April 1 is the start of financial year – so Happy New Financial Year 2021-22 (Money 2021) to you. And what a coincidence that financial year starts on “April Fool’s Day”.
The start of financial year also brings a lot of changes in rules & regulations especially from personal finance & money perspective. It’s the date when new tax laws or any changes in the taxes are effective. In this post we list down the changes for FY 2021-22.
Changes in Income Tax for 2021
This year there has been relatively lesser changes in the income tax 2021 rules:
Tax Slab: There has been No change in the income tax slab rates
Interest of EPF to be taxed: The interest earned on EPF would be taxed in case the employee contribution is more than Rs 2.5 Lakhs in a year. This also included employee contribution in the form of VPF (Voluntary Provident Fund). Only interest earned on employee contribution (not employer) in excess of Rs 2.5 Lakh would be taxed.
Some Senior Citizens exempted from filing Income Tax Return: Senior citizens aged 75 years or more are exempted from filing income tax returns if their source of income is from pension and interest from fixed deposit in the same bank. If you have fixed deposit in other bank, this rule does not beneift you. Realistically this would benefit very few senior citizens.
Less trouble for past income tax returns: Income tax returns older than 3 years can’t be reopened in normal circumstances. This may give people some relief.
How to Pay 0 Income Tax on Salary of Rs 20+ Lakh (FY 2021-22)?
As you can see with the above income tax calculation, salary components and salary structure plays a very important role in how much income tax you pay. We have come up with some optimised salary structure using which you pay NO income tax even with CTC of more than Rs 20 Lakhs.
Changes in Investments & Money 2021
Get your New Cheque Book if your bank has merged: Last year 8 public sector banks merged with bigger banks. The merger is now complete. If you are customer of the bank which got acquired, you should get your new passbook, cheque book and other documents as the old documents are not valid from April 1, 2021. Following banks were impacted:
- Andhra Bank and Corporation Bank merged with Union Bank of India
- Oriental Bank of Commerce and United Bank merged with Punjab National Bank
- Syndicate Bank merged with Canara Bank
- Allahabad Bank with Indian Bank
- Dena bank and Vijaya bank merged with Bank of Baroda
Standing Instruction on Cards: RBI had changed the regulation on standing instructions which go in effect from April 1, 2021. You might have received messages from banks & credit card companies for the same. You need to re-initiate the transaction manually. This change has now been postponed to September 1, 2021 due to non preparedness of banks.
Dividend plans of Mutual funds to be renamed as “Income distribution cum capital withdrawal” plan. This reflects the true nature of the pay out from mutual funds and differentiate it from dividends of company shares.
Best Investment to Save Tax
Section 80C offers more than 10 investments where you can invest to save tax, However many a times you need not actually do this investment as its already covered due to expenses like children tuition fee or automatic EPF deduction for salaried. In case you are new to taxes and investment do read our helpful guide on How to take maximum advantage of Section 80C and choose the best investment to save tax.
We have come-up with our Income Tax Calculator for FY 2021-22 which would help you plan and save your taxes. You can also look at how you can pay 0 income tax on a salary of Rs 20+ Lakhs by just rejigging your salary structure.