With the start of the new financial year, there are several changes related to income tax rules that will come into effect from April 1, 2022. Let's take a look at the new income tax rules that have been introduced for this fiscal year:
1) Interest earned on the employee’s contribution to the Provident Fund (PF) account will be taxed if the amount of the contribution in the tax year exceeds Rs 2.5 lakh.
“The first is the interest tax on PF accounts where CBDT (Central Board of Direct Taxes) has come up with an implementation where a maximum tax-exempt contribution of up to Rs 2.5 lakh is foisted in the Employee Provident Fund (EPF ) account under Income-tax ( 25th Amendment) Rule," said Amit Gupta, MD, SAG Infotech
2) Any income from transferring a virtual digital asset will be taxed at a flat rate of 30%.
“The new 30% tax regime on crypto-asset income from April 1, 2022 will dampen sentiment towards the new age asset class. However, we expect crypto investors to support their investment thesis and continue investing for longer periods,” said Kunal Jagdel, Founder BitsAir Exchange.
3) Any loss incurred during the transfer of a virtual asset shall not be offset with any income (including profit from the sale of another virtual digital asset) under any provision of law. Only the cost of acquiring such an asset can be claimed in this account.
“This makes the government’s position on taxing virtual digital assets very clear. The law also removes the ambiguity of saying that digital assets will also be included along with capital assets for purposes of the term 'transfer'. So, the same said Sridhar R, Partner-Tax, Grant Thornton Bharat, the definition of transfer will apply to virtual digital assets in relation to equity assets.
4) If you receive a gift in the form of cryptocurrency or any other virtual digital asset, it would be liable for taxation as a gift.
5) A new provision has been introduced allowing taxpayers to file an updated return for errors or errors made in income tax returns.
“The filing of a new 'Updated return' will be a booster for voluntary tax compliance. The time limit for filing an updated tax return would be two years from the end of the relevant assessment year,” said Lokesh Acharya, Director and Co-founder of Fincorpit Consulting Private Limited.
6) State government employees will now be able to claim the deduction under Section 80CCD(2) of NPS contribution by their employer up to 14% of their basic salary and dearness allowance.
“Employees of state governments across the country will now get tax breaks on employer contributions to their national pension Scheme of up to 14%, higher than the 10%,” Lokesh Acharya said.
7) There is currently a 15% surcharge on the additional long-term capital gains fee on the sale of listed stocks or mutual funds. Effective April 1, 2022, this cap will be extended to include long-term capital gains on all assets.
8) An additional deduction of Rs 1.5 Lakh on properties valued at less than Rs 45 lakh for first-time home buyers won’t be available to taxpayers from 1st April 2022.
9) Tax exemption has been provided to people who have received money for expenses incurred on treatment of Covid 19. Also, money received by family members after the death of a person will be exempt up to 10 lakhs for family members.
10) Budget 2022 introduced a new tax benefit for parents/guardians of a disabled person. If a parent/guardian of a disabled person buys a savings life insurance policy with the disabled person as the beneficiary, the parent/guardian will be eligible for deduction from gross income before tax subject to certain conditions.
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