A number of rules impacting your pockets are set to change from April 1. These changes will affect people in many ways from changes in your salary structure, EPF contribution, LTC vouchers to ITR filing. Since the government is planning to implement New Wage Code Bill 2021 from April 1, your salary may see a huge overhauling.
Some of the major tax-related announcements in Budget 2021 are also set to come into effect from April 1 onwards which means that from next month onwards several ITR filing rules, EPF contribution taxation rules will be applicable.
Here are all the rule changes coming into effect from April 1:
1. Salary structure: According to New Wage Code, if implemented on April 1, wages would be at least 50% of the total wages. Given that today most companies have their basic salary of around 35% to 45%, this would amount to a change for them. Your CTC may also increase along with your basic salary when the new rules are implemented.
2. Contribution to PF: Presently, 12 per cent of your basic salary now goes to PF. When the basic salary becomes 50 per cent of the CTC, the contribution to the PF will also increase. For example, for a person with a monthly CTC of Rs 40,000, Rs 20,000 will be the basic salary and Rs 2,400 will go to the PF account.
3. Gratuity rule: New rules of gratuity have been made in the new labor laws. Currently, employees are entitled to gratuity after 5 years of continuous work in the same company. However, under the new law, employees will be entitled to gratuity even if they have been employed for just one year.
4. LTC relaxation: The Centre had declared relaxation in the Leave Travel concession (LTC) Scheme due to the COVID-19 outbreak in 2020. 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 GST rate of 12 per cent or more instead of travel expenses. This relaxation will not be applicable from April 1.
5 EPFO contribution taxation: From April 1, 2021, interest on employee contributions to provident fund above Rs 2.5 lakh per annum will be taxable. This is in line with the announcement made by Finance Minister Nirmala Sitharaman in her budget speech. This means that from April 1 onwards, people contributing more than Rs 2.5 lakh per annum to PF account will have to pay tax on interest earned on the amount beyond the Rs 2.5 lakh limit.
6. ITR filing for senior citizens: senior citizens above the age of 75 years, who only have pension and interest as a source of income will be exempted from filing the income tax returns. 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 case where the interest income is earned in the same bank where the pension is deposited.
7. TDS at higher rate for non-filers: A new section 206AB will be inserted in the Income Tax Act as a special provision providing for a higher rate for TDS for the non-filers of an income tax return.
Additionally, individual taxpayers will be given pre-filled Income Tax Returns (ITR). The move is aimed at easing the filing of returns. The pre-filled ITRs will have an automatic upload of data on income and other vitals of a taxpayer.
Source: https://www.timesnownews.com/business-economy/personal-finance/article/gratuity-epf-contribution-income-tax-these-rules-will-impact-your-pocket-from-april/732249
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