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New Income Tax Rules 2022: Know 7 major changes in income tax rules applicable from April 1st

New Income Tax Rules 2022: The new income tax rules have come into force with the start of the new financial year from April 1, 2022. Some of the major changes in income tax include tax on cryptocurrencies, updated return filing and tax rules for EPF interest.

There will be no need to file income tax returns for senior citizens above 75 years of age from April 1 with the start of the new financial year FY 22-23.

New Income Tax Rules 2022: 7 Major Changes in Income Tax Rules

1. 30 percent tax on transfer of crypto assets

Any income earned from transfers of crypto assets will be taxed at 30% starting April 1. The tax rate will apply to all virtual digital assets and their earnings, including non-fungible tokens and bitcoin. Digital assets received as gifts will also be taxable.

Taxation on crypto profits

The provision of 1 percent TDS on the total digital asset transaction value will be applicable from July 1, 2022. TDS will be charged irrespective of profit or loss to the investor. TDS limit will be ₹50,000 per year for specified persons.

2. No compensation for VDA losses by VDA gains

Losses from one type of virtual digital asset cannot be offset by gains from any transactions involving other digital assets such as stocks, mutual funds and real estate. This means that the investor has to pay 30 per cent income tax on the profit made by him and the loss cannot be deducted from the final taxation amount. This would be a major blow to individuals and businesses dealing with cryptocurrencies. This announcement was made during the presentation of the Union Budget 2022 as a measure of prevention of tax evasion.

3. Updated ITR Filing

Individuals will be allowed to file an updated income tax return with effect from April 1, 2022. This means a person will get an additional opportunity to update the already filed ITR within two years of the relevant assessment year to rectify the errors or mistakes.

A new sub-section 139(8A) will be introduced in the Income Tax Act to allow taxpayers to file an updated return.

4. NPS Deduction to State Government Employees

State government employees will be able to deduct 14 per cent of their basic pay and dearness allowance for NPS contribution made by their employers under section 80CCD(2). This is similar to the deduction available to Central Government employees under the same section. It was decided to bring the state government employees at par with the central government employees.

The central government currently contributes 14 per cent of the salary to the National Pension System (NPS), which is allowed as a tax deduction on an employee’s income. In case of state government, the tax free contribution by the employer is 10 per cent.

5. Income Tax on PF Account

The Central Board of Direct Taxes (CBDT) will implement the Income Tax (25th Amendment) Rules, 2021 from April 1, which means a tax-free contribution limit of Rs 2.5 lakh will be levied on the Employees’ Provident Fund (EPF) account. If an employee earns more than this, then the interest earned from him will be taxed.

6. ITR not required for senior citizens

Senior citizens above the age of 75 years will no longer be required to file Income Tax Return (ITR) for the financial year 2022-23. However, they will have to submit a declaration to the bank for this.

7. Tax Relief to Persons with Disabilities

The government has allowed annuity and lump sum payment to disabled dependents during the lifetime of parents/guardians who have attained the age of 60 with effect from April 1.

Till now, deduction was allowed to the parent or guardian only if the lump sum payment or annuity was available on the death of the parent or guardian.

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