New Rules April 1 2021: The way you save, invest, insure and spend tax will witness some important adjustments from the next monetary year 2021-22. Some of the new guidelines in taxation and the re-structuring of the salary structure of personnel will effect your take-property spend from April 1, 2021 . At the exact same time, new typical insurance coverage goods will assist you in producing a much better purchasing selection. Overall, the guidelines and regulations are right here to remain and one will have to make them work to one’s benefit.
Here are some important adjustments in salary, tax and insurance coverage that will develop into effective from April 1, 2021.
New PF rule soon after amendment
In her price range 2021 announcements, the FM had proposed that the interest earned on an employee’s contribution above Rs 2.5 lakh in a year will develop into taxable in the hands of the employee. As of today, the whole PF contribution earns a tax-cost-free return and the PF quantity enjoys EEE status.
But, from April 1, 2021, the taxation of PF contributions will see a modify. The interest earned on contribution above Rs 2.5 lakh per annum will be taxable as per one’s tax slab equivalent to how interest revenue from bank fixed deposit is taxed.
However, there has been a current amendment to this rule. “The government has announced that they are extending the permissible limit for employee EPF interest earning from 2.5 lakh to 5 lakh (in the case where employer contribution to EPF is not happening). Beyond Rs 5 lakhs of interest earnings, employees will get taxed,” says Prashant Singh, Vice President & Business Head – CPO, TeamLease Services.
If your month-to-month Basic Salary is practically Rs 1.75 lakh ( just the simple salary and not your total month-to-month revenue), your month-to-month contribution is practically Rs 20833, which is Rs 2.5 lakh in a year. Nothing adjustments for you and interest earned on the whole PF balance stay tax-exempt. The new PF contribution guidelines will not effect an employee whose month-to-month contribution is under Rs 20,833. However, if your Basic Salary is above Rs 1.75 lakh, there’s no escaping tax on interest earned.
New Wage Code
The new Labour Codes may perhaps bring a sea-modify in the salary structure of the personnel. “To comply with this new definition of wages under the Code of Wages 2019, the employers will have to restructure the basic wages component of employees from top to bottom, expected to be implemented from April 1, 2021,” says Prashant Singh, Vice President & Business Head – CPO, TeamLease Services.
Currently, the ratio in between simple salary and other elements of the salary like allowances is not a fixed quantity. Going forward, there will be a typical ratio across personnel to be maintained by the employers. “The major concern is the wages ( basic wages) should be more than 51% of the gross wages. Therefore, the employer has to fix at least 51% as basic wages + DA & the rest components of the allowances can be fixed not more than 49% as enumerated in the exclusion clause of wages definition,” adds Singh.
Will this effect employee’s take-property spend? “Employee take-home salary will get reduced towards social security kitty as well as post-retirement gratuity, the scheme will prove beneficial to employees in the long run. However, while the new wage code is set for an April rollout, clarity is yet to emerge on many provisions,” informs Singh.
Exemption from filing ITR
Interest revenue received from SCSS, bank fixed deposit and so on is taxed as per one’s revenue slab beneath the head ‘income from other sources. And, pension from the ex-employer is taxed under the income tax head of Salary while family pension is taxed as ‘income from other sources’. The senior citizens who are above 75 years of age and have only pension and interest revenue need to have not file Income Tax Return (ITR).
Standard private accident insurance coverage policy
With the objective of possessing a typical solution with prevalent coverage and policy wordings across the market, the IRDAI has decided to mandate all common and well being insurers to supply a typical private accident insurance coverage solution. The solution will have a simple mandatory coverage even though insurers will be permitted to add any optional covers as nicely. The pricing in terms of premium is, consequently, left for the insurers to arrive at. General and Health Insurers will have to supply Standard private accident insurance coverage policy from April 1, 2021.
Standard Pension policy
Buying a pension or an annuity program will develop into considerably simpler now. IRDAI has asked all life insurance coverage organizations to supply Standard Individual Immediate Annuity Product, ‘Saral Pension’ with impact from from April 1, 2021. The regulator has released the recommendations on Standard Individual Immediate Annuity Product, ‘Saral Pension’ by defining the rewards, functions, terms and situations and annuity selections.
Anyone in between 40 and 80 years can invest in Saral Pension which will be a Single Premium program i.e. one will have to invest a lump sum quantity to get standard pension on Monthly, Quarterly, Half-Yearly or Yearly basis. The minimum quantity of pension will be Rs. 1000 per Month, Rs. 3000 per Quarter, Rs. 6000 Per half-year and Rs. 12000 per annum. The quantity invested is named Purchase Price in annuity plans.
Standard Vector-Borne Disease Health Policy
In order to make readily available Vector-Borne Disease-distinct well being insurance coverage solution addressing the requires of insuring public for having well being insurance coverage coverage to specified Vector-Borne Diseases, all common and well being insurers have been asked by IRDAI to supply Standard Vector-Borne Disease Health Policy covering Dengue fever, Malaria, Chikungunya and so on. from April 1, 2021.
Higher TDS for non-filers of ITR
If you have not been filing ITR, be prepared to be taxed at a larger price on specific revenue like interest revenue that you earn for the duration of the year. “The Finance Minister in Budget 2021 has introduced a special provision of TDS in the income tax act. This section imposed a higher TDS rate on the individuals who have not filed income tax returns, but their income is liable for TDS deduction of more than Rs. 50,000 in the last two preceding previous years. The rate of TDS shall be higher of – Twice at the rates specified in the relevant provisions of the income tax act or at the rate of five per cent. This rule of TDS shall be applicable with effect from 1st July 2021,” says Archit Gupta, Founder and CEO, ClearTax.