This income tax rule will change from 1st April! Save your money, here is how

Income Tax Calculator: Finance Minister Nirmala Sitharaman announced in Budget 2021 that income tax rule for TDS (Tax Deducted at Source) will get changed from the new fiscal, which means from 1st April, 2021. As per her budget speech, if a person doesn't file income tax return (ITR), then in that case, the TDS interest rate on one's bank deposits would be charged double. That means, even if an earning individual doesn't fall in the income tax outgo slab, if he or she doesn't file ITR, then TDS rate will double on the earning individuals.

Elaborating upon the change in income tax rule on TDS and TCS for an earning individual who don't file ITR, SEBI registered tax and investment expert Jitendra Solanki said, "In order to discourage the practice of not filing income tax returns by the persons in whose case substantial amount of tax has been deducted or collected, the union budget proposal says that a person in whose case TDS/TCS of Rs 50,000 or more has been made for the past two years and who has not filed ITR, the rate of TDS/TCS shall be at the double of the specified rate or 5 per cent, whichever is higher. This provision shall not be applicable for the transactions where full amount of tax is required to be deducted e.g. salary income, payment to non-resident, lottery, etc."

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On whether the TDS interest rate would be applicable on the senior citizens who are more than 75 years, Pankaj Mathpal, Managing Director, Optima Money Managers said, "Budget 2021 allows non-filing of ITR for those super senior citizens who have a single income source of pension. If a 75 plus year old person has a source of income other than pension too, then in that case the super senior citizen will have to file ITR and avoid double TDS interest rate charge being levied on them."