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Major financial changes
April 3 , 2021
1207 days
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- Major financial changes for FY22 from April 1, 2021 are given below.
New Wage Rule
- As per the new compensation rules, the allowance component cannot exceed 50 percent of the total salary or compensation.
- This means that the basic salary has to be 50 percent.
- To comply with this rule, the employers will be required to increase the basic pay component of salaries.
- That will result in a proportional rise in gratuity payments and employees’ contribution to the provident fund.
New EPF tax rules
- Union Finance Minister Nirmala Sitharaman had announced during the 2021 Budget presentation that interest on employee contributions to the provident fund of over Rs 2.5 lakh per annum would be taxed, starting from April 1st.
- There would be tax exemption for PF up to Rs 2.5 lakh.
- The interest received from employee’s provident fund (EPF) is exempt from tax under the existing tax provisions.
- However, from April 1st the interest earned on the EPF contributions (only employee contribution) above Rs 2.5 lakh a year will now be taxable.
Public sector bank mergers
- The account holders of seven public sector banks will need to get their passbook and cheque book updated as they will become non-functional from April 1, 2021.
- The banks include Vijaya Bank, Dena Bank, Corporation Bank, Allahabad Bank, Andhra Bank, Oriental Bank of Commerce and United Bank of India.
- This is because these seven public sector banks are scheduled to merge with various other banks effective from April 1st.
- They banks being merged are,
- Dena Bank and Vijaya Bank have been merged with Bank of Baroda.
- Oriental Bank of Commerce and United Bank of India have been merged with Punjab National Bank (PNB).
- Corporation Bank and Andhra Bank have been merged with Union Bank of India and
- The Allahabad Bank has been merged with the Indian Bank.
Banks to cancel auto-debit facility
- Banks will be cancelling all auto-debit payments for DTH, mobile phone, broadband, electricity, water and other utilities bill starting from April 1st due to RBI's new guidelines.
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