10 key changes in Income Tax rules this year
The new financial year, starting April 1, 2022 has come with a host of changes, with most of them being announced during the Budget in February. Here is a look at 10 important changes that taxpayers will see this year.
Tax on employees’ provident fund
As per the new rules introduced in the Budget, interest credited to the provident fund account of an employee will be exempted from taxes only for contribution up to ₹2.50 lakh every year, while interest beyond the said amount will be taxed in the hands of the employee.
The threshold will be ₹5 lakh if the employer doesn’t contribute to the employee’s provident fund.
The interest (currently 8.1 per cent) rate on EPF was fully tax free in the hand of contributors of provident fund till the rules were changes in the Budget 2021.
Tax on cryptocurrencies
As per the announcement made by Finance Minister Nirmala Sitharaman in the Budget-2022, “any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent.” Virtual digital assets, a new term in the Income Tax Act, has been introduced to include cryptocurrencies, non-fungible tokens, assets in metaverse, digital currencies and tokens.
No offsetting of crypto losses
The government has said that investors cannot offset losses incurred in the transfer of a virtual digital asset like cryptocurries against the income from the sale of another virtual digital asset. It means, if investors make losses in one asset, they will have to pay taxes on the profits on others.
While infrastructure cost in the acquisition of crypto assets will also not be considered as cost of acquisition under the new rules.
The government has also clarified that crypto tokens will be treated as any other capital assets and will attract capital gains tax.
Tax on gifting crypto
Both the receiver and the send of the gift will be levied taxes on the gifting of any virtual digital asset or cryptocurrency.
Updated I-T returns
Under a new provision in the Income Tax Act, taxpayers can file an updated return for errors done or include any undisclosed income in their Income Tax Returns. The deadline for filing the updated tax return is two years from the end of the said assessment year.
Deduction on NPS
Under Section 80CCD(2), state government employees across India can now claim deduction up to 14 per cent of their basic salary and dearness allowance for contribution to the National Pension Scheme. Earlier, the deduction was 10 per cent.
Long-term capital gain surcharge
The cap of 15 per cent surcharge on long term capital gain, which earlier existed only on the sale of mutual funds and equities, has been extended to long term capital gain on all assets from April 1.
No I-T deduction on home loans
The Finance Ministry has stopped the additional income tax deduction of ₹1.5 lakh under Section 80EEA of the Income Tax Act on house properties valued at below ₹45 lakh from April 1, 2022.
Borrowers, whose home loans were sanctioned between April 1, 2019 and March 31, 2022, however, can avail the benefit.
COVID benefit
The government has provided tax exemption to people who have received money for the treatment of COVID-19. Also, the compensation money received by a person who died of COVID-19 has been exempted of tax up to a limit of ₹10 lakh.
Life policy for parents/guardians of disabled
Under the new rules, a parent or guardian of a disabled person can file for deduction of tax from his or her gross income if he or she buys a savings life insurance policy where the disabled person is a nominee.
