From April 1, 2021, there will be some changes to your salary structure, EPF contribution, LTC voucher for ITR filing, which will have a direct impact on your wallet. As the government plans to enact the New Wage Code Bill 2021 from April 1, there will be a huge restructuring in your salary.

At the same time, some of the major tax-related announcements in the 2021 Budget will go into effect on April 1, which means the ITR filing rules, EPF contributions and tax rules will be applicable by next month. Significantly, this is the first time in the country’s 73-year history that changes are being made to labor law. The government says it benefits both employers and workers. Let’s see what changes from April 1, 2021….

PF increases but salaries decrease

Under the new draft rule, the base salary must be 50% or more of the total salary. Increasing the base salary will increase PF, which means a reduction in take-home or on-hand pay. Currently, 12 percent of your basic salary now goes to PF. When the base salary is 50 percent of the CTC, the contribution to the PF also increases. For example, a person with a CTC of Rs 40,000 per month would have a base salary of Rs 20,000 and a PF account of Rs 2,400.

Tax on PF interest

From 1 April, interest on employee contributions of more than Rs 2.5 lakh per annum will be taxed on the future fund. This is in line with the announcement made by Finance Minister Nirmala Sitharaman in his budget speech. This means that people who contribute more than Rs 2.5 lakh per annum from April 1 to PF account will have to pay tax on interest earned above the limit of Rs.

The higher the retirement rate, the better the old age

Increase of gratuity and PF contribution will increase the amount received after retirement. This will make life easier for people after retirement. The biggest change is the salary structure of the highest paid officers and thus they are greatly affected. Increasing PF and gratuity also increases the cost of companies. This is because they too have to contribute more to the PF. The balance sheet of companies is also affected by these issues.

It is proposed that the working hours are 12 hours

The new draft law proposes to increase the maximum working time to 12. The draft rules of the OSCH code also provide for adding 15 to 30 minutes of overtime by counting 30 minutes of overtime. Under the current rule, less than 30 minutes is not considered an overtime entitlement. The draft rules prohibit any employee from working continuously for more than 5 hours. A half-hour rest notification for employees after every five hours is included in the draft rules.

The CTC may increase with base salary

If the new pay code is enacted on April 1, the pay will be at least 50% of the total wage. This means that the basic salary (basic salary and dearness allowance in government jobs) must be 50 percent or more of the total salary from April. The basic salary of most companies today is around 35% to 45%, which is a change for them. Your CTC may increase with your base salary when the new rules apply.

LTC scheme discount

In 2020, due to the outbreak of the COVID-19 outbreak, the Center announced a relaxation in the Vacation Travel Discount (LTC) scheme. The exemption allowed central government employees to claim income tax benefits on spending between October 12, 2020. By March 31, 2021, the GST rate on goods purchases will attract 12 percent or more in exchange for travel expenses. This waiver does not apply from April 1.