Form 16 has been postponed to July 15, although the deadline for self-assessment tax over Rs 1 lakh is still July 31.

Form 16 has been postponed to July 15, although the deadline for self-assessment tax over Rs 1 lakh is still July 31.

The government has delayed numerous income tax deadlines as a result of the second wave of the coronavirus, including those for filing income tax returns for FY 2020-21, issuing Form 16, and others. However, for those whose tax liability after deduction of TDS and advance tax exceeds Rs 1 lakh, the deadline for filing self-assessment tax for FY20-21 has not been extended. If a self-assessment tax of more than Rs 1 lakh is not paid by July 31, such individuals may face a penalty.

RSM India’s Founder, Dr Suresh Surana, adds, “Additionally, an extension has been granted to employees for the issuance of TDS certificates in Form 16 following the extension of the due date for filing TDS returns. The issuance of TDS certificates in non-salary instances does not currently have a corresponding extension. As a result, by June 15, 2021, banks must submit Form 16A (TDS certificate for tax deducted on interest).”

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According to a government press release issued on May 20, 2021, if an individual taxpayer’s tax dues for FY 2020-21 exceed Rs 1 lakh after deducting TDS and advance tax dues, the payment must be made on or before July 31, 2021. From August 1, 2021, until the date of filing of the ITR, criminal interest will be charged at a rate of 1% per month under section 234A of the Income-tax Act, 1961.

This is comparable to the government’s action last year, which only benefited small and medium-sized taxpayers.

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Even though the ITR filing date for people whose accounts are not required to be audited has been extended to September 30, 2021, if an individual’s tax liability for FY 2020-21 exceeds Rs1 lakh, they must pay the amount before July 31, 2021 to avoid paying penal interest.

“It has been clarified that interest under section 234A of the Act shall continue to be levied where the tax payable (after TDS/TCS, advance tax, relief under section 89, 90/ 90A/ 91, MAT credit) is more than Rs. 1 lakh,” says New Delhi-based practising chartered accountant Sachin Vasudeva.

ITR or Income Tax Return Filing Deadline for FY21 (AY 2021-22) Extended.

Deloitte India Partner Saraswathi Kasturirangan believes “The extension of the deadline for filing tax returns is a good thing. However, when the self-assessment tax owed on the return is more than Rs 1 lakh, this does not afford relief from the interest that is charged for filing the return after the initial due date.”

How to calculate self-assessment tax?

To figure out how much self-assessment tax you owe for FY 2020-21, follow these steps:

  • Step 1: Determine your entire income for the fiscal year 2020-21. This comprises wages, capital gains, rental income, interest income, dividend income, and other sources of income.

  • Step 2: To calculate your net taxable income, subtract your total income from your tax exemptions and deductions. House rent allowance, tax-saving investments under section 80C (ELSS, PPF, etc.), premium paid on your health insurance policy, and so on are examples of tax exemptions and deductions.

  • Step 3: Determine the amount of tax you owe on your net taxable income. You may determine your income tax liability using ET Wealth’s online calculator.

  • Step 4: Subtract the amount of taxes paid as TDS from your salary, interest income, and other sources from your total tax liability. Deduct the advance tax (if any) that you paid in the fiscal year 2020-21. These facts will be reflected on your Form 26AS. The deadline for filing TDS/TCS returns has been extended by the government to July 31.

When you reduce the TDS and advance tax from your overall tax liability, you’ll get the amount of self-assessment tax you’ll have to pay before filing your ITR.

Tax Avoidance or Tax Planning or Tax Evasion or Tax Management – Understanding the terminologies!

Tax avoidance is one of the most common methods used by taxpayers, as they attempt to exploit loopholes in the tax law, which may exist in the form of a lack of proper jurisdiction to hear cases, a lack of proper stringent and vigil mechanisms for its implementation, or liberal penal provisions, or any other such loopholes, and this is noticed by taxpayers, and they tried to utilise such gaps, and therefore use legitimate mechanisms to reduce their own tax liability required to be paid.

For e.g: Using tax deductions to reduce business expenses and the resulting tax bill/ Protecting revenue from tax liability by establishing a proper employee retirement plan/ When a person transfers income from an asset without actually transferring the asset, the income is included in the transferor’s income.

As a result, while it is legal, it is also illegal, which is why it is also known as loopholes tax planning.

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Tax planning is the most commonly used method by taxpayers, in which individuals or businesses attempt to maximise the benefit of legal provisions in the form of deductions, exemptions, or any other mechanism found in the Income Tax Act of 1961, in order to reduce their respective tax liability, and this method of lowering tax liability is 100% safe.

Using various deductions authorised under Section 80 of the 1961 Act/ Investing in Special Economic Zones/ Investing in fixed deposits, mutual funds, provident funds, or any other funds where a tax exemption or rebate is provided or supplied either spontaneously or over time.

tax avoidance

Tax avoidance is defined as a totally criminal or illegal way of avoiding one’s tax duty in which all taxpayers, whether individuals, businesses, or corporations, have the primary goal of displaying less profit through different criminal tactics in order to reduce their tax responsibility, or they may also show higher expenditure in order to qualify for specific exemptions and so on

For example, showing false and fabricated books of accounts and financial statements/ inflation deductions without sufficient evidence/ claiming more and more expenditure/ illegally transferring assets/ hiding legal documents showing real income earned or generated and then claiming exemptions by showing less income/ transferring black money to foreign bank accounts such as Swiss accounts

Summary of CGST (Fourth Amendment) Rules, 2021

Tax management is essentially finance management for the express purpose of paying tax, and is thus a considerably broader word than tax planning, as the former’s main goal is to comply with the relevant income tax laws and other allied standards.

For example, avoiding prosecution or penalties by filing an income tax return on time, etc.

Are you aware of these Top 5 EPFO Provident Fund account benefits?

Employees’ Provident Fund Organisation (EPFO) offers a variety of benefits to its members. Free insurance and pension coverage are among the Provident Fund’s perks. In general, an employee’s Provident Fund (PF) account is viewed as a retirement-oriented investment option, and it is required of any employee who meets the Rs 15000 monthly PF contribution threshold. Section 80C of the Income Tax Act exempts an employee’s PF contribution up to Rs 1.5 lakh in a single financial year from income tax.

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Employees should be informed of the following five primary points:-

1. Free insurance:

Under the EDLI, a Provident Fund Account holder is automatically liable for free insurance up to Rs 7 lakh in the event of death while serving (Employees Deposit Linked Insurance Scheme). The death cover for PF account holders was previously Rs 6 lakh, but it has now been increased to Rs 7 lakh. Most notably, the PF account holder would not have to pay any insurance premiums for the EDLI death cover.

2. Pension provision:

After 58 years, a PF account holder is still liable for a pension. To be eligible for a pension, however, a minimum of 15 years of daily monthly PF contributions must be made in one’s PF account. The pension gain comes from the employer’s contribution, which goes to the EPS account of the PF account holder for 8.33 percent of its contribution (out of a total of 12 percent).

pf

3. Loan against PF:

In the event of a financial emergency, a PF account holder may borrow against his or her PF balance, with an interest rate of only 1%. The loan will be for a limited time and must be repaid within 36 months of the date of disbursement.

4.Emergency partial withdrawal:

EPFO provides for partial withdrawal in the event of a medical or financial emergency, subject to certain terms and conditions.

How to navigate tax changes to protect your long-term money goals

5. Home loan and hole loan repayment:

An individual’s PF account may be used to repay a home loan. According to EPFO law, they can withdraw up to 90% of their PF balance for the purchase or construction of a house. They can also use their PF balance to purchase properties.