Keeping in view PM Modi’s vision of a “self-reliant India”, FM Nirmala Sitharaman announced a slew of personal finance measures to boost demand in the country, which is ravaged by the pandemic. Here are the five announcements made by her:
1) Due date for all income tax returns has been extended to 30 November from 31 July.
2) TDS, TCS rate for non-salaried payments for period up to March 31, 2021 has been slashed by 25%, a move that will release 50,000 crore into the system, said Sitharaman.
“In order to provide more funds at the disposal of taxpayers, the rates of Tax Deduction at Source (TDS) for non-salaried specified payments made to residents and rates of Tax Collection at Source (TCS) for the specified receipts shall be reduced by 25% of the existing rates,” the Finance Minister said.
Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc shall be eligible for this reduced rate of TDS.
3) To increase take-home salary for employees and to give relief to employers in payment of provident fund, Finance Minister Nirmala Sitharaman today said that for next three months EPF or employee provident fund contribution will be 10% each for employees and employers as compared to the statutory obligation of 12%. CPSEs and state PSUs will, however, continue to contribute 12% as employer contribution.
“The move by the government to reduce the 12% PF contribution to 10% will help increase the take home pay of employees. It will also reduce the cost to the employers, especially for international workers where the company picks up the cost,” said Saraswathi Kasturirangan, partner at Deloitte India.
4) The finance minister today also announced an extension by another three months a scheme under which the government pays the EPF contribution of employees and employers. Under this scheme, the central government pays 24% of the monthly wages into EPF accounts below 15,000 per month, who are employed in establishments having up to one hundred employees, with 90% or more of such employees earning monthly wages less than 15,000. This scheme will be now available till August.
5) The EPF decision will provide relief to 6.5 lakh establishments covered under EPF and about 4.3 crore such employees, said Sitharaman, adding that it will provide liquidity of 6,750 crore to employees and and employers over next three months.