In this post, we will look into the 7 important changes in income tax rules effective from April 1, 2022. In that, we will discuss the following changes in detail:
As part of the union budget 2022-23, cryptocurrency assets are proposed to be taxed at 30%. Cryptocurrency gains will be taxed at 30% beginning April 1, which is the highest tax bracket, which is the same as lottery winning. The same tax rate would be applied to all virtual digital assets, including bitcoin and non-fungible tokens (NFTs). In addition, crypto received as a gift would also be taxable.
According to the proposed section 115 BBH of the Income-tax act, 1961, a loss from transferring a virtual digital asset cannot be set off against income derived from the transfer of another virtual digital asset. Beginning July 1, 2022, every single crypto transaction will be subject to a 1 per cent tax deduction at source under Section 194S of the Income Tax Act. Regardless of whether one makes a profit or a loss, TDS will be deducted at redemption.
IT Return: Filing an updated return
On April 1, individuals will have another chance to update their income tax returns (ITR). The updated return can be filed if additional information was missing from the original ITR. A new subsection139(8A) has been added to the income tax act to allow the taxpayers to file an updated return. Updated returns can be filed by an individual within three years from the end of the financial year. No matter whether a person is required to pay an additional tax of 25% to 50% on tax and interest due, this return will be filed.
NPS deduction to State government employees
The state govt employees will now be able to claim deduction under section 80CCD (2) for NPS contribution by the employer up to 14% of their basic salary and dearness allowance, which is in line with the deduction available to the central government employees under the said section. The state government employees are now at the same level as the central government employees. Currently, the central government contributes 14% of the salary to the National Pension System (NPS), which is deductible from the wages of an employee. Employers contribute 10% tax-free to the state government
Contribution to the PF account
Income-tax (25th Amendment) Rule 2021 has been implemented by the central board of direct taxes from April 1, 2022. which will result in a tax-free contribution limit of Rs 2.5 lakh (Rs 5 lakh for government employees) being imposed on Employee Provident Fund (EPF) accounts. If an employee earns more than this then the interest they earn will be taxed.
With effect from April, once the interest portion of the EPF account statement for FY22 is credited, two sections will appear on the statement – one reflecting the taxable component and the other reflecting the non-taxable portion.
No ITR Needed for Senior Citizens
Effective from April 1, 2022, senior citizens aged above 75 years will no longer need to file income tax returns (ITR) for FY 2022-23. however, this exemption from filing ITR is available provided certain conditions are fulfilled by the senior citizens. Further, a declaration has to be given by the senior citizen to the bank.
Section 80U – Tax Deduction for Disabled Individuals
As of April 1st, the government will pay an annuity and lump sum to differently-abled dependents during the lifetime of their parents/guardians upon the parents reaching 60 years of age. Until now, the deduction could only be claimed by the parent or guardian if the differently-abled person received a lump-sum payment or annuity upon the death of the parent or guardian. An insurance scheme for such a person can be taken out by the parent or guardian. A resident individual who has been certified as a person with a disability by the medical authority can claim the tax benefit under Section 80U.
Tax relief for covid-19 treatment expenses
As per the notification given by Finance Ministry, any financial assistance received by the income taxpayer from their employer towards Covid-19 Treatment expenses is to be considered tax-exempt. This is also applicable for any assistance received from any other sources but with a limit.
Additionally, if the family member of a deceased COVID-19 affected employee receives any ex-gratia payment from the employer, then the complete amount will be tax-exempt.
Similarly, if the financial help is received from an external source, the amount will be exempt up to 10 Lakh, provided the amount is received within 12 months from the date of death of the individual.
This post on new important changes in income tax rules effective from April 1, 2022, has come to an end. Share your views and opinion with us in the comment section below.