The New Financial Rule is going to affect your life in new fiscal year starting from 1st April 2021. This will change many things related to jobs, pension, banking transaction and your other daily financial working. These rules will implement across the country from 1st April. The impact of these news changes will apply to almost all section of people. Here are the top 10 New Financial Rule summary for you to understand the basic impact on your daily life.
Summary of top 10 New Financial Rule implemented by government
1. There will be an additional tax on interest received on PF deposit
The additional tax was announced on the interest received from the Employees Provident Fund (EPF) in the General Budget 2021-22. Now deposit upto 2.5 lakh PF in a financial year will be tax free. But If you invest more than that, you will have to pay tax on the interest earned on additional amount beyond 2.5 lakh.
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2. New salary structure enforced from 1st April 2021 for all employees in India
The government has described the new wage code from 1st April. This will be applicable to all employees working in government and private sector in the country. The new salary structure will be enforced for all employees and they will receive new salary based on new structure. As per new structure 50% of Cost to Company (CTC) has to be be part of base salary component. It means your 50% of take home salary will be contain basic salary components described by the government of India.
3. Pre filled Tax Return Form will be available for the individual tax payers: New Financial Rule
Government has provisioned the Pre filled Tax Return Form available for the individual tax payers. It will be available for all tax payers from 1st April 2021. As per government sources, it will ease down the complex tax calculation and tax liability for individual tax payers in the country. This will also encourage more people to file their income tax due to this easy form availability for each tax payer.
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4. No Tax Return for senior citizens above 75 years of their age: New Financial Rule
The government has also ease down the tax return filing for the senior citizens beyond 75 years of their age. This will be applicable to all senior citizens dependent on their livelihood from the interest earn on fix deposits (FDs). But this relaxation is not applicable for the senior citizens having other source of income like rental, stock market or other business sources etc. But this is a big relief to a large section of senior citizens living their life on FDs interest.
5. TDS liability will become double if you will not file returns on time: New Financial Rule
Government has made a life little difficult to TDS defaulters and people who file later turns for their TDS liability. The government has made changes to section 206AB of the Income Tax Act. Under this, if you do not file ITR on time then you will have to pay double TDS from April 1, 2021. It will help small business owners to become more disciplined to file their returns on time. As per new rule, TDS and TCL rates will revised to 10-20% which was earlier 5-10%.
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6. Income Tax liability will become more transparent for individual tax payers
Now government has made Aadhar and Pan card link to your account mandatory. Now you will not be able to hide your income liability any more. Earlier this was only linked to salary and provident funds to track tax liability. Due to this people had an option to hide earning from mutual fund, stock market and other sources. But new rule will link everything and make system transparent to calculate your tax liability. It means you will pay more tax.
7. Delay return filing fee will be applicable for filing return after 1st April 2021: New Financial Rule
Although government has revised the income tax return filling date for FY 2019-2020 due to corona pandemic. But government has implemented the late fee (penalty) for filing income tax return beyond 1st April 20201. The government has revised the late fee rule under the Finance Bill 2021. This will help many individual business owners and individual to file their delayed income tax. But additional late fee will make them unhappy for sure.
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8. Many bank passbook and cheque book will become redundant from 1st April: New Financial Rule
Many passbook and cheque books become useless from 1st April 2021 due to merger of banks. If you have a bank account with Dena Bank, Vijaya Bank, Corporation Bank, Andhra Bank, Oriental Bank of Commerce, United Bank of India and Allahabad Bank, then your passbook and check book will become use less from 1st April 2021. This change is happening due to the merger of these seven public sector banks into various other banks. Although it will not impact your banking transaction and your entire financial details will shift to new bank.
9. Pension fund managers will charge more on thr name of fund management
Now government has allowed pension fund managers to charge more money from people investing in pension funds. The Pension Fund Regulatory and Development Authority (PFRDA) has allowed the Pension Fund Manager (PFM) to charge higher fees from its customers from 1 April 2021. Government believe this will attract more foreign investment in this segment. But this certainly not good for individual investors hoping higher pension.
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10. New safety rule for car owner and car manufacturer: New Financial Rule
Now government has mandatory to have 2 airbags in each car for driver and passanger next to driving seat. As per new safety standard all car manufacturer has to provision dual airbag in all variants of cars way forward. This is good for the passengers safety. But this will increase the cost of base level cars for 1st time car owners or people looking for a smaller family car.
The summary of these 10 new rules indicate that government has assured their higher income from addition tax and penalty etc. But government and its police has absolutely no clarity for economical refund and new job creation in the country.
