As businesses start the new financial year, it is imperative for them to stay updated about the key GST & income tax changes effective from 1st April 2021.
In this blog, we are rounding up all the new rules that businesses need to take into account for FY 2021-22.
Key GST changes effective from 1st April 2021
- The Central Board of Indirect Taxes and Customs (CBIC) has mandated e-invoicing for all business to business (B2B) transactions for businesses having a turnover of over Rs 50 crore
- HSN (Harmonized System of Nomenclature) Code is mandatory on B2B and B2C tax invoices for businesses exceeding Rs. 5 crore turnover
Here’s a detailed breakup.
|Business Turnover||HSN code for B2B Transactions||HSN code for B2C Transactions|
|Turnover up to Rs 5 Cr||4 – Digit||–|
|Turnover more than Rs 5 Cr||6 – Digit||6 – Digit|
- Businesses can avail credit for an input tax credit on an invoice only when those invoice details are uploaded by the supplier in the statement of outward supplies
- Manual GST audit and submitting reconciliation statements are no longer mandatory for businesses in FY 2021-22
Key changes in Income Tax Regime effective from 1st April 2021
- If businesses fail to deposit the employee’s contribution to EPF (Employee ProvidentFund) on time, they will not be able to avail the deduction
Pro Tip: Invest in smart payroll software and never miss another due date for your compliance payments.
- A new TDS section 194 Q will be effective from 01-July-2021, which requires businesses exceeding turnover of Rs. 10 Cr to pay 0.1% TDS on purchase of goods. If the supplier does not provide PAN/Aadhar, then the rate would be 5%
- The interest earned on PF (Provident Fund) will be taxable if the employees’ contribution exceeds Rs 2.5 lakh
- Tax filing is not mandatory for seniors above 75 years of age with pension and interest income only
- Businesses are liable to pay twice the TDS rate specified in the income-tax act if they haven’t filed their income tax return (ITR). This new TDS rule will be effective from 1st July 2021
We hope this helps you plan your finances smoothly for FY 2021-22.
Subscribe to our weekly newsletter to stay updated about all the recent tax changes & their effect on your business.