What are the Important Rules for Income Tax and IT Returns?

As the new financial year has started, it is important that salaried employees and “taxpayers” fulfil the critical financial tasks on time. We provide you here with a checklist of the key functions to help you make all essential tax-saving investments.

Make a note of these financial obligations & tasks for the new financial year to avoid penalties. The approaching due date is a reminder for all to fulfill tax-saving expenses and investments.

10 Income Tax Rules in Financial

1. PAN-Aadhar Linking
2. Filing Revised ITR
3. Submission of LTC Cash Voucher Scheme Bill
4. Submitting Salary Details from Previous Employer
5. Contribution to NPS/PPF Accounts
6. Booking Long-Term Capital Gains & Losses
7. Pay TDS or TCS for Deduction More Than ₹50,000
8. Pre-Filled ITR Forms to Ease Filing Process
9. Penalty Up to ₹10,000 for Not Filing ITR
10. New PF Tax Rule

PAN-Aadhar Linking

To avoid the possibility of your PAN becoming inoperative, link PAN with Aadhar without any delay. In case this does not happen, it would be considered that your PAN hasn’t been furnished, and you may have to submit a penalty as well.

The notification has been issued by CBDT (central board of direct taxes), and failure to link the two would make it difficult to conduct any financial transactions.

Filing Revised ITR

Filing revised income tax returns is done in case of any error made in previously filed ITRs. Delays in filing revised ITR is called belated or late returns. It is important that you do this quickly.

Otherwise, the penalty fine for late returns is ₹ 10,000. For those with an annual income of up to five lakhs, the belated returns fine would be ₹1000.

Submission of LTC Cash Voucher Scheme Bill

LTC or leave travel concession cash voucher is to be submitted by government employees for availing the tax benefits available under the scheme.

Announced in the year 2020, the system requires that you fill the form in its correct format and attach to it self-attested copies of invoices, bills, and vouchers.

Submitting Salary Details from Previous Employer

This applies to people who have been holding more than one job in the same fiscal year. It is mandatory for an employee to submit the last employer’s salary details to the current one to make appropriate tax deductions.

Also check, Revised Salary Structure in India – All You Need to Know

Contribution to NPS/PPF Accounts

NPS (national pension scheme) and PPF (public provident fund) accounts require a minimum annual contribution of ₹500 for preventing it from becoming dormant.

The investment amount is necessary to keep the account active and going so that you can avail of benefits like obtaining loans and partial amount withdrawals. Ensure that before any further delay, you deposit this amount.

Booking Long-Term Capital Gains & Losses

Long-term capital gains are an essential tax-saving option for investments made at the end of the financial year. If your long-term capital gain is less than 1 lakh, you can save taxes by booking it.

Long term capital gains on equity schemes and shares are completely exempt for up to ₹1 lakh. The rest of the balance is then taxed at ten percent.

Similarly, you should book your long-term capital loss and short-term capital loss and save 10 to 15 percent tax.

Pay TDS or TCS for Deduction More Than ₹50,000

In case the TDS or TCS deduction exceeded ₹50,000 in the last two years, you will have to pay the TDS or TCS amount (5 percent minimum).

Pre-Filled ITR Forms to Ease Filing Process

Pre-filled ITR forms will include details like your salary income, TDS, capital gains, dividend income and more. This will help in easing the ITR filing process for every taxpayer.

Suggested Read: Best Software for Filing Income Tax Return | TaxBuddy vs ClearTax: Detailed Comparison of Income Tax Software

Penalty Up to ₹10,000 for Not Filing ITR

This new change was introduced only recently. The new rule states that those who fail to submit their income tax returns would be paying double the TDS rate on their bank deposits. Even those who are not covered by the income tax slab are not immune from this new changed rule.

You can file belated IT returns until 31st March 2022. However, you can be taxed to the maximum amount of ₹10,000.

New PF Tax Rule Is Applicable Now

If you contribute 2.5 lakhs annually in the provident fund scheme, the interest amount would be taxable as per the financial budget 2021. 

Conclusion

Enlisted above were the key financial tasks and obligations that need to be completed before the end of the current financial year. While some of these are mandatory, the rest of them are based on specific investments and job profiles you may have. Select the one most appropriate to you and fulfill your financial responsibilities diligently.