	5%	5%
5 – 7.5 LAKH	20%	10%
7.5 – 10 LAKH	20%	15%
10 – 12.5 LAKH	30%	20%
12.5 – 15 LAKH	30%	25%
ABOVE 15 LAKH	30%	30%

How to select the right tax regime?

Well, there is no right or wrong in any of the tax regimes. It will vary from person to person depending upon their income, investment, and deduction that he/she gets. Here is a list of things that you should look at –

Tax Rates – The Old Tax regime has only 3 tax rates – 5%, 20 % and 30%. Whereas the new regime has just double the number of tax rates ranging from 5%, 10%, 15%, 20%, 25% and 30%.You may find that as far as tax rates are concerned the new regime gives you a concessional rate of tax but it comes with conditions.
Forego Exemption and Deduction – The aim of the new tax regime is to simplify tax filing. In a bid to do so the government has removed all the tax-saving benefits in the new regime. Opting for a new regime means you will forego around 70 exemptions and deduction of income tax. Like 80C deduction, standard deduction, HRA, housing loan interest benefit, and so on.

Lack of tax planning- The new tax regime is good for those people who do not invest in the tax-saving instrument and don’t claim tax deduction. There are many avenues of investment that can give you an income tax deduction and help you in saving tax. But then it is a possibility that an individual after covering all his/her expenses is never left with money to invest. For them, the new tax regime works well.
Allowed deduction- Only two deductions can be claimed in the new tax regime i.e 80CCD (2) – employer contribution to NPS and Section 80JJA which is for new employment.

Who can opt for and who can’t ?

A salaried employee can switch between both the regimes every year but an individual having income from business and profession cannot switch every year, they will get only one chance to choose in a lifetime.

Hope we have helped you in understanding which tax regime will work for you.

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5 New Rules that will Change Your Tax Liability from 1st April 2021

Tue, 30 Mar 2021 06:07:40 +0000

The Buyt Desk

1st April 2021 will mark the beginning of the new financial year 2021-22. The new financial year will come with new rules. There will be changes in the way you are taxed. Here is a list of new things that will come into effect from 1st April-

1.A higher TDS

With the introduction of two new sections, 206AB and 206CCA in the Income Tax Act, the non-filers of income tax will end up paying a higher rate of TDS or TCS. If a person’s TDS or TCS liability is more than Rs 50,000 and he/she has to furnish their income tax return of the previous two years. If they can’t furnish the previous year’s return then they will have to pay higher TDS.

2. New Wage Code

From 1st April the new wage code will be implemented. This code mandates that the basic pay of an employee can’t be less than 50% of his/her salary package. This will be beneficial for people who receive a PF contribution from the employer on their basic pay. With smaller basic pay companies ended up paying less but now no matter what the basic pay will be 50% of the CTC. People will see an increased contribution towards PF and gratuity will increase.

3. Provident Fund Exemption limit

It was announced by FM Nirmala Sitharaman that if an employee contributes more than Rs 2.5 lakh in a year in his/her provident fund(PF) then the interest received on the incremental amount will be taxed. But when the Finance Bill 2021 was presented the limit of Rs 2.5 lakh was raised to Rs 5 lakh. The interest earned by employees on contributions beyond Rs 5 lakh will be taxed from 1st April. The government estimates that with the increased limit very few people will be impacted negatively. As far as the calculation goes someone earning more than an annual basic of Rs 41.66 lakh annually will be in a position to contribute more than Rs 5 lakh.

4.Exemption from filing ITR

From 1 April 2021, senior citizens above 75 years of age will not have to file ITR. Such people are now exempted from filing ITR. However, this exemption is for those senior citizens who are dependent on pension or interest from fixed deposits (FD) only. Another condition is that the senior citizen must be receiving the pension and should hold a fixed deposit in one and the same bank.

5. Linking PAN-Aadhaar

The government has given time till March 31, 2021 to link PAN with Aadhaar. Earlier, its last date was 30 June 2020, which was later extended to 31 March. If the PAN card is not linked to Aadhaar, the PAN card of the user will become invalid from the new financial year i.e 1st April 2021.

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Tax Exemption, Deduction and Rebate- what is the Difference Between the Three?

Sun, 17 Jan 2021 13:38:40 +0000

The BuyT Desk

There are three kinds of tax benefit that a taxpayer gets- tax exemption, deduction and rebate. But more than often, people get confused with these three terms. Failure of understanding results in not using them correctly. Tax exemption gives you relief when you undertake certain expenditure. A tax deduction reduces your taxable income and rebate gives you benefit on the total tax payable. Let’s understand how it gets applied to the tax liability.

Tax Exemption

Income tax exemption means that you get a tax benefit on a specific source of income. You don’t get this on your total gross income but on certain expenditure that you incur. Tax exemption very specifically aims to lighten the burden of tax for a salaried employee. They form a part of the salary component. The tax exemption that a taxpayer get are-

Leave Travel Allowance (LTA)
House Rent Allowance (HRA)
Pension Income (Gratuity/ VRS/pension)
Leave encashment
Perquisites from a company such as a laptop or mobile allowance

Tax Deduction

As the name suggests, this is a reduction from the taxpayer’s gross income. A deduction is allowed on certain expenditure like transportation, tuition fee, medical expenses and specific investments like the premium of an insurance policy. The following deduction can be claimed –

Standard Deduction: All the category can avail a 50,000 standard deduction of taxpayers. This deduction helps in reducing the gross income by Rs 50,000. If a taxpayer’s annual income is Rs 7.5 lakh, his gross income reduces to Rs 7 lakh once the standard deduction is applied.
Section 80C- A deduction of up to Rs 1.5 lakh is allowed for specific investment like insurance premium, PPF, tuition fee, PF contribution
Section 80E- Interest repayment for an Education Loan- there is no maximum upper limit cap on the interest amount.
Section 80TTA- A deduction of maximum Rs 10,000 against interest income earned from your savings account with a bank, co-operative society, or post office.
Section 80D– Medical Insurance premium
Section 80G- Donation

If you have made any of the expenditure mentioned above/ investment, your taxable income will reduce according to contribution.

Tax Rebate

Income tax exemptions and deductions are allowed to be claimed from the income whereas rebate is allowed to be claimed from the tax payable. It helps to reduce the tax liability for taxpayers.

Section 87A Rebate: Individuals with a taxable income of up to Rs 5 lakh post claiming deduction are eligible to rebate on their full tax. A tax rebate of Rs 12,500 is allowed. But the condition is that the tax payable should be less than Rs 12,500, then you will not have to pay any tax. But you must file your IT return even if your tax payable is zero if you are claiming benefit under section 87A.

Hope we have helped you in understanding tax deduction, exemption and rebate more clearly.

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