The Financial Year 2020-21 will close on 31 March 2021. Like all new financial years, the new FY 2021-22 will have new tweaks & changes to your personal finance. The top Changes in Personal Finance from 1 April 2021 will be:

Changes in Personal Finance from 1 April 2021

1 . EPF deduction above Rs 2.5 Lakhs will attract taxation. The interest earned on an amount over Rs 2.5 Lakhs will be added to the income. This involves the mandatory deduction of 12.5% and voluntary provident fund (VPF) deduction.

Should you discontinue EPF and shift to NPS?

The answer is NO. EPF still earns 8.5% interest and this is also tax-free. A part of your retirement goals can be met using the EPF deduction. So stay put. Maintain deduction to 2.5 Lakhs only. The rest amount can go to NPS or PPF.

2. If you or any member is 75 years old, you will not be required to file Income Tax Returns. This is only applicable if:

• You should have pension & interest income & this income should accrue in one bank only. If you have interest or income in any other bank this change will not help you.

3. Pre-Filled Returns – this is the year the income tax department will provide you returns where many figures related to Income & Tax deductions will be prefilled.

Income will include Income from salary/pension, dividends, gains from shares & securities. It will also include Interest income from the bank & post office. On the deduction side, TDS & TCS will also be shown.

Earlier Pre-filed ITR form was available for salaried employees where Income was reflected on basis of Form 16, but now the scope has become wide.

4. The penalty of double TDS if you do not file income tax returns.

No this does not mean that all have to file returns. But investors or assesses who have TDS of Rs 50000 or more in the last 2 Financial Years will need to file the income tax returns. So a penalty of 5% or twice the TDS amount which is lower would be taken as a penalty for not filing ITRs. This is as per the new section introduced as Sec 206AB.

5. The LTC & LTA Voucher Scheme will stop post 1 April 2021. This was started in October 2020 and the amount taken in place LTC & LTA need to be utilized by 31 March 2021. Hence post-April the facility or leftover amount cannot be taken as expenses under the scheme.

6. IT Scrutiny & Notices: Post-April 1, 2021 pending matters or scrutinization of 3 years or more cannot be opened. Earlier this limit was 6 years. It shall reduce to 3 years now. The limit of 3 years will be applicable for most of the cases. It will not be applicable on matters of extreme tax theft of Rs 50 Lakhs or above. The limit for such cases will be 10 years now.

This has been done to reduce fears of notices & litigations between the public & the Income Tax Department.

7. The Due Date for linking Aadhar and Income Tax PAN is 31st March 2021. In case of non-linking, your PAN Card would become in-operative. In case of Non-Linking, you may be Charged a Fine of Rs. 10,000 as per Section 272B of the Income Tax Act. (Update 1 April 2021- date has been extended to 30 June 2021)

8. Important Change in Banking: If you have a bank account in any of these seven public sector banks — Dena Bank, Vijaya Bank, Corporation Bank, Andhra Bank, Oriental Bank of Commerce, United Bank of India, and Allahabad Bank — then your passbook and cheque book will become non-functional from 1st April 2021. This will happen because of the merger of these banks in various other banks. 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.

9. Mutual Funds: In case you have bank details of Dena Bank & Vijaya Bank you need to get them changed. For other banks mentioned above the change would be automatic. But for the mentioned 2 banks you need to submit the change request with new bank proof.