Income tax

10 new tax rules in effect this month

With the start of the new fiscal year, there are several changes regarding the income tax rules that are due to take effect on April 1, 2022. Let’s take a look at the new income tax rules that have introduced for this exercise:

1) Interest earned on the employee’s contribution to the Provident Fund (PF) account will be taxed if the amount of the contribution in a fiscal year exceeds 2.5 million.

“The very first is the PF account interest tax in which CBDT (Central Direct Tax Commission) has proposed an implementation where a tax-exempt contribution cap up to 2.5 lakh is deposited in the Employees Provident Fund (EPF) account under the Income Tax Rule (25th Amendment),” said Amit Gupta, MD, SAG Infotech

2) Any income from the transfer of a virtual digital asset will be taxed at a flat rate of 30%.

“The new 30% flat tax regime on income from crypto assets from April 1, 2022 will dampen sentiment for the new asset class. However, we hope that crypto investors will support their investment thesis and stick with investing for longer periods of time,” said Kunal Jagdale, Founder of BitsAir Exchange.

3) Any loss incurred on the transfer of a Virtual Asset shall not be offset by any income (including gain 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 calculation.

“This makes the government’s position very clear with respect to the taxation of a virtual digital asset. The law also removes the ambiguity of saying that digital assets will also be included with fixed assets for the purposes of the term ‘transfer’. Therefore, the same definition of transfer will apply to virtual digital assets as that applicable to fixed assets,” said Sridhar R, Partner – Tax, Grant Thornton Bharat.

4) If you receive a gift in the form of cryptocurrency or any other virtual digital asset, it will be subject to taxation as a gift.

5) A new provision is inserted that allows taxpayers to file an updated return for errors or mistakes made in tax returns.

“The introduction of a new ‘updated return’ will boost voluntary tax compliance. The time limit for filing such an updated tax return would be two years from the end of the relevant tax year,” said Lokesh Acharya, Director and Co-founder of Fincorpit Consulting Private Limited.

6) State government employees will now be able to claim a deduction under Section 80CCD(2) for NPS employer contribution of up to 14% of their base salary and dearness allowance.

“State government employees across the country will now get tax relief on employers’ contributions to their national pension scheme of up to 14%, up from the 10%,” Lokesh Acharya said.

7) Currently, there is a cap of 15% long-term capital gains surcharge on the sale of listed shares or mutual funds. From April 1, 2022, this cap will be extended to long-term capital gains on all assets.

8) The additional deduction of 1.5 Lakh on house properties valued at less than 45 lakh for first time home buyers will no longer be available to taxpayers from April 1, 2022.

9) Tax exemption has been given to people who received money for expenses incurred for the treatment of Covid 19. Similarly, money received by family members on the death of a person will be exempt up to 10 lakhs for family members.

10) Budget 2022 introduced a new tax benefit for the parent/guardian of a person with a disability. If the parent/guardian of a disabled person takes out a savings life insurance contract of which the latter is the beneficiary, the parent/guardian may benefit from a deduction on the gross income before tax under certain conditions.

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