Salary structure, DA, gratuity, EPF contribution, Income Tax, LTC scheme – These rules affecting your pocket set to change from April 1
There are number of rules affecting common man are all set to change from April 1. These changes will affect the people in many ways—right from your salary structure, EPF contribution, LTC vouchers, grtuity to ITR filing — most of these rules will change starting April 1.
There are number of rules affecting common man are all set to change from April 1. These changes will affect the people in many ways—right from your salary structure, EPF contribution, LTC vouchers to ITR filing — most of these rules will change starting April 1.
As the government plan to implement New Wage Code Bill 2021 from April 1, you salary may see huge overhauling, while as per the announcement made by Union Finance Minister Nirmala Sitharaman EPFO contribution and income tax filing rules will also change beginning next month. Lets look at these rules
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1. Changes in salary structure
According to New Wage Code, if implemented, the share of basic salary in your CTC should be 50 percent or more. If the basic salary is less than 50 percent in your salary details, then it is going to change soon. Your CTC may also increase along with your basic salary when the new rules are implemented. Allowances to employees, like leave travel, house rent, overtime and conveyance, will have to be capped to the remaining 50 per cent of CTC
2 Contribution to PF will increase
Presently, 12 per cent of your basic salary now goes to PF. When the basic salary becomes 50 per cent of the CTC, the contribution to the PF will also increase. For example, for a person with a monthly CTC of Rs 20,000, Rs 10,000 will be the basic salary and Rs 1,200 will go to the PF account.
5. Change in Gratuity rule
New rules of gratuity have been made in the new labor laws. Right now, employees are entitled to gratuity after 5 years of continuous work in the same company, but in the new law, employees will be entitled to gratuity even if they have been employed for just one year.
4. Ease in LTC rules
The Centre had declared relaxation in the Leave Travel concession (LTC) Scheme due to the COVID-19 outbreak in 2020. The relaxation allowed the central government employees to claim income tax benefits on expenses made between October 12, 2020 to March 31, 2021 on purchase of items that attract GST rate of 12 per cent or more instead of travel expenses.
5 DA Hike
Some media reports claimed that the Centre would announce a hike of 4 per cent in DA. Speculations are rife that the Centre would also make an announcement regarding DA restoration while announcing the DA hike due since January 2021. If the Centre decides so, then the existing 17% DA of a central government employee will jump to 25 per cent (17 + 4 + 4).
6 EPFO contribution
From April 1, 2021, interest on employee contributions to provident fund above Rs 2.5 lakh per annum will be taxable. This is in line with the announcement made by the Union Finanace Minister in her budget speech
7 Income Tax rule for senior citizens
Persons whose age is above 75 years and who has pension income and interest from fixed deposit comes in the same bank and who has only interest income, they need not file income tax return. Bank will deduct the income tax which he has to pay and deposit to the government. This was also annouced by Nirmala Sithaaman in her speech
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