Key Tax Changes w.e.f 01.04.2020 Part 2

My Dear readers, followers, taxpayers & clients,  

Welcome to my blog. Get yourself update with changes in tax structures. I wrote in previous blog some key changes on tax structure. Now, let see some another key changes in this second part.

Even while the country is in a complete lockdown to control the spread of Coronavirus in the country, the new financial year (FY) 2020-21 has started from April 1. For income tax purpose, while the FY 2020-21 has begun on April 1 and will end on March 31, 2021, the relevant assessment year (AY) will be AY 2021-22. All income earned during the FY is assessed in the AY and income tax return for FY 2020-21 is accordingly filed in the AY 2021-22.
As a taxpayer and even if one is not a taxpayer, there have been several important changes that one needs to be aware of. Here are a few of those key income tax changes effective April 1, 2020.
1. Financial Year not extended
It is important to note that contrary to the concern raised about a change in the financial year, the government had clarified on March 30, 2020, that the financial year has not been extended.
2. Last date for I-T savings extended
If you were not able to make income tax saving for FY 2019-20 because of the lockdown, there’s a piece of good news. The government has allowed taxpayers to invest in PPF, NSC, ELSS or any other tax saving scheme by June 30, 2020, and yet claim tax benefit for the FY 2019-20. The tax benefit under Section 80C, for FY 2019-20 may, therefore, be availed even if the investment is done between April 1, 2020, and June 30, 2020. However, for those who have already made tax-saving investments, can invest till June 30 or anytime later in the FY and avail tax benefit for FY 2020-21.
3. New Tax Regime in-force
Starting FY 2020-21, the income taxpayers will have an option to pay lower income tax rates by foregoing income tax exemptions and deductions or continue paying the same tax rates by availing the deductions. For those availing lower rates will be assessed under the New Tax Regime else the assessee will continue to pay taxes as per Old Tax Regime.
Under the new tax regime, the following will be the new income slabs and tax rates:
  • ·         Up to Rs 2,50,000 – Nil
  • ·         From 2,50,001 to Rs 5,00,000 – 5%
  • ·         From 5,00,001 to Rs 7,50,000 – 10%
  • ·         From 7,50,001 to Rs 10,00,000 -15%
  • ·         From 10,00,001 to Rs 12,50,000 – 20%
  • ·         From 12,50,001 to Rs 15,00,000 – 25%
  • ·         Above Rs 15,00,000 – 30%

Some important exemptions, deductions available under Income-tax Act that the taxpayer will have to forgo will include – Investments in PPF, ELSS, Life insurance etc, and expense such as home loan repayments, tuition fees etc. ( I will discuss about new and old tax regime in detailed manner in another blog.) 
4. Belated return last date extended
For those who yet had not filed there ITR for F.Y. 2018-19, for them the last date now has been extended by the government to June 30, 2020. 
See You all in the next blog.

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