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Modifications in Income Tax Rules of EPFO and LTC

Highlights

  • Check the Amendments Made in Income Tax Rules of Employee’s Provident Fund and Leave Travel Concession.
  • See the Tax Privileges you can enjoy after the Budget 2021 Announcement.
  • Use the Pre-Filled ITR Form to file a quick income tax return.

The Finance Minister of India Nirmala Sitharaman has announced certain amendments in the Income Tax Rule of EPF and LTC in the 2021 Budget. These amendments will be in effect from the 1st of April 2021. It has impacted the salaried employees of our country and has brought relief for them. Firstly, the finance minister said that people with the age of 75 and above will not have to file any tax on their pensions and the interest from fixed deposits if they are credited into the same bank. This rule will come into effect from the 1st of April 2021. There are also some other changes made by Nirmala Sitharaman that you can explore below in this news.

Changes Made in EPFO and LTC Rules

Some announcements have also been made related to the pre-filling of ITRs, TDS Deductions, LTC, and EPFO Schemes. So, you must explore all the changes made this year in the Union Budget.

Your Monthly EPF Share

If the contribution of your EPF is INR 2.5 Lacs or above per annum then it will be taxable from the 1st of April 2021. This rule will levy taxes on the depositors with a high value of EPF. It would help the workers with a low salary and the people earning less than INR 2 Lacs per month. This proposal will not affect the workers who are getting a salary of less than INR 2 lacs per month.

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No tax will be charged on the amount PF of up to INR 5 lacs if the employer doesn’t make any contribution to PF. In other words, if only the employee is making contribution to PF without the contribution of the employer then the amount of up to INR 5 lacs is exempted from tax as per the amendments in the Tax Laws.

Pre-Filled ITR

Now you can easily file income tax returns through the Pre-Filled ITR Forms. It will save time for the payer and your return will be filed quickly. These forms will have the pre-filled data and include the details of the payer. The data on income and other things of the taxpayer will be uploaded automatically through the pre-filled forms.

Cash Vouchers for LTC

The government has announced a cash voucher scheme for the Leave Travel Concession. As we can see that travelling has been affected due to the Covid 19 pandemic so the government is giving tax benefits to the LTC Schemes. These tax benefits will be given to those individuals who were unable to claim their LTC Tax benefits because of the travel halt during a pandemic.

Increase in TDS Rate

Now the government will put a new section in the Income Tax Act. The section will be 206AB and according to this section, a special provision is made in which the rate of TDS will be applicable for the individuals who do not file an income tax return.

Exemption from Filling Tax Returns for the Individuals of 75 Years or Above

Individuals having an age of 75 or above and receiving a pension and interest on fixed deposit in the same bank need not file an income tax return. The bank is authorized to deduct the tax and pay it directly to the government. The individual need not worry about filing the return. But the only condition for this amendment is that the individual must have a pension account and a fixed deposit with the same bank.

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Conclusion

As a whole, the finance minister has made 5 announcements in the 2021 budget and all of them will be in effect from the 1st of April. So, you better know all the announcements made in this budget and explore all the amendments tare are made related to EPFO and LTC.

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