With the budget getting implemented from the coming month. We have listed few things which gets implemented from this budget session and will impact your take home salary and your savings.
1. Bank Merger
Banks as Dena Bank, Vijaya Bank, Corporation Bank, Andhra Bank, Syndicate Bank, Oriental Bank of Commerce, United Bank of India and Allahabad Bank will have their account numbers merged. These mergers took place in last two years and will come in effect from 01 April 2021 passbooks and chequebooks from the merged banks will become invalid.
The Merger timeline
- Dena Bank and Vijaya Bank were merged with Bank of Baroda on April 1, 2019
- Oriental Bank of Commerce (OBC) and United Bank of India with Punjab National Bank came into effect from April 1, 2020
- Punjab National Bank and Bank of Baroda have already stated that the existing cheque books of OBC, United Bank of India, Vijaya Bank, and Dena Bank will be valid only till March 31, 202
- Syndicate Bank has been merged with Canara Bank, Andhra Bank and Corporation Bank merged with Union Bank of India, while Allahabad Bank has been merged with Indian Bank
2. Labour Laws updates in 2021
Take-home salaries, which is expected to reduce, owing to the fact that the government is eyeing increasing contributions towards provident fund (PF) and other post-retirement schemes
Basic Pay to be 50 Percent or more of CTC
The new wages code makes it compulsory for organizations to make sure that 50 percent of employees’ CTC is basic pay, while the remaining 50 per cent comprises other employee allowances, including house rent, overtime, etc.
Gratuity Cost of Companies to Increase
the maximum basic pay to 50 per cent of CTC, thus effectively increasing the Gratuity bonus to be paid to the employee.
While increasing the pension components in wages, these new laws likely to decrease the take-home salary.
15 Minutes Overtime Payment
If you worked for 15 minutes or more overtime this will be attracting overtime payment to the employees.
48 Hours Set Work Time for One Week
The government has also made it clear that 48 hours is the maximum limit for a one-week work capacity and the employers are to choose this work time and make it available in 4 , 5 or 6-day week structure.
3. Senior Citizens over 75 years will get exemption for ITR filing
Senior citizens who are above 75 years of age, are not exempted from paying tax. However, they are exempted from filing income tax return (ITR) if they fulfill these conditions. The exemption from filing income tax returns would be available only in case
- where the interest income is earned in the same bank where the pension is deposited.
- banks will deduct the income tax which the taxpayer has to pay and deposit to the government.
- the person should have only pension income and interest from fixed deposit should accrue in the same bank.
4. Mandatory air bags for both front passengers
In 2019 the introduction of key safety features for two- and four-wheelers was to add mandatory airbag for all passenger vehicles. A loophole in the regulations caused handful of Car Manufacturers to offer only a driver-side airbag as standard, with the passenger-side airbag offered as an option. However, now all cars on sale in India will need to have dual front airbags, regardless of the segment or price bracket they are in. No car will be registered after 31 August 2021, if they do not have dual airbags for front passengers.
A front passenger airbag being added will result in a Rs 5,000-8,000 increase in the starting prices of the vehicles. It certainly is a rise in price for buyers on a , but it’s important to highlight that a front passenger airbag could make all the difference in case of a road accident, protecting the front passenger from life-changing injuries or death and as per data around 29-32% reduction in death for passenger and co-passenger.
5. 45 years and above can get corona vaccination
Government to speed up Covid-19 vaccination drive for all above 45 years of age from April 1, and requested that all eligible people should “immediately register and get vaccinated”.
So far, only those above 45 who had certain co-morbidities were allowed to take the vaccine after producing a letter from a registered doctor.
The government has also approved expanding the dosage interval for Covishield from 28 days to 4-8 weeks in the light of scientific evidence that the latter produces enhanced immunity among the beneficiaries.
6. Post Office Savings Account: Changes from 1st April
For savings and current account, no charges shall be levied on withdrawing Rs 25,000 monthly. After this, every withdrawal shall attract a minimum of Rs 25 or 0.5 percent of the total amount withdrawn.
If you make a cash deposit up to Rs 10,000 in a month, then there will be no charge. But a deposit of over that amount shall attract a minimum of Rs 25 on every post office savings account deposit.
he number of transactions allowed for free are capped at 4. The rule is for mini statements, cash withdrawal and depositing cash.
in case of withdrawal of money for 4 times a month, no charges, after that 0.5% withdrawal charges to be paid on the amount withdrawal. Total of Rs 25,000 can only be withdrawn over a month from postoffice.
7. New rules on recurring payment from debit/credit cards
- For auto-payments from debit and credit cards or via wallets, an additional authentication will be required by the customer from April
- The new rule will be applicable for transactions performed using all types of cards – debit, credit, UPI and PPIs, including wallets
8. Twice TDS if no ITR Filing
Budget 2021 introduced a new provision — Section 206AB in Income Tax Act, providing for higher rate for tax deducted at source (TDS) for the non-filers of income tax return. Under the proposed TDS, rate in this section is higher of the followings rates: Twice the rate specified in the relevant provision of the Act; or twice the rate or rates in force; or the rate of 5%. Now you also need to pay 10% TDS on consultancy etc.
9. EPF: Only up to 2.5 L investment is tax free
if the employee’s contribution to his or her EPF and VPF exceeds Rs 2.5 lakh in a year, the interest above that amount will be taxable as per employee’s income tax slab. This only takes into account the employees’ contribution and not employer’s (or the total contribution). If your total provident fund contribution (both mandatory and voluntary) is more than Rs 2.5 lakh, then the interest earned on the excess amount will be taxable as per your slab now. This move is expected to specifically impact high-income salaried individuals.
Some interesting figures on EPF accounts.
- There are around 1.2 lakh HNI accounts
- 1 individual has more than Rs 103 cr in his account
- 2 individuals have more than Rs 86 cr each in their accounts
- The top 20 HNIs have around Rs 825 cr cumulatively in their accounts
- The top 200 HNIs have over Rs 2,000 Cr cumulatively in their accounts
- The average corpus for an HNI is Rs 5.92 cr, which amounts to average tax-free annual earnings of Rs 50 lakh
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