The Tax Season of 2020 is going to be different than what you know

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No doubt that this pandemic has slowed down many vital processes. But, the government has clearly instructed that there would not be any extension in the financial year. But, there are certainly some changes in the tax system. The government has extended the date related to the Indian Stamp Act for certain amendments. These amendments shall be effective from July 1, 2020.

Economic Relief is a must in times of pandemic

COVID-19 has put a major setback to the global economy. People at all levels of society are facing adverse situations in one or the other way. This is why the government needs to bring about some changes in the taxation system. Some measures are taken by the government that could give relief to people are mentioned below:

Why will there be a change in the tax 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 taxation season of 2020 would be a bit different from what you know. Some of the changes are as follows:

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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 taxation 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.

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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 per cent instead of 12 per cent 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.

Self-employed people or people having a business

People who are self-employed or own a business pay taxes in four parts throughout the year. These payments are termed as estimated tax payments. The extended date for these payments is set to July 15, 2021. Its original date was April 15, 2021. The extension for due dates June 17, September 16, and January 15 (2021) are yet to be decided.