The Buyt Desk
The new financial year which begins from 1st April 2021, will change many things for your wallet. Your salary structure, contribution to Provident Fund, gratuity rule and your income tax liability will be governed by new rules. Let us look at what will be changing for you from 1st April 2021-
1. Salary Structure
According to reports, the New Wage Code Bill 2021 will come into effect from April 1, and this will change your salary structure. As per the new wage code, the basic salary will have to be 50 % of the total CTC. If your basic salary is less than 50% in the current structure then obviously it is going to change soon. Allowances to employees, like house rent, leave travel, conveyance allowance & overtime will have to be capped to the remaining 50% per cent of CTC.
2. Contribution to PF will increase
Especially for those employees whose basic salary was less than the CTC. When their basic will brought up to make it 50% of the CTC then obviously their PF contribution will increase too. Presently, 12% of your basic salary goes to PF. When the basic salary becomes 50% of the CTC, the contribution to the PF will also increase.
3. EPFO contribution
From April 1, 2021, interest received on employee contribution to provident fund above Rs 2.5 lakh per annum will be taxable. This is in line with the announcement made by the Union Finance Minister in her budget speech
4. Change in Gratuity
New rules of gratuity will be implemented as well. Right now, employees are entitled to gratuity after 5 years of continuous work in the same company, but in the new labour law, employees will be entitled to gratuity even if they have been employed for just one year.
5. LTC rules will ease
The Centre had declared relaxation in the Leave Travel Concession (LTC) Scheme. Due to the COVID-19 outbreak, people didn’t travel and their leave travel concession was not utilised. The government introduced a leave travel cash voucher scheme in which instead of availing the concession the employee could purchase items with GST of 12% and claim income tax benefit.
6.No Income Tax return for senior citizens
Senior citizens above the age of 75 years are exempted from filing an income tax return if their source of income is the pension and interest income. Bank will deduct the income tax and deposit to the government.
7. Higher TDS and TCS
The non-filers of income tax will have to pay higher TDS as per the new section 206AB and 206CCA of the Income Tax Act.
8. Pre-filled Return forms
Pre-filled return forms will have more information than earlier. Till now pre-filled forms had the details regarding your income, tax payment and TDS details. But now the pre-filled forms will have the information related to capital gains, dividend income and interest from bank and post office deposit.
