NEW DELHI: Citing the hardships being faced amid the devastating second wave of Covid-19 pandemic, the Central Board of Direct Taxes (CBDT) has extended the deadline to file Income Tax Return (ITR), allowing individuals to file their tax returns for income earned during the financial year 2020-21 by September 30.
Even as taxpayers have now got some more time to file their ITR, taxpayers are struggling to meet the increased compliance burden. Besides, just when taxpayers were trying to fix the complex puzzle of choosing between the new and old tax regime, introduction of a brand new e-filing website has only added to their woes.
It is important for a taxpayer to know these changes in order to file an error-free ITR. One of the new features this year is that the tax department will give pre-filled information, including the interest earned, dividend received, capital gains on shares and mutual funds in the tax forms to the taxpayers.
However, it will be better to cross check these details with documents such as Form 16, Form 26AS and bank statements before you start filing your ITR.
According to Harsh Bhuta – Partner at Bhuta Shah and Co LLP, this year the return filing will require some additional compliances, especially if you receive any dividend income. For instance, from the financial year 2020-21, the government has made dividends distributed by a company taxable in the hands of the investors.
Taxpayers will have to provide quarterly reports of such dividends received. Also, the dividend, which was earlier shown under ‘Exempted Income’, now should be shown under ‘Income from other sources’. This quarterly reporting is mandatory to avail relaxation of advance tax penalties on dividend income.
Taxpayers also have to give details of employee stock ownership plan (ESOPs) received by the employee from an eligible start-up wherein tax on the same is deferred.
Old vs New tax regime
One of the significant changes this year is the option of new or the ‘simplified tax regime’. This is the first assessment year where taxpayers will have to choose between the new and the earlier-followed regime. “Under the new regime tax slabs rates of 5 per cent, 10 per cent, 15 per cent, 20 per cent and 25 per cent are applicable on each successive increase of Rs 2.5 lakh starting from the basic exemption of Rs 2.5 lakh till a total income of 15 lakh.
However, the taxpayer needs to forego various tax deductions and exemptions otherwise available under the old regime,” explained Pitam Goel, founder partner, Tattvam & Co. For instance, standard deduction for salaried class, house rent allowance, leave travel allowance (LTA), other deductions like section 80C of ITA (covering EPF, LIC, PPF, etc), section 80D of ITA (Health Insurance), 80CCD of ITA (NPS), home loan interest deduction, etc will not be available under the new tax regime.
According to Aarti Raote, Partner Deloitte India, the selection of the ‘regular tax regime’ or the ‘simplified tax regime’ is dependent on the facts of each taxpayer. “Taxpayers who claim significant amounts in deductions like house rent allowance, leave travel assistance, housing interest or chapter VI-A deductions like 80C or 80E (interest education loan) would find that the old or regular tax regime is more favourable. However, an employee not claiming such deductions would be better off under the new simplified tax regime. One can use the tax simulator to find out which regime suits better to make a wise choice,” Raote explained. While the selection option is stricter for business, salaried individuals with income from salary, house property and other income can change the regime every year.
New website
In a bid to make income tax return filing easier, the tax department has launched a new website on June 7. Despite some technical glitches, the new portal boasts of several new features. Apart from mobile friendly and easy to use interface, the user profile section also includes options to update details such as bank accounts, demat accounts, sources of income, which will be used in pre-filing ITR, after necessary returns are filed by other stakeholders such as employers, banks etc. This would save a lot of the taxpayer’s time when filing returns. Taxpayers can also give access to chartered accountants who would be able take necessary action on behalf of the taxpayer such as filing grievances, filing form 15CB etc.
No monetary ceiling
There is no monetary ceiling prescribed for reporting the transactions related to capital gains, dividend and interest income. It will only come pre-filled in the ITR forms.
Choose your ITR form
ITR-1
ITR-2
ITR-3
ITR-4
ITR-5
ITR-6
ITR-7
ITR Forms Applicable for Sources of Income covered
