Why will there be a change in the taxation system?
This is no hidden fact that the global economic conditions are not so good. The sole reason behind this huge loss to the economy is lockdown due to COVID-19. The entire lockdown of the country is a major setback for its growth. The country is trying its best to fight against this pandemic and make things stable. But, the government needs to look at the economy as well. This is why there are several changes made in the taxation system. Hence, the tax season of 2020 would be a bit different from what you know. Some of the changes are as follows:
Good news- last date for IT savings gets extended
You need not worry if you were not able to make income tax saving for the financial year 2019-20. Everyone is thriving the worse effects of the pandemic. But, you have a piece of good news, a tax benefit under Section 80C May. The government has allowed taxpayers to invest in PPF, NSC, ELSS, or any other tax-saving scheme by June 30, 2020. Apart from this, you are eligible to claim tax benefits for the financial year 2019-20. You can benefit from this scheme even if your investment is done between April 1, 2020, and June 30, 2020. People who have already made the tax-saving investment can invest till June 30 or later to avail tax benefits for 2020-21.
Get set for enforcement of a new tax regime
For the financial year 2020-21, the income taxpayers have the facility to pay lower income rates or ongoing rates. The ones who pay lower rates have to follow a new tax regime. The new income slabs and their tax rates are as follows. People with an annual income of Rs 2.5 lakh do not need to pay taxes. People with an annual income of 2,50,001 to Rs 5 lakh have to pay a 5% tax. 10% tax is put on an annual income of 5,00,001 to Rs 7.5 lakh. 15% tax for 7,50,001 to Rs 10 lakh. 20% tax for 10,00,001 to Rs 12.5 lakh . 25% tax for 12,50,001 to Rs 15 lakh. 30% tax for people with annual income of 15 lakh or above. Investments in PPF, ELSS, etc, and expenses such as home loan repayments, tuition fees are some deductions available under the income tax act.
The sigh of relief- reduction in interest rates
You can take a sigh of relief if you have delayed payments of advanced tax, self-assessment tax, regular tax, TDS, TCS. The government has reduced interest rates at 9 percent instead of 12 percent per annum. This is for the payments made between March 20, 2020, and June 30, 2020.
Benefits for first-time buyers of home loan
The government has extended the tax benefit available on the home loan repayment. Under certain conditions, the borrower can avail of a deduction of 1.5 lakh on home loan repayment. The home loan should be sanctioned between April 1, 2019 to March 31, 2021. An important point is that the home value as per the stamp duty should be within Rs 45 lakh.