Amid the 21-day lockdown, the government has already extended the deadline for filing income tax returns for 2018-19 along with the date for linking PAN with Aadhaar, by three months to June 30. However, some changes to the income tax rules, which were announced in Budget 2020, come into effect from Wednesday, April 1.
Here are five things to know:
> New tax slabs come into effect, however, the taxpayers now have a choice to either go with the new slab or stick to the old one, which continues to remain in force. Under the new tax rates, there is zero tax for income up to Rs 2.5 lakh; 5% for income between Rs 2.5 lakh and up to Rs 5 lakh; 10% for income between Rs 5 lakh and up to Rs 7.5 lakh; 15% for income between Rs 7.5 lakh and up to Rs 10 lakh; 20% for income between Rs 10 lakh and up to Rs 12.5 lakh; 25% for income between Rs 12.5 lakh and up to Rs 15 lakh; 30% for income above Rs 15 lakh. Under the new lower tax rates, the individual will have to forgo a lot of deductions that could help decrease taxable income such as standard deduction, deductions under Section 80C, exemption on HRA (house rent allowance), leave travel allowance (LTA), etc.
> Dividends received from mutual funds and domestic companies from April 1 will be taxable at the recipient’s hands. This means that dividends which the individual will earn from their mutual fund investments will now be taxed at the recipient’s slab rates. Till the last financial year, dividends received from mutual funds were tax-free but the mutual funds used to deduct dividend distribution tax (DDT) at a rate of 11.2%.
> If the employer's contribution exceeds Rs 7.5 lakh in a financial year towards NPS (National Pension Scheme), superannuation fund and EPF, the amount will now be taxable in the hands of the employee. This will apply to both the old and new income tax regimes.
> If you are purchasing a house for the first time with a value of up to Rs 45 lakh, the date for availing additional tax benefit has been extended by a year to March 31, 2021. This implies that individuals who have taken loans to buy homes up to Rs 45 lakh will be eligible to claim an additional tax deduction of Rs 1.5 lakh on interest, in addition to the existing deduction of Rs 2 lakh.
> The tax payment on shares allotted to startup employees under ESOPs or employee stock ownership plan, can now be deferred under the new rules. The tax payment has been deferred from the exercise date to 48 months after exercise, cessation of employment or sale of shares, whichever is earliest.