The start of the next financial year is April 1st. On April 1, 2022, various income tax rules and other financial adjustments will go into effect, as they do every New Year. Here’s a look at the new rules that will go into force, as well as how they will affect your finances.
The Lok Sabha also approved amendments to the Finance Bill, 2022, that clarified the taxation of virtual digital assets. “Any income from the transfer of any virtual digital asset shall be taxed at a rate of 30%,” said Finance Minister Nirmala Sitharaman in the Union Budget 2022.
If an employee’s contribution to the Employees’ Provident Fund (EPF) account in the preceding financial year 2021-22 exceeded Rs 2.5 lakh, the interest generated on the excess contribution will be taxable in the employee’s hands. A new EPF account will be created to calculate the interest that will be taxable in the hands of an employee.
7 main changes to income tax that will take effect on April 1, 2022
Guidelines OF CRYPTO TAXATION
FM According to Sitharaman, the system will not allow any deductions for any expenditures or allowances while calculating such income, except for the cost of acquisition.
She further stated that any loss resulting from the transfer of a virtual digital asset cannot be offset against any other revenue.
In order to record transaction details, the minister also stated that the government will make a provision for Tax Deducted at Source (TDS) on payments made in relation to the transfer of virtual digital assets at a rate of 1% of such consideration above a monetary threshold.
According to her, a gift of a virtual digital asset is likewise proposed to be taxed in the recipient’s hands.
YOUR CRYPTO ASSETS WILL BE TAXED
Beginning April 1, a 30% I-T plus and surcharges will be imposed in the same way as winnings from horse racing or other speculative transactions are treated.
– A 1% TDS on virtual currency payments exceeding Rs 10,000 per year, as well as taxes of such presents in the hands of the recipient.
– For designated persons, such as individuals/HUFs who are required to have their accounts audited under the I-T Act, the TDS threshold limit would be Rs 50,000 per year.
Losses in cryptocurrency cannot be offset by gains in cryptocurrency or other assets
The Indian government has tightened crypto regulations by prohibiting losses in one digital asset from being offset against gains from another version of crypto investment. The government will not grant tax deductions for infrastructure costs spent when mining crypto assets because they are not considered acquisition costs. For example, if you make a $1,000 gain on bitcoin and a $700 loss on Ethereum, you must pay tax on the $1,000 gain rather than the $300 net profit. Similarly, gains and losses in cryptocurrencies cannot be offset against gains and losses in other assets such as stocks, mutual funds, or real estate.
Return on Information Technology (IT) has been updated and is ready to be filed
A new option has been added that permits taxpayers to file an updated return if their income tax filings contain errors or mistakes. Taxpayers now have two years from the end of the relevant assessment year to file an updated return.
Employees of the state government are qualified for an NPS deduction.
State government employees will now be allowed to deduct up to 14 percent of their basic pay and dearness allowance for NPS contributions made by their employers under Section 80CCD(2), which is the same as the deduction available to Central Government employees under the same section.
Taxation of a PF account
From April 1, the Central Board of Direct Taxes (CBDT) will apply Income-tax (25th Amendment) Rule 2021. It means that the Employee Provident Fund (EPF) account will have a limit of up to 2.5 lakh in tax-free contributions. If you contribute more than this, the interest you earn will be taxed.
LTCG is open to a surcharge
Long-term capital gains on the sale of listed equities or mutual funds are currently subject to a 15% fee. This cap will be extended to long-term capital gains on all assets beginning April 1, 2022.
Deduction of benefit under section 80EEA
For first-time home purchasers, there was an additional deduction of up to 1.5 lakh on home loan interest on properties worth less than 45 lakh. This scheme will not be extended beyond March 31, 2022, according to FM. As a result, beginning April 1, 2022, taxpayers will no longer be able to take advantage of the additional deduction of 1.5 lakh. Other existing deductions for house loan interest up to $2 lakh would be maintained under section 24 of the I-T Act.
Covid-19 treatment expenses are free
Tax exemption has been granted to people who have received money for Covid medical treatment, according to a press release issued in June 2021. Similarly, money received by family members on the death of a person due to Covid will be exempt up to Rs. 10 lakhs if the payment is received within 12 months of the death. This change will take effect on April 1, 2020, and will be reversible.
Disabled persons are eligible for tax relief
A disabled abled individual’s parent or guardian can enroll in an insurance plan for that person.