Six New Tax Rules That Are Effective 1st April 2022
Every year, there are additions or deletions to taxation rules in India. These are announced in the Budget report that is presented in February. This year, there have been some interesting financial changes that will impact individuals. Some of these are welcome changes, while others may increase your tax burden. Nevertheless, staying on top of the new income tax rules will help you with tax planning and ensure you file your income tax returns correctly.
Here are the top changes to taxation rules that will impact you starting April 1st, 2022:
1. Taxation on Interest Earned on EPF Accounts
The new income tax rules have introduced a taxation component for interest earned on Employee Provident Funds. If an employee contributes Rs. 2,50,000, any interest earned on the excess contribution will be taxable. The taxation threshold has been set at Rs 5,00,000 for individuals who don’t receive a contribution from employers, such as government employees. A separate account for the additional interest earned will be created to make taxation easier.
2. Tax on Cryptocurrencies and Virtual Digital Assets
In a move that sort of taxation on cryptocurrencies and virtual digital assets (VDA) in India, the government has announced a flat 30% tax on gains from cryptocurrencies and other VDA. The government has also made it clear that no deductions will be allowed on transactions made for virtual digital assets, and the losses from one VDA cannot be set off against gains from other VDAs.
3. Updated Income Tax Returns Filing Extended
As a taxpayer, you can now file revised or updated income tax returns within two years from the end of the assessment year. This will give you more time to correct any errors or disclose additional income that you did not in the initial filing. However, taxpayers need to pay an additional tax of 25% to 50% on the tax and interest due on the additional income.
4. NPS Deduction for State Government Employees
Suppose you are an employee of any State government. In that case, you will be able to claim a deduction under Section 80CCD(2) for NPS contributions made by your employer up to 14% of your basic salary and dearness allowance. Earlier, this deduction was 10%.
5. Tax Exemption on Covid-related Financial Assistance
If you have received money for Covid treatment from an employer or got money up to Rs. 10,00,000 on the death of a family member due to Covid, this amount will not be considered income, therefore becoming exempt from taxation.
6. Tax Relief for Insurance Bought for Disabled Persons
Under the provisions of Section 80DD, parents or guardians of a disabled person can now claim a tax deduction on a life insurance policy purchased for a disabled person, even if the payout starts while they are alive.
These are some of the significant income tax rules that will impact you from April 1st, 2022. Staying abreast of the latest financial changes can help you improve your tax planning and ensure you don’t miss out on any key declarations while filing your income tax returns.
ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. Please note, IPO related services are not Exchange traded products and I-Sec is acting as a distributor to solicit these products. ICICI Securities is also a BRLM to the issue. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing.