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New Income Tax rules Effective This Month

April 1 marks the onset of the new financial year. As it happens every new year, there are certain income tax rules and other financial changes that come will into effect on April 1, 2022. Here is a look at the new changes that come will into effect and how these will impact your money matters.

Here is What’s going to change in income tax rules from April 1:

Updated ITR filing window

The Finance Minister also gave respite to people filing their revised Income Tax Return (ITR) from next fiscal. FM has announced that the revised tax filing window will remain open for two years from the year of assessment in case of less filing of tax. The rule will be applicable from April 1. 

Previously, one could get a window of just 5 months from the due date of filing returns, to revise the tax returns. However, one won’t be able to file an updated return to report any sort of additional loss or decrease in the tax liability. 

Crypto Tax

The Union Budget 2022-23 proposed a 30% tax on cryptocurrency assets. Beginning April 1, cryptocurrency gains will be taxed at 30%, which is the highest tax bracket, with a rate that is the same as lottery winnings. From Bitcoin to non-fungible tokens (NFTs), this tax rate would apply to all virtual digital assets (VDAs) and their earnings.

For example, if an investor buys a cryptocurrency for Rs. 15,000 and sells it for Rs. 25,000 generating a Rs. 10,000 profit, they must pay a 30 per cent tax of Rs. 3,000. The 1 per cent TDS is set to go into effect on July 1, 2022. Regardless of whether an investor makes a profit or losses, the TDS will be taken from the total transaction value.

Also, Crypto received as gifts will also be taxable.

Crypto Losses cannot be used for Set-off against crypto gains: For example if you make a ₹1000 gain on bitcoin and a ₹700 loss on Ethereum, you have to pay tax on ₹1000 and not on your net profit of ₹300.

State government employees NPS Deduction

State government employees will now be able to claim tax benefit of 14 percent on the National Pension System (NPS) under Section 80CCD(2) made by their employer up to 14 per cent of their basic salary and dearness allowance. The deduction will be similar to that of Central government employees under the said section.

KYC norms

Accounts held with RBI and Sebi-regulated financial entities most be compliant with KYC norms with updated addresses and ID proof by March 31 ( banks were asked not to take action during the pandemic).

Tax on PF account

The Central Board of Direct Taxes (CBDT) has decided to implement Income-tax (25th Amendment) Rule 2021 from April 1. It means that a cap of tax-free contributions up to Rs 2.5 lakh is being imposed on the Employee Provident Fund (EPF) account. If the contribution is made above this, then the interest income will be taxed.

Mutual Funds

Dividends earned from mutual funds or domestic firms will be put under tax brackets from now onwards. A high burden of tax will be levied on investors in higher tax brackets, while less burden will be put on those in lower tax brackets.

Tax relief on Covid-19 treatment expenses

As per the press release in June 2021, tax exemption has been provided to persons who have received money for Covid medical treatment. Likewise, money received by family members on the death of a person due to Covid will be exempt up to Rs. 10 lakh for family members if such payment is received within 12 months from the date of death.

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