From April 1, 2021, the Financial Year 2021-22 will begin. There are some big changes coming up next month that will have a significant impact on the financial circumstance. A spike in NPS fund manager's charges, banking regulations due to merge of some banks, adjustments in LPG cylinder rates, a new salary system, and so on are only a few of the significant changes that will be in effect from tomorrow. Here are the most important adjustments that will have a significant influence on your financial status.
The price of LPG cylinder is announced by the central government on the first of every month. Although international oil prices are expected to increase in the coming month, the price of LPG cooking gas may spike further on April 1, 2021.
New Wage Code
The new wage code regulations are scheduled to be announced in accordance with the Code on Wages 2019 on April 1, the first day of the fiscal year 2021-22. The Wage Code Bill was approved by the government in Parliament in 2019. An adjustment in salary structure and working hours for a significant number of employees is projected as a result of this. Employers will be required to pay at least 50% of an employee's CTC as basic pay under the new wage code, which will maximize contributions to other aspects such as provident fund and gratuity. Basic pay, house rent allowance (HRA), retirement benefits (PF, gratuity, and more), and tax allowances like LTC and so on all relate to an employee's CTC. As a result, most employees' take-home pay will be reduced, but retirement benefits are likely to be higher due to increased monthly contributions to the provident fund and gratuity.
Hike in NPS Fund Managers Charges
The Pension Fund Regulatory and Development Authority (PFRDA) has mandated pension fund managers (PFMs) to charge more for the next fiscal year 2021-22, which starts on April 1, 2021, in order to draw more foreign investment The pension regulator has permitted fund managers to charge higher than the current 0.01 percent because the PFRDA has abolished the 0.01 percent ceiling on AUM (Asset Under Management) charges, according to PFRDA. The overall limit has been set at 0.09 percent for AUM up to Rs 10,000 crore, according to the PFRDA. Charges of up to 0.06 percent will be allowed for PFMs with AUM of Rs 10,001 crore to Rs 50,000 crore. Charges of up to 0.05 percent will be required for those with AUM of Rs 50,001 crore to Rs 150,000 crore. Finally, PFMs with assets under management of more than Rs 150,000 crore will be permitted to charge a maximum fee of 0.03 percent.
Passbook and cheque book will be become non-functional
Your passbook and cheque book will become non-functional on April 1, 2021, if you have a bank account with any of these seven public sector banks: Dena Bank, Vijaya Bank, Corporation Bank, Andhra Bank, Oriental Bank of Commerce, United Bank of India, and Allahabad Bank. This will come as a part of the merging of these banks with other banks. As Dena Bank and Vijaya Bank is merged with Bank of Baroda, Oriental Bank of Commerce and United Bank of India with Punjab National Bank (PNB), Corporation Bank and Andhra Bank with Union Bank of India and Allahabad Bank merger with Indian Bank. Account holders of the other merged banks will be allowed to use their current cheque books and passbooks until March 31 (today). If a customer has an account with any of these seven banks, look for a new cheque book and IFSC code instantly. That being said, Syndicate Bank and Canara Bank's current cheque books and passbooks will be valid until June 30, 2021.
New tax rule on EPF
The government declared a limitation on tax deduction on PF contributions in Budget 2021. An annual contribution limit of Rs 2.5 lakh has been introduced. Strictly speaking, if an employee's statutory or voluntary contribution to the provident fund exceeds Rs 2.5 lakh a year, the interest received on that excess contribution is subject to taxation. The new law will take effect on April 1, 2021. The change is expected to affect individuals with high income and, as a result, high EPF contributions. And apart from high-income individuals, salaried employees who contribute more than the required 12 percent of basic pay in the Voluntary Provident Fund (VPF) will be affected.
Tax deducted at source (TDS)
In budget 2021, the finance minister proposed higher TDS (tax deducted at source) or TCS (tax collected at source) thresholds in order to enable more taxpayers to file income tax returns (ITR). The budget proposes adding new Sections 206AB and 206CCA to the Income Tax Act as a special allowance for the deduction of higher TDS and TCS thresholds for non-filers of an income tax return, respectively. Individuals who have not paid income tax returns yet have a TDS or TCS allowance of more than Rs 50,000 in the previous two years will be required to pay TDS or TCS at a rate of at least 5%.
LTC cash voucher scheme
In Budget 2021, the central government announced a tax deduction for cash allowance in favor of the Leave Travel Concession (LTC). Last year, the government proposed a scheme for people who were unable to receive their LTC tax advantage due to covid-related travel bans. This initiative is only valid until March 31, 2021, which means money must be spent by the stated date to avail the benefit.
Pre-filled ITR forms
Individual taxpayers will be issued pre-filled Income Tax Returns (ITR). Details of salary income, tax payments, TDS, and other records are now pre-filled with income tax returns to make compliance easier for the taxpayer. Specifics of capital gains from listed securities, dividend income, and interest from banks, post office, and other sources will be pre-filled to make filing returns much easier. The step is intended to make filing returns easier.
Senior citizens above the age of 75 are no longer required to file ITR
Individuals above the age of 75 are restricted from filing income tax returns, according to Finance Minister Nirmala Sitharaman, who announced the restriction while introducing Budget 2021. (ITR). Only senior citizens who have no other source of income and depend solely on their pension and interest from the bank that holds their pension account will be eligible for the provision.
New tax regime
On April 1, 2020, the new fiscal year will begin amid a nationwide lockdown. Despite the fact that the government has extended numerous tax-related deadlines, such as the filing of income tax returns for FY 2018-19, tax-saving for FY 2019-20, and linking of PAN with Aadhaar, some new tax-related rules will take effect on April 1. Last year, in Budget 2020, the government adopted the new tax regime. That being said, beginning on April 1, 2021, the practice of choosing one of the tax regimes for FY 2020-21 will be necessary. Taxpayers have a deadline until March 31, 2021 (today) to make tax-saving deductions, but they will be required to choose a tax regime while filing their tax returns for the fiscal year 2020-21. At the beginning of FY 2020-21, an individual can select the new tax regime and notify their employer. During the fiscal year, the employee is not allowed to change their preference. The adjustment, however, can be introduced when filing IT returns in July 2021. The deadline to pay tax for FY 2020-21 (AY 2021-22) is July 31, 2021. If an individual does not adopt the new tax regime at the outset of the fiscal year, the employer will subtract tax (TDS) in compliance with the current tax regime.