The new financial year 2020-2021 has kicked off after the closing of the financial year 2019-2020 on March 31. Earlier, the government had extended the deadline for filing income tax returns for 2018-2019 and linking PAN with Aadhaar by three months to June 30. With the beginning of the new financial year, some changes in income tax rules have come into effect from April 1, 2020. Here is all you need to know.
5 NEW INCOME TAX RULES THAT COME INTO EFFECT FROM TODAY:
1. As announced in Budget 2020, new tax slabs will come into effect from today. The old tax slabs will also remain in effect. It is for people to decide which regime they prefer to go with.
THE NEW TAX REGIME:
- 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 12.5 lakh and up to Rs 15 lakh
- 30% for income above Rs 15 lakh
2. Employer contribution exceeding Rs 1.5 lakh in a year under recognized provident funds like EPF or funds of exempted establishments is taxable. If an individual opts for the new tax regime, he can still claim an income tax deduction on employer contribution towards the employee's NPS account.
3. For those who are buying a house for the first time and the value is up to Rs 45 lakh, the date for availing tax benefits has been extended to March 31, 2021. Those who have taken loans to purchase houses up to Rs 45 lakh can claim an additional tax deduction of Rs 1.5 lakh on interest, in addition to the existing deduction of Rs 2 lakh.
4. From now on, dividends received by you from mutual funds and domestic companies will be taxable in your hands. Till the last financial year, the dividend was tax-free in the hands of the recipients, however, the mutual funds deducted a dividend distribution tax (DDT) at a rate of 11.2 percent for equity-oriented oriented funds and 29.12 percent for debt-oriented funds.
5. For the employees of startups, the new tax regime that comes into effect from today allows deferment of tax payment on shares allotted to them under the Employee Stock Ownership Plan (ESOPs). The new regime has deferred the tax payment from the exercise date to 48 months after exercise, cessation of employment of sale of shares, whichever is earliest.