This financial year is about to end and the government has planned some major changes for the next financial year which will start from April 1, 2021.
Here is a list of changes that will come in place from April 1.
In the Union Budget 2021 announced by the Finance Minister, there has been a new tax limitation and for any contribution to PF over Rs. 2.5 lakh in a year, interest accrued on it will now draw tax implication.
EPF or employee provident fund has been started off a social benefit scheme towards which both the employee and employer contribute proportionately i.e. 12 percent of basic pay and dearness allowance. So, broadly what remains is the contribution of up to Rs. 2.5 lakh towards the EPF remains tax-exempt.
Therefore, primarily those making a larger contribution to the VPF account shall also be hit from April 1, 2021.
The Pre-filled Income Tax Return (ITR) forms are going to be available for taxpayers from April 1, 2021.
Linking the Aadhaar card, PAN card and bank accounts allowed the tax department to pre-fill the forms for individual taxpayers. The facility had further been extended to make certain the bulk of the details for example bank interest, salaries as well as tax deductions are automatically filled in the form which could be submitted when approved by the taxpayers.
During the Budget 2021 presentation, Union Finance Minister Nirmala Sitharaman had made certain announcements, including changes in ITR for senior citizens, LTC vouchers, changes in salary structure, among others.
In 2020, the Centre had declared relaxation in the Leave Travel concession (LTC) Scheme due to the COVID-19 outbreak. The relaxation allowed the central government employees to claim income tax benefits on expenses made between October 12, 2020 to March 31, 2021 on purchase of items that attract a GST rate of 12 per cent or more instead of travel expenses.
The new section 206AB and 206CCA is inserted in the Income Tax Act, 1961 by the Finance Bill, 2021. The said sections provide for a higher rate of TDS or TCS to be applied if the transactions are done with the non-filers of income-tax return. The said section has been inserted after Section 206AA and Section 206CC respectively of the Act which provides for higher rate of TDS/TCS for non-furnishing of Permanent Account Number (PAN).
Senior citizens who are above 75 years of age are not exempted from paying tax. However, they are exempted from filing income tax return (ITR) if they fulfill certain conditions. The exemption from filing income tax returns would be available only in the case where the interest income is earned in the same bank where the pension is deposited. As per the Budget, banks will deduct the income tax which the taxpayer has to pay and deposit to the government. For this, the condition is that the person should have only pension income and interest from fixed deposit should accrue in the same bank.
New rules of gratuity have been made in the new labor laws. Right now, employees are entitled to gratuity after 5 years of continuous work in the same company, but in the new law, employees will be entitled to gratuity even if they have been employed for just one year.
According to the new rules, the share of basic salary in your CTC should be 50 percent or more. If the basic salary is less than 50 percent in your salary details, then it is going to change soon. Your CTC may also increase along with your basic salary when the new rules are implemented.
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