With the beginning of the new financial year on 1 April, consumers will witness some significant changes in rules which are going to pinch their pockets and affect money matter to a large extent. From changes in banking rules due to merger of banks, income tax filing rule changes in terms of EPF investment, to, new salary structure from April 2021, TDS/TCS deduction, changes in Income Tax Returns rules for senior citizens, LTC cash voucher scheme, banks merger etc. are some of the glaring changes that are going to take place from 1 April 2021.
Some of these changes are in accordance with the announcements made by finance minister Nirmala Sitharaman in the Union Budget 2021.
Notably, 31 March is the deadline set by the union government to link PAN Card with the Aadhaar card, otherwise, PAN will become inoperative from 1 April. Taxpayers also have to fill the revised income tax return (ITR) by 31 March.
EPF investment rules
Starting from 1 April 2021, individuals investment in EPF account will come under the ambit of income tax. The government will tax the interest on annual employee contributions to EPF Rs 2.5 lakh and above will be taxable in a financial year. The proposal for it was made in the union budget.
The government, however, in the just-passed Finance Bill has raised the limit to Rs 5 lakh, subject to certain conditions. This increased tax-exempt limit is applicable to only those PF contributions where there is no employer contribution.
Income tax rules on TDS
The income tax rule for TDS (Tax Deducted at Source) will be changed from 1 April 2021, in accordance with a provision made in the budget. From 1 April, the government will charge TDS from those not filing ITR. In her budget speech, Finance Minister Nirmala Sitharaman said that if a person doesn’t file an income tax return (ITR), then, in that case, the TDS rate on bank deposits would double.
Change in LTC cash voucher scheme
With the aim to provide relief to employees, the union government notified that there will be a Leave Travel concession or LTC cash voucher scheme’s exemption as against a leave travel concession (LTC).
This scheme is available only till 31 March this year, that is, money must be spent by this date to avail of the scheme. Employees will have to ensure that the required bills are submitted to the employer on or before 31 March.
Public sector banks merger
If you are a customer of 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 — then your passbook and cheque book will become non-functional from 1 April 2021 as these banks have merged with other banks.
Salary structure from 1 April
Among all the changes, the biggest will be the change in employees’ working hours and their salary structure. The government is planning to increase the working hours to 12 hours from the current 9 hours. The changes are expected to come into effect from 1 April. It is likely to include the change in employees’ salary structure with an increase in the gratuity and provident fund and a decrease in take-home salary.
Income tax returns (ITR) for senior citizens
Senior citizens above 75 years of age will be exempted from filing income tax returns if they fulfil certain conditions. This facility can be availed by only those senior citizens who have no other income source except pension and interest income. The exemption from filing income tax returns would be available only in a case where the interest income is earned in the same bank where the pension is deposited.