Significant Changes that would come with effect from 1st April 2021

Significant Changes that would come with effect from 1st April 2021 This article discusses significant changes that would come with an effect from 1st April 2021. The List is Exhaustive and not inclusive. Here I have put the changes which I thought are relevant for the common man.

E-Invoicing

• E-Invoicing will be mandatory for B2B Transactions for Bussiness having a Turnover of more than Rs 50 Crores.
• At present, the businesses with a turnover of over Rs. 100 Cr B2B are required to issue E-Invoice for B2B Transactions.

HSN Code

• The Change-related to Quoting of HSN Code on Tax invoice is given below:

HSN Code Change	B2B Transactions	B2C Transactions
For Turnover upto Rs 5 Cr	4 - Digit HSN	NA
For Turnover of more than Rs 5 Cr	6 - Digit HSN	6 - Digit HSN
For Exports	8 - Digit HSN	8 - Digit HSN

• The HSN Code digits will be reported based on the Turnover of FY 2019-20.
• In the case of Export, the requirement of mentioning 8 - Digit HSN on Tax Invoice is as per FTP (Foreign Trade Policy) and not GST.
• In case of non-mention of HSN Code Penalty of Rs 50,000 is applicable.
• Also, HSN Mis-match changes the GST rate of goods/services. Taxpayers should be very careful while implementing the same.
• Department can send notices in case of HSN mismatches and mistakes in GSTR-1/ Tax Invoice/ E-way Bill/ E-Invoice/ GSTR-9/ AOC-4/ Cost Audit Report/ Shipping Bill/ Bill of Entry/ Registration Certificate etc.

Tax on Interest on PF

• Interest earned from the Provident fund is exempt from Income Tax.
• But, recently Budget 2021 has proposed that interest on Employee Contributions to provident fund over Rs. 2.5 Lakh should be taxed.
• This proposal will be applicable w.e.f 1st April 2021.

New Labour Law

New Wage Code was introduced in the year 2019, and the same is expected to be notified with effect from 1st April 2021. This code will bring a major change in the definition of Wages. This Change is going to bring a major hit on take-home salary. Click here to read more on New Labour Law

Penalty for Non-Linking of Aadhar & PAN

• 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.

Pre-filled ITR Forms

• A major change in ITR Form is expected as, as per Budget 2021 Prefilled ITR Forms will be introduced.
• The Prefilled ITR Forms will have information of Capital Gains from Listed Securities, Dividend Income, Interest from Banks/Post Office, etc.
• Earlier Prefiled ITR form was available for Salaried employees where Income was reflected on basis of Form 16.
• But now the scope has become wide.

High TDS/TCS Rate for Income Tax Return (ITR) Non-Filers

• A new section 206AB has been inserted in Income Tax Act as a special provision providing for higher rate for TDS for the non-filers of income tax return (ITR)
• The Proposed Rate on Non-Filer is higher of:
  • 5%
  • twice the rate specified in the relevant provision of the Act
  • twice the rate or rates in force
• Similarly, a new section 206CCA has been inserted in Income Tax Act as a special provision providing for higher rate for TDS for the non-filers of income tax return (ITR)
• The Proposed Rate on Non-Filer is higher of:
  • 5%
  • twice the rate specified in the relevant provision of the Act