Ask Me Anything about Atmanirbhar Bharat - Tax changes

AMA (Ask Me Anything)
1

A series of relief measures were announced by FM Nirmala Sitharaman under Atmanirbhar Bharat Abhiyan on 13th May 2020.

Primary direct tax changes were:

  • Extension of Due dates for AY 2020-21
  • TDS rates slashed by 25% for professionals, traders on dividend, other payments for FY 2020-21

We understand it can be confusing.
Ask us Anything about tax changes under Atmanirtbhar Bharat Abhiyan.

We at Quicko are on a mission to simplify taxes for all! :rocket:

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Rather, I have a tip to share -

The EPF contribution for the next 3 months has been decreased from 12% to 10%. For both employee and employer contribution, for a corporate employee.

EPF Earlier Next 3 months Added to Salary
Employee Contribution 12% of Basic and DA 10% 2%
Employer Contribution 12% of Basic and DA 10% 2%
TOTAL 4%

E.g. If your basic is Rs 50,000 12% earlier = Rs 6000 (employee contribution) + Rs 6000 (employer contribution), total Rs 12000 to EPF per month.

Now for next 3 months, it would be 10% = Rs 5000 (employee) + Rs 5000 (employer) = Rs 10,000 to EPF and the remaining (2%+2%) Rs 2000 would be added to your monthly salary for next 3 months = Rs 6000 total extra cash in hand in this period.

This 4% extra in hand i.e. Rs 6000 in this example, which is hardly noticeable for most and you are most likely going to spend it.

It would-

  1. Increase your taxable income component for FY21 by adding Rs 6000 to your salary in the above example
  2. Decrease the cumulative interest of Rs 6000 in the above example, it would have earned otherwise over the years, had it been contributed to EPF.
  3. Affect your tax-saving investment planning. It would fall short of Rs 6000 in the above example.

If you do not need this extra money, you can do the following:-

  1. Add that amount as a voluntary EPF contribution to EPF.

  2. Make a voluntary investment of that amount in NPS Tier 1 which again is a retirement fund. But here, you can choose your scheme preference and pension fund manager and accordingly allocate in Equities, Govt Securities, and Corporate Bonds. NPS is a comparatively low-cost financial device for retirement corpus.

  3. Invest in an ELSS fund. The good thing about ELSS is it gives you a tax benefit and has the lowest lock-in period. After 3 years, you can redeem it, if you want to.
    Another ELSS tip: You can redeem when 3-year lock-in ends, and reinvest it for that year’s tax saving purpose, and this way a life-cycle can go on over a period of time where you don’t have to add fresh funds for tax saving purpose, making it ‘Atmanirbhar’. :sweat_smile:

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Hi,
The due date to file ITR is extended to 30th November but for tax audit report it is 31st october.
so in case tax audit is applicable, I will have to file the tax audit report by before filing the ITR?

5

Hi @Kunal4k1,

Yes, in case if tax audit is applicable a practicing chartered account will be required to prepare and file your tax audit report on or before 31st October 2020.
However, you can file your ITR until 30th November 2020.
This due date extension is for AY 2020-21.

Hope this helps :slight_smile:

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