Key income tax rules effective in 2020 you should know: PPF, tax savings schemes...

Due to Covid situation word wide, Govt of India have extended the return filing date to June 30, 2020, which enables taxpayers to invest in tax saving schemes like PPF, NSC, ELSS or any other tax saving scheme by June & still claim tax benefit for FY 2019-20.

Key income tax rules effective in 2020 you should know: PPF, tax savings schemes...

Key income tax rules effective from April 1, 2020.

India is in complete lockdown situation due to the widespread covid-19 virus, however time does not stop for anything, the new financial year (FY) 2020-21 has arrived  from 1st April 2020 for the purpose of income tax, while the FY 2020-21 has started on April 1 and will end on March 31, 2021, the relevant assessment year (AY) will be AY 2021-22. The earnings during the Financial Year is assessed in the Assessment Year and income tax return for FY 2020-21 is accordingly filed.

As an individual taxpayer, we need to be aware of the key decisions taken which may impact to our financial planning. Outlining some of the key items from the rest.

Financial year was not extended, but filling can be done

First off, it's far important to be aware that contrary to the concern raised about a change in the financial year, the authorities had clarified on march 30, 2020, that the financial year has not been prolonged and the status quo at the equal is being maintained. However the last date of filing have been extended from 31st march to 31st June 2020.

Last date for I-T filing extended

Just in case you were not able to make enough investment by march 31 2020 due to lockdown situation, the good news is you still can claim the tax benefit on the investments such as PPF, NSC, ELSS or any other tax saving scheme are made until 31st June 2020.

The tax benefit can still be availed even if the investments are made between 1st April 2020 and 31st June 2020.

New Tax Regime

Starting FY 2020-21, the citizens can decide to pay lower personal assessment rate by prior annual duty exclusions and findings or hold paying the equivalent rate post availing the deductions. For those opting lower rates may be surveyed underneath the new tax system else the income taxpayer will continue to pay taxes as per Old Tax Regime..

Under the new tax regime, the tax rates will be ..

 

Income Lower range

Income upper range

Tax rate

 

2.5L

0%

2.5L

5L

5%

5L

7.5L

10%

7.5L

10L

15%

10L

12.5L

20%

12.5L

15L

25%

>15L

 

30%

 

Few important exemptions and deductions available under the law that the taxpayer may go through, such as Investments in PPF, ELSS, Life insurance etc, and expense such as home loan repayments, tuition fees etc can be claimed as rebate.

Last date for return was extended

Last year too, the govt had extended the last date for filing TDS returns for FY 2018-19 to June 30, 2019 and deadline to issue Form 16 to July 10, 2019. The government, on May 13 announced the extension of income tax return (ITR) filing deadline for FY 2019-20 to November 30, 2020 from July 31, 2020.

Interest on due tax

If as a taxpayer delays payments of advance tax, self-assessment tax, ordinary tax, TDS, TCS made between twentieth March 2020 and thirtieth June 2020, the government has reduced interest rate at 9%  in place of 12% per annum considering the situation, however late submitting is in no way endorsed by means of the authorities.

Dividend taxable

The tax on dividend will now be considered as an income, in tern all the applicable tax slabs will apply. For equity MF investors, the Dividend Distribution Tax of 11.64 per cent was deducted before receiving the dividend amount. Those investors in higher tax slab will be impacted more because of this new rule. So if you are a equity investor, you need to be aware of this.

Home loan for first-time buyers

For the first time home buyer, the government has increased the tax benefit available on interest payment. Under Section 80EEA, the tax payer can avail a deduction of up to Rs 1.5 lakh on interest payment subject to certain conditions. One of them is the home loan needs to be sanctioned by a lender between  the period from 1st April 2019 and 31st March 2020 which has now been extended to March 31, 2021. Importantly, the price of the property should not exceed Rs 45 lakh including the stamp duty.