New Income Tax Rule Changes from FY 2021- 2022
New Income Tax Rule Changes from FY 2021- 2022
There are many changes in the income tax rules effective from this financial year (FY 2021-2022). Income tax on crypto assets, filing of updated returns, new tax rules on EPF interest, and tax relief on Covid-19 treatment are some of the major changes effective from 1st April 2022. The present article briefs the new income tax rule changes from FY 2021 -2022.
Income tax rule changes in Crypto Tax
Crypto assets will be taxed from the next financial year starting 1st April 2022. Union Finance Minister Nirmala Sitharaman in her Budget 2022 speech announced a 30 percent tax on income from virtual digital assets such as cryptocurrencies including bitcoin and Ethereum and non-fungible tokens (NFTs).
- Provisions on the 30% tax will be effective at the start of the fiscal year while those related to the 1% TDS will come into effect from July 1, 2022.
- The threshold limit for TDS would be Rs.50, 000 a year for specified persons, which includes individuals/HUFs that are required to get their accounts audited under the Income Tax Act.
- Apart from this, if a person receives a gift in form of cryptocurrency or any other virtual digital asset, it would be liable for taxation as a gift.
Scheme for Taxation of Virtual Digital Assets (Cryptocurrencies & NFT)
Filing of updated IT Return
A new provision is inserted in the Income-tax rules that allow the taxpayers to file an updated return for errors or mistakes done in income tax returns. Taxpayers can now file an updated return within two years from the end of the relevant assessment year.
Income tax rule changes on Covid-19 treatment expenses
CBDT has provided tax relief to persons who have received money for expenses incurred on treatment of Covid 19.
Money received by family members on the death of a person due to Covid will be exempt up to Rs. 10 lakhs for family members if such payment is received within 12 months from the date of death.
Tax Relief to Persons with Disability
Budget 2022 has introduced a new tax benefit for the parent/guardian of a disabled person. As per the new tax sop, if the parent/guardian of a disabled person buys a savings life insurance policy with the latter as the beneficiary then the parent/guardian would be eligible for deduction from gross income before tax subject to certain conditions.
For more details on Tax Benefits For Persons with Disability, click here
Income tax rule changes under section 80EEA
CBDT has removed section 80EEA (deduction for interest paid on home loan for affordable housing). As per this section, a deduction for interest payments up to Rs 1.5 Lakh is available under Section 80EEA. This deduction is over and above the deduction of Rs 2 lakh for interest payments available under Section 24(b) of the Income Tax Act.
Therefore, taxpayers can claim a total deduction of Rs 3.5L for interest on a home loan, if they meet the conditions of section 80EEA.
Surcharge on Long Term Capital Gain
There was a cap of 15% surcharge on long-term capital gain on the sale of listed equity or mutual funds. From 1st April 2022, this cap will be extended to long-term capital gain on all assets.
Tax on PF account
The Central Board of Direct Taxes (CBDT) has decided to implement Income-tax (25th Amendment) Rule 2021 from 1st April 2022. It means that interest accrued in the PF account on contributions over Rs 2.5 lakh a year will be taxable according to the new rule, for calculation of taxable interest, separate accounts within the provident fund account shall be maintained during 2021-2022 and all subsequent years for taxable and non-taxable contributions made by a person.
NPS deduction to State Government Employees
The State Government employees will now be able to claim deduction under Section 80CCD (2) for NPS contribution by the employer up to 14% of their basic salary and dearness allowance.
