New Income Tax Rules Come Into Effect From April 1, 2022: Here's Are The Key Changes

New Delhi: There are going to be many changes in the income tax rules effective from the next financial year i.e., April 1, 2022. Income tax on crypto assets, updated return filing, new tax rules on EPF interest, and tax relief on COVID-19 remedies are going to be some of the major changes, which will be effective from 1st April.

Tax On Crypto:

The crypto asset tax regime in India will be implemented gradually in the financial year starting 1st April. Provisions on 30% tax will be effective at the beginning of the financial year while the provisions relating to 1% TDS will be applicable from July 1, 2022.

The Budget for 2022-23 has brought clarity regarding the imposition of income tax on crypto assets. TDS limit will be Rs 50,000 per year for specified persons, including individuals/HUFs, who are required to get their accounts audited under the I-T Act.

Losses From Crypto Cannot Be Set Off Against Other Assets

The Indian government has tightened the norms for crypto by closing the loss in a particular digital asset against the income from the second edition of the crypto holding. The government will not allow tax exemption on infrastructure costs while mining crypto assets as it will not be considered as the cost of acquisition.

For example, if you make a profit of Rs 1000 on Bitcoin and make a loss of Rs 700 on Ethereum, you will have to pay tax on Rs 1000 and not your net profit of Rs 300. Similarly, you cannot set off gains and losses on cryptocurrencies against gains and losses in other assets such as stocks, mutual funds, or real estate.

Filing of updated IT return

A new provision has been created that allows taxpayers to file an updated return for errors or mistakes made in the income tax return. Taxpayers can now file an updated return within two years from the end of the relevant assessment year.

NPS Deduction For State Government Employees

State government employees will now be able to claim deduction under section 80CCD(2) for NPS contribution up to 14% of their basic pay and dearness allowance by the employer, which is in line with the deduction available to central government employees.

Tax On PF Account

The Central Board of Direct Taxes (CBDT) has decided to implement the Income Tax (25th Amendment) Rules, 2021 from April 1. EPF account. If the contribution is made above this, the interest income will be taxed.

Tax Relief On The Cost Of Treatment of COVID-19

As per the June 2021 press release, tax exemption has been provided to those persons who have received funds for COVID medical treatment. Similarly, on the death of a person due to COVID, there will be an exemption of up to Rs. 10 lakh for family members if such payment is received within 12 months from the date of death. This amendment will come into force with retrospective effect from 1st April 2020.

Higher TDS For ITR Non-Filers

This provision is for those who have missed filing their previous income tax returns. Higher TDS and TCS (tax collected at source) will be applicable to them in the financial year 2022-23. However, it will not be applied if the source of income is salary and provident fund. The new rule will be applicable on will be deducted on interest income, dividend income, etc.

No ITR is Needed for Senior Citizens above 75 yrs

For the financial year 2022-23, senior citizens aged 75 years and above will not need to file income tax returns (ITR), subject to certain conditions. For this, a declaration will have to be given to the bank.

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