The Buyt Desk
1st April 2021 will mark the beginning of the new financial year 2021-22. The new financial year will come with new rules. There will be changes in the way you are taxed. Here is a list of new things that will come into effect from 1st April-
1.A higher TDS
With the introduction of two new sections, 206AB and 206CCA in the Income Tax Act, the non-filers of income tax will end up paying a higher rate of TDS or TCS. If a person’s TDS or TCS liability is more than Rs 50,000 and he/she has to furnish their income tax return of the previous two years. If they can’t furnish the previous year’s return then they will have to pay higher TDS.
2. New Wage Code
From 1st April the new wage code will be implemented. This code mandates that the basic pay of an employee can’t be less than 50% of his/her salary package. This will be beneficial for people who receive a PF contribution from the employer on their basic pay. With smaller basic pay companies ended up paying less but now no matter what the basic pay will be 50% of the CTC. People will see an increased contribution towards PF and gratuity will increase.
3. Provident Fund Exemption limit
It was announced by FM Nirmala Sitharaman that if an employee contributes more than Rs 2.5 lakh in a year in his/her provident fund(PF) then the interest received on the incremental amount will be taxed. But when the Finance Bill 2021 was presented the limit of Rs 2.5 lakh was raised to Rs 5 lakh. The interest earned by employees on contributions beyond Rs 5 lakh will be taxed from 1st April. The government estimates that with the increased limit very few people will be impacted negatively. As far as the calculation goes someone earning more than an annual basic of Rs 41.66 lakh annually will be in a position to contribute more than Rs 5 lakh.
4.Exemption from filing ITR
From 1 April 2021, senior citizens above 75 years of age will not have to file ITR. Such people are now exempted from filing ITR. However, this exemption is for those senior citizens who are dependent on pension or interest from fixed deposits (FD) only. Another condition is that the senior citizen must be receiving the pension and should hold a fixed deposit in one and the same bank.
5. Linking PAN-Aadhaar
The government has given time till March 31, 2021 to link PAN with Aadhaar. Earlier, its last date was 30 June 2020, which was later extended to 31 March. If the PAN card is not linked to Aadhaar, the PAN card of the user will become invalid from the new financial year i.e 1st April 2021.
