5 New Income Tax Rules Will Be Effective From April 01, 2022; Learn More

1. Crypto Tax/Other Virtual Digital Assets (VDA) Tax

One of the biggest announcements of Budget 2022-23 was the taxation of crypto gains. The budget brought in clarity concerning the levy of income tax on crypto assets. The crypto asset tax regime in India will gradually roll out in the financial year (FY) starting April 01, 2022. Provisions on the 30% tax will also be effective at the start of the fiscal year 2022-23 while those related to the 1% TDS will come into effect from July 1, 2022. Furthermore, if you receive a present in the form of bitcoin or any virtual digital asset, it will be taxed as a gift.

2. VDA losses can't be offset by VDA gains

While computing tax, losses experienced from one type of virtual digital asset (VDA) cannot be offset against gains from any transaction involving another VDA. This means that investors will have to pay a 30% tax on whatever gains they make, and losses will not be deducted from the final taxation amount if they trade various tokens.

3. Updated ITR filing after end of time limit to file ITR

From April 1, an individual will get an additional opportunity to update his/her income tax return (ITR). A new subsection is introduced in the Income Tax Act, this provision will allow the taxpayers to file an updated return for errors or mistakes done in income tax returns. This new subsection is 139 (8A) which has been added to the Income-tax Act.

Updated returns can be filed by an individual within three years from the end of the financial year. This tax return will be filed irrespective of whether an individual has filed an original/belated ITR or not.

4. Tax on PF

If the employee's contribution to the Employees' Provident Fund (EPF) account exceeds Rs 2.5 lakh in the previous financial year 2021-22, then the interest earned on the excess contribution will be taxable in his/her hands. To calculate the interest that will be taxable in the hands of an employee, a new EPF account will be created. This new tax on interest was proposed by Finance Minister Nirmala Sitharaman in her budget address for 2021-22.

5. NPS deduction to State government employees

Under section 80CCD(2) of Income Tax Act, 1961, state government workers would be able to deduct up to 14% of their base salary and dearness allowance for NPS payments made by their employers . This is the same as the deduction available to Central Government employees under the same section.