New Income Tax Rules 2022: New income tax rules have come into effect with the start of the new financial year from April 1, 2022. Some of the major changes in income tax include tax on cryptocurrencies, filing of updated returns and tax rules of EPF interest.
There will be no need for Income Tax Return filing for senior citizens aged above 75 years from April 1st with the start of the new fiscal year FY 22-23.
New Income Tax Rules 2022: 7 Major Changes in Income Tax Rules
1. 30 percent tax on Transfer of Crypto Assets
Any income earned from the transfer of crypto assets will be taxed at 30 percent starting from April 1st. The tax rate will apply to all virtual digital assets and their earnings including non-fungible tokens and Bitcoin. The digital assets received as gifts will also be taxable.
Taxation on Crypto Gains
The provision of 1 percent TDS on the total digital asset transaction value will come into effect from July 1, 2022. The TDS will be taken regardless of whether the investor makes a profit or loss. The threshold limit for TDS would be ₹50,000 a year for specified persons.
2. No offsetting of VDA losses by VDA gains
The losses incurred from one type of virtual digital asset cannot be offset against gains made from any transaction involving another digital asset such as stocks, mutual funds and real estate. This means that the investor will have to pay 30 percent income tax on the gains they make and the losses cannot be deducted from the final taxation amount. This will be a major setback for individuals and businesses dealing with cryptocurrencies. This announcement was made during the Union Budget 2022 presentation as deterrence of tax evasion.
3. Updated ITR filing
Individuals will be allowed to file an updated Income Tax Return from April 1, 2022. This means that an individual will get an additional opportunity to update the previously filed ITR within two years of the relevant assessment year to correct errors or mistakes if any.
A new subsection 139 (8A) will be introduced in the Income Tax Act to allow the taxpayers to file an updated return.
4. NPS deduction to State government employees
The state government employees will be able to deduct 14 percent of their basic pay and dearness allowance for NPS contributions made by their employers under Section 80CCD(2). This is the same as the deduction available to Central Government employees under the same section. The decision was taken to bring the state government employees at par with the central government employees.
The central government currently contributes 14 percent of the salary to the National Pension System (NPS), which is allowed as a tax deduction in the income of an employee. In the case of the state government, the tax-free contribution by the employer is 10 percent.
5. Income Tax on PF account
The Central Board of Direct Taxes (CBDT) will apply Income-tax (25th Amendment) Rule 2021 from April 1st, which means that a tax-free contribution limit of Rs 2.5 lakh will be imposed on the Employee Provident Fund (EPF) account. If an employee earns more than this then the interest they earn will be taxed.
6. No ITR Needed for Senior Citizens
The senior citizens aged above 75 years will no longer need to file income tax returns (ITR) for FY 2022-23. They will though have to submit a declaration to the bank for the same.
7. Tax Relief to Differently-abled Persons
The government has allowed payment of annuity and lumpsum to the differently-abled dependent during the lifetime of parents/guardians that is on the parents attaining the age of 60 years from April 1st.
Till now, the deduction was allowed to the parent or guardian only if the lump-sum payment or annuity was available to the differently-abled person on the death of the parent or guardian.